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Lecture 08 : International Logistics — Transcript

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0:01[Music]
0:22[Music]
0:26so hello dear friends welcome back to uh
0:28nptl online course on Logistics and
0:30Supply Chain management so in the last
0:32session we started discussion on
0:35International Logistics we talked about
0:37uh what are the stages in international
0:40transactions talking about specifically
0:42about the financial transactions and
0:45then uh in this session we'll try to uh
0:49look into what are the various possible
0:51options how we can go internationally
0:53right so uh well I'm Dr vikas takur uh
0:57Department of humanities and social
0:59sciences I kakur so as I discussed so we
1:03we will be talking about in this lecture
1:05about the international market
1:07penetration strategies we'll see how we
1:09can go obviously when we are opting for
1:12any of this strategy there are some pros
1:15and cons of this right so somewhere we
1:19are more cost efficient somewhere we are
1:21uh you know delivering on time somewhere
1:23we we are losing control over quality
1:26somewhere we are diluting our ownership
1:28so these are some of the major points
1:30we'll discuss when we'll go for either
1:32exporting licensing joint ventures
1:34ownerships importing or counter trade
1:37right then I'll just give you quick
1:40highlight of what are the major players
1:43if you talk about International
1:46Logistics market and then in India and
1:49uh I have included one very small case
1:51study obviously uh for further reading
1:53we can go in detail but I here I have
1:56included only the small
1:58concept so these are uh six options we
2:03have when we will talk about whether we
2:05want to go internationally right
2:09so uh when first question is uh we
2:13discussed in the last session as well
2:15why we are going internationally now
2:17this is not we are talking about the
2:19backward integration where we were
2:21including you know our suppliers from
2:24International Market this let us Focus
2:26only uh about the forward Channel and uh
2:30where we are serving the customers now
2:33here the point is we want to serve our
2:35customers internationally right we want
2:38to expand the Orizon of our business so
2:41these are all options available right
2:43how we can go for international market
2:46so we'll try to discuss one by one each
2:50strategy and what are the implications
2:52for uh Logistics and Supply Chain
2:54management right so if you talk about
2:57exporting it is simple that you you are
3:00just selling your goods and services
3:03from one country you are selling to
3:04other country right so that means here
3:08you are not including any intermediator
3:11in that so this is most simple and least
3:15risky method because no other
3:17intermediator is involved so what you
3:20will do when you are exporting so
3:22obviously you will set up your own
3:24distribution Network right and then you
3:27will start selling into the foreign
3:29market let's go quickly about these
3:32types of exporting direct exporting
3:34direct exporting sells its products
3:37directly to customer in foreign markets
3:39without any intermediaries like I
3:41mentioned this is direct exporting you
3:44are directly interacting with the
3:45customer you have your own fulfillment
3:47centers you have your retail shops and
3:50you have maybe you are providing the
3:52Doorstep Delivery as well right so you
3:54are completely working
3:56alone so then indirect exporting then
4:00what we are doing here we have some
4:02trading companies agents or distributors
4:05or local career Partners who are
4:07delivering our services let's say if I'm
4:09selling some uh in uh products in UK
4:13market so I may be having one
4:15distribution or uh order fulfillment
4:17center in UK from there we will be
4:20sorting or uh doing the cross docking
4:24and that cross doing will be done using
4:26some local partner right who is already
4:29well established in that market in that
4:31way maybe we want uh to avoid right now
4:34our investment in expanding the
4:37distribution Network as well in that
4:39because setting up that uh you know
4:41delivery uh Channel also requires
4:44resources in that way it can be we'll
4:46see what are the challenges what are the
4:48pros and cons of
4:50exporting so let's first talk about
4:52quickly the benefits Market
4:54diversification obviously earlier you
4:57were having one market in one country
4:59now you are having access to so many
5:01other markets right you are going to
5:03Market 1 2 3 so diversification is there
5:07competitive Advantage already I told you
5:10let's take one other
5:12example uh if I'm promoting or as a
5:16customer I want credit card right so if
5:19any company or bank is coming to me and
5:22saying that this is One credit card you
5:24can use this credit card for anything
5:28for purchasing any type of goods or
5:30services or anywhere in the world right
5:34so that means is something they are
5:36providing us the One Stop solution I
5:38need not to care about the exchange
5:40rates I need not to care about you know
5:44the I need not to go to the bank I need
5:45not to submit all those letters and then
5:48no's are required and all documentation
5:51to make those transaction how easy that
5:54life would be you just imagine one
5:56single card right right way I'm sing
5:59that card here in India or using the
6:02same card in same way in some other
6:04country so you just imagine how it will
6:07provide the Competitive Edge right then
6:10economies of scale because earlier I was
6:12supplying products to Market one so
6:14let's say in Indian market my share is
6:17somewhere saturated so let's say now I
6:21have seen the growth period but over the
6:23time it now it is saturated or moving
6:25like this I want some maybe economies of
6:28scale maybe I want want to increase the
6:30capacity so that I can utilize all the
6:32resources I can explore the uh Market
6:35potential in the foreign markets so then
6:38economies of scale can be
6:40utilized obviously when you you are
6:43increasing uh your sales growth so then
6:47Revenue growth will be there right but
6:50what are the challenges Market entry
6:52barriers so obviously when you are going
6:55International Market first is the local
6:59restriction regulatory Authority
7:00restrictions right or trade restrictions
7:03you can say they have different Tech
7:05structure they have different legal
7:07structure tariffs so all those things
7:10you need to take care that is the first
7:12basic point for you know you need to
7:14address this is a very big entry barrier
7:17you need to understand the local
7:19structure legal as well as uh somewhere
7:21ethical structure as well right then
7:24Logistics challenges now because you are
7:27directly exporting so there will be
7:29Logistics challenges if you talk about
7:32India if you are coming to India
7:33geographically it's widespread so if you
7:36are a foreign player you don't have
7:39expertise how you can just imagine
7:41starting business in India and then you
7:44covering the hilly areas from North to
7:46maybe the South and maybe the
7:48infrastructure parameters are also
7:50different somewhere you'll get the train
7:52facility somewhere you'll get you have
7:53to go by a road somewhere you can use
7:55the ship facility right so that also we
7:58discussed about what are the you know
8:00restrictions on those infrastructure
8:03constants are there right so that is
8:05very again very important point so this
8:07was probably the reason very basic
8:09reason why hero and
8:11Honda they come together and they made a
8:15kind of joint venture right because
8:17Honda was having technology and hero was
8:21having that supply chain distribution
8:25Network
8:27for Network for
8:30Les now they thought that we can exploit
8:33this distribution Network and we can
8:36exploit this technology of Honda and we
8:38can do fairly well in somewhere in other
8:41Market which the hero is not right now
8:44and we can go into uh your fuel based
8:48two- wheeler right so then they exploded
8:50Hero Honda but then after their breakup
8:53uh so then uh now you can see hero is
8:56going separately Honda is going
8:57separately because Honda got the
8:59knowledge for that time they acquired
9:02the knowledge of Indian market they
9:03started setting up their own you know
9:06centers service centers they got enough
9:09knowledge of this uh industry but on the
9:12other hand if you talk about hero they
9:14also got the knowledge how you know two
9:16wheer industry works so they now they
9:18are competing they are competing with
9:20each other right so this is means
9:22Logistics challenges are there this is
9:24one strategy how you can uh you know uh
9:28cover those log challenges Financial
9:30Risk is there because you are exporting
9:33there directly let's say you uh opened
9:35up a be house maybe capacity of 500
9:39ton and then somewhere you are utilizing
9:42today only 350 capacity tomorrow maybe
9:46400 or maybe you are thinking of
9:48expanding this capacity or even if you
9:50are not thinking and day after tomorrow
9:52there is some fluctuation and demand is
9:55going down what you will do with this
9:58capacity this is one Distribution Center
10:01what you will do with the logistics
10:03Network right the whole chain so that
10:06risk is always there you are investing
10:09into that that risk is there currency
10:12exchange I told you if you are selling
10:14for € Euro you are getting earlier 100
10:17rupees now you are selling 1o maybe the
10:21currency this currency appreciated rupee
10:24appreciated now you are getting only 95
10:26rupees right so that also currency
10:29exchange rate you need to take care then
10:32we need to take care of legal and
10:34Regulatory Compliance the intellectual
10:37uh property rights who is having the
10:39intellectual property rights so that
10:41also you need to take care and then
10:43obviously culture and language barriers
10:45are there when you are going overseas so
10:47that you can uh avoid by using local
10:51like indirect exporting right where you
10:54are including some more players and
10:56maybe the local career Partners who are
10:57doing delivery on your behalf right so
11:00these are some of the exporting examples
11:02you can see Tata Motors so Tata motor
11:05exports is vehicle to various
11:07International markets including South
11:09Africa Europe and Southeast Asia right
11:12this is how they have set up their Bast
11:14Network Bajaj Auto so they started
11:17exporting motorcycles and three-wheelers
11:19or other commercial vehicles they are
11:22exporting to more than 70 countries
11:24worldwide talking about infosis they are
11:27providing the it software Solutions
11:31right and across the globe including
11:33North America Europe and Asia Pacific so
11:36this is these are some of the examples
11:37of exporting right now in from Indian
11:40market what we are
11:41doing this is another strategy licensing
11:44so what we can do is licenser May
11:47provide you uh the licensing with the
11:50rights that they can use uh you know uh
11:54their strategy their recipe to produce
11:57the product and services or maybe to
11:59sell the product or Services right so uh
12:02you can acquire that intellectual
12:04property such as your trademarks patents
12:06copy rights or proprietary technology
12:09you can use now when we are going for
12:11these kind of Licensing or franchise
12:13kind of system see KFC titled their
12:17restaurant so let's say they are only
12:20working in us or mecd they are working
12:23only in us right but setting up their
12:27Distribution Center all over the world
12:29it's not one night work right it may
12:32take long time and then if you are not
12:35aware about the foreign markets Asian
12:37market European market other markets so
12:40then it is very difficult and will take
12:42so long to understand each market
12:45individually let's not take that
12:47headache and we'll give it to some local
12:49vendors we'll share with them the our
12:52resources our trademark our recipe our
12:55raw material our technology so that they
12:58can produce similar kind of product in
13:00the same quality right and in that way
13:04we can grow our brand image as well so
13:06magd let's say you are coming here in
13:09India we have magd you are going in
13:12Europe you have magd options right so
13:14anywhere in the world you are going same
13:16store you are looking you feel more
13:17comfortable okay this is my store right
13:20so you feel connected as a customer so
13:21this is one point you can in increase
13:23your brand image what are different
13:25types of Licensing trademark licensing
13:28where you can can use macd brand name
13:31their logo or product and services they
13:33are selling right so in your regional
13:37market patent licensing is uh you can
13:40use the patented technology or any
13:42invention done by them like I talked
13:45about the recipe secret recipe you can
13:47use that copyright licensing sometimes
13:50the the literary work or music artwork
13:53or software you can use like uh the
13:56English movie Hollywood movie you can
13:57dub in uh you know Hindi directly or you
14:00can make the SQL or maybe kind of the
14:03same story concept you can again use
14:06that with the permission right copyright
14:08licensing franchising is another option
14:12uh where you get the right to operate in
14:14the same area in the same business with
14:17the same brand name and model name and
14:19operating procedures right so obviously
14:22again Market expansion is one benefit
14:25which you are going for risk mitigation
14:27now if you are with your burger and you
14:31are saying it is better than magd who
14:33will Who will you know uh admit your
14:36this claim as a customer if you are
14:39saying that but if you are making the
14:41same Burger but you are putting name as
14:44me obviously everyone will come to that
14:47they know that much quality or minimum
14:49level will be maintained right so low
14:52capital investment is required because
14:55that building up that brand image
14:58marketing that is already already done
14:59this brand is known for right so that
15:01much is not there quickly you can start
15:03generating the revenue brand exposure to
15:05foreign markets will be there brand will
15:08be more highlighted and you as a
15:10stakeholder of that brand because now
15:12you are also carrying that brand you got
15:14the license to reuse that brand so that
15:17you will be getting the visibility as
15:19well what are the challenges because now
15:22you on behalf of magd someone else is
15:26you know using the same recipe kind of
15:29same raw material but you don't have
15:31direct control over the quality what you
15:33can promise in your outlet same
15:35obviously your all the stakeholders
15:37Partners cannot promise right so there
15:39is no direct control over quality
15:42intellectual property protection can be
15:44somewhere can terms in terms of
15:46competitive risk because today whatever
15:49maybe he is your stakeholder tomorrow he
15:52he can uh be your competitor as well and
15:55because now uh Honda knows about the uh
15:59Indian market so they can compete with
16:01hero they know the supply chain role of
16:03distribution Network Services Center in
16:05India so where the they need to locate
16:07strategic locations they have all data
16:10with them right so once who are partner
16:14the maybe uh after some time they can be
16:18competitors and then you have dependency
16:20on licenses because uh you cannot make
16:23changes in that whatever is uh
16:25documented and then if you are serving
16:27in the foreign market you want to move
16:30even the licenser want to move he cannot
16:32move without the permission of the
16:34licens because already you have given
16:36permission to someone else to operate in
16:38the other market so legal and
16:40contractual risks are also there so
16:43negotiation Drafting and enforcement to
16:45protect the interest of both the
16:47licensers and licenses so it is
16:49important right otherwise in the end
16:51split will be very difficult right like
16:54Hero Honda they also struggled while
16:56they were splitting separating right but
16:58if you is properly documented then you
17:00will be having in the end proper idea
17:02how much control the one will be having
17:04of the other so licensing example if you
17:07see AMU they're selling their amul
17:10branded products into so many different
17:12Market 20 countries you can just see the
17:15list is huge and still they are
17:17maintaining the product quality and
17:19standards because they have the license
17:22agreements and they are also training
17:24their Partners how they can deliver the
17:25quality products ITC limited ITC limited
17:29uh for these brand ashirbad sunfist and
17:32bingo they are partnering with the
17:35manufacturing and distribution so they
17:36are only using manufacturing and
17:38distribution chain so they are moving
17:40their own product uh manufacturing the
17:43product and then they are using the
17:44third vender Tav India is another uh
17:48organization which is working on this
17:50and they uh licenses its brand for
17:52retail operations in several countries
17:55and uh local Partners to establish and
17:57operate Fab India toes abroad right so
18:00this is how you can get the quick access
18:02through your licensing
18:04system uh in the foreign market so next
18:07talking about the next option is joint
18:09venture so I told you Hero Honda joint
18:11venture maruti suuki joint venture where
18:14you are coming to some foreign market
18:16and you are exploring the third Market
18:19where you are not existing you are
18:22operating right so even if you are
18:24operating existing so even then you can
18:26go for you know updated technology ology
18:29or somewhere you can Li some resources
18:33from that uh company who's coming for
18:35joint venture so then in that way you
18:38can understand in terms of joint venture
18:40if you see Equity joint venture so uh
18:44Partners they can contribute as uh
18:47capital and resources to establish a new
18:49legal entity right which can be any
18:52limited company and uh then they hold
18:55the ownership stake and they have fixed
18:57share in profits risks and control right
19:00how much they can control contractual
19:02joint venture like Hero Honda this is
19:04for specific period of time if they will
19:07survive after that also they can
19:09continue but yes you need to you know
19:12Define the uh termination Provisions as
19:15well in that so that is a point in
19:18contractual joint venture maruti Suzuki
19:20is not contractual joint venture if you
19:22talk about hir was your contractual
19:25joint venture now risk sharing because
19:27now you two companies are operating one
19:29is local one maybe foreign player you
19:31can risk you can share your risk access
19:34to resources hero is having access to
19:37Honda technology techn Honda technology
19:39is having resources to Hero
19:41manufacturing sites manufacturing
19:44facilities and their distribution by
19:46distribution Network Easy Market entry
19:48because already Indian player is there
19:50cost efficiency will be there you need
19:52not to make that big huge investment to
19:55set up your distribution Network risk
19:57diversification because now two players
19:59are involved and they have some
20:01knowledge about the local market so that
20:04way you can diversify the risk C
20:07cultural challenges like if you talk
20:09about Walmart acquired 80% share in flip
20:13Flipkart and Walmart is something if you
20:16read the story about Walmart the
20:18organization which is notorious for you
20:20know handling the
20:22workers and their worker related
20:25policies they are actually they are
20:28customer focused worker related policies
20:30are in big big questions but their
20:32customer is their God like that so this
20:35is how they are
20:36promising so you might have heard about
20:39the big tragedy that happened in
20:42Pakistan at Rana plaza building so many
20:45buers died but Walmart refused to pay
20:48compensation to them and uh yeah in that
20:51way they uh guidelines are very strict
20:54you cannot be part of any Union
20:56otherwise you will be simplified but Now
20:58flip cart is which is uh you know uh uh
21:03started in India by Indians so how it
21:06will take over how policies will merge
21:08another cultural difference will be
21:10there so that is obviously strategic
21:13alignment again uh you need to align
21:16Walmart with Flipkart very uh you know
21:19other example is Tata Tata nanop plant
21:22which is always always very you know
21:24good example they started in bestest
21:26Bengal singu right but because of farmer
21:29hesitation and all that they they
21:32acquired that land in a proper way right
21:35they followed all the procedure policies
21:37they started investing thousand CR they
21:39invested they came up with the
21:41infrastructure all that and then Farmers
21:43started agitation about that that we are
21:46losing our land we are losing the
21:47climate this that everything started
21:49happening but now Tata because if you
21:51have seen the Tata ad they say that our
21:54values are stronger than our steals if
21:57you talk about out they are still their
22:00values are more stronger than still this
22:02is the promise they are making so Tata
22:05simply said that they step back that we
22:07don't want to make any profit any
22:09business on the stake of the farmers
22:12interest right so they BW simple but
22:17imagine if there is some other player so
22:19obviously then it is not in the hands of
22:22tataa only so if two companies are
22:24coming together that easy decision
22:26making will not be there right so this
22:28is the point I wanted to make control
22:30and governance so joint ventures you
22:33need to clearly mention how much control
22:36one is having obviously now Walmart is
22:39claiming 80% stake so is having the
22:42authority with them but in joint venture
22:44where you are having almost equal share
22:47you are sharing equally resources so
22:49decision- making Powers will be equally
22:51distributed and uh how will dispute uh
22:54uh resolution will happen right that
22:55also you need to take care intellectual
22:58property protection so obviously when
23:01two players are coming so
23:03confidentiality and ownership protection
23:05of intellectual assets so that secret
23:09recipe of Honda is no longer secret for
23:13hero right because they are partner
23:16somehow so they know the technology now
23:18the best thing is they know the
23:20technology of Honda they can again
23:23renovate the same technology and come up
23:25with more strong promises right in the
23:27market so so exit strategy because it is
23:30joint venture maybe contractual so you
23:32need to decide how the dissolution
23:36divestment or buyout will happen in the
23:38end right so if you talk about joint
23:41ventures Mahindra and Mahindra joint
23:43venture with MRA sustain so a subsidiary
23:45of Mahindra and Mahindra and uh for
23:48renewable energy sector worldwide they
23:51have done this if you talk about
23:53Hindustan unil limited right so they
23:56have join Venture with uni for personal
23:59care and home care products right
24:01Reliance Industries again join Venture
24:04with global energy companies for
24:06exploration production and refining
24:08operation in various countries including
24:10United United State and other countries
24:13right so these are some of the examples
24:15of joint venture where two companies are
24:17coming together sharing almost equal
24:20part ownership is actually the reverse
24:23of that where one is taking the
24:25ownership of other so acquiring it is
24:27kind of acquisition so what will happen
24:30overnight so like what happened with the
24:33run backi now same thing happened with
24:35Flipkart as well when Walmart is saying
24:37that 80% stake is gone that means
24:40ownership is gone now decision making
24:42power is with Walmart right so ownership
24:45encompasses the right to use manage
24:47transfer and dispose of Assets in their
24:50way right so they can make the decisions
24:52so how you can go wholly owned
24:55subsidiaries 100% your share and then
24:57you will be having control of everything
25:00right decision making management so
25:02Walmart can control the Flipkart
25:03operation in India right how they want
25:06to set up the location whatever their
25:08earlier culture ethical considerations
25:11were there but now because 100% stake it
25:13is not there 100% but if you have eared
25:15100% so then you have full control over
25:18that Equity investment if you having
25:21part uh of that investment then you gain
25:24the access to their markets customers
25:27technology and distri distribution
25:29channels right so Equity Investments
25:32provide a minority or majority ownership
25:34position in Target company offering
25:36opportunities for collaboration
25:38integration and value creation
25:40franchising another option where you can
25:43include the third party Grant granting
25:46them the license kind of thing and they
25:48will start operating under your company
25:51brand name your you can use the
25:53intellectual property right acquisition
25:56is involving purchasing the existing
25:57business business assets or subsidiaries
26:00so in that way you can uh go for either
26:03forward integration or backward
26:04integration right so you can acquire or
26:08uh your uh suppliers or your
26:10Distributors as well in that way also it
26:12can happen so when you are acquiring
26:15100% you have control you can control
26:17the policies market present and excess
26:20obviously so Walmart very tough
26:23competitor with the uh Amazon both are
26:26coming from us so in IND Market why
26:28Amazon should be there alone so Walmart
26:30came and they came strongly with
26:32Flipkart right so knowledge transfer
26:34will be there obviously uh from one
26:37organization Flipkart you are sharing
26:39the knowledge how they were operating
26:40and from W Walmart you can get because
26:43Walmart is the world largest retailer
26:47right in terms of employer if you talk
26:49about third largest employer in the
26:51world this is the you know strength of
26:54Walmart risk management obviously you
26:57can do in better BAS because now you are
26:59in broader picture what are challenges
27:01Capital requirements will be there
27:03obviously Regulatory Compliance already
27:06we talked about right cultural
27:08differences Walmart versus Flipkart best
27:11case to understand cultural differences
27:13right so uh how the customers will take
27:17Indian customers will take especially
27:18when we are saying that vocal for local
27:21and then so many different companes we
27:23are coming up with to protect our local
27:25vendors right local suppliers so but yes
27:30that that way it will not work uh I
27:32think because it's a the complete word
27:35whole word is One Market right so
27:37integration challenges are there because
27:39both are coming from two different
27:41backgrounds right political and economic
27:43risk right now maybe Walmart is seeking
27:46as very good opportunity Walmart tried
27:48venturing with your bharti AEL as well
27:51earlier but they failed right but now
27:53they came up with the flip cart who is
27:55doing fairly well having more than 60%
27:58almost 60% in some markets and uh major
28:01stake in e-commerce industry if you talk
28:04about right so obviously inflation
28:06recession exchange rate fluctuations
28:08those risks are always there if you talk
28:11about ownership adya Vera acquired noes
28:14and became the aluminum rolling and
28:16recycling Giant in that industry Tata
28:19steel very famous deal you might
28:22remember chorus group and became the
28:24largest player globally Dr ready
28:26laboratory acquired select business
28:29divisions and Manufacturing facilities
28:31in multinational companies right so
28:33let's talk about importing here you are
28:35bringing the goods or services to your
28:38country from some foreign distributor
28:40right so just purchasing the goods so in
28:44that way product you have more options
28:46maybe earlier you were also selling in
28:48the market now you have more options in
28:50that way cost competitiveness if you are
28:52getting cheaper product time to Market
28:54obviously quickly you will get uh to the
28:57market because you need not to
28:59manufacture it already someone somewhere
29:01in the part of world manufacturing that
29:03product so easily you can introduce in
29:06the market so Market expansion you will
29:08get and risk mitigation if today you
29:11need 100 products you will import 100
29:13products tomorrow you need th000
29:15products you need th000 products and
29:17then day after tomorrow if you need only
29:1910 products you will use only 10
29:21products so that capacity whatever you
29:24have buil there is no capacity some
29:26other organization is using whether you
29:28are using this part or this much part or
29:31this much part so you are not bothering
29:33because you are importing that so
29:35challenges trade barriers obviously are
29:38there regulatory Frameworks trade
29:40restrictions import duties will be there
29:42supply chain complexity because many
29:45players are there you need to
29:46collaborate coordinate with everyone you
29:48need to make the trade relations no
29:50direct control over the quality of the
29:53product because you are not
29:54manufacturing you are just importing
29:56that currency and finance Financial Risk
29:58already we talked about exchange rate is
30:01one major factor which is affecting this
30:03right already I discussed with that
30:05Financial volatility and uh credit risk
30:08obviously will be there unknown players
30:11are there so that risk will be there
30:13competitive pressure will be there right
30:15so many players are there so importing
30:18example Walmart is importing worldwide
30:20they are feeding their suppliers large
30:23order this is how they are negotiating
30:25Amazon India is also partnering with
30:28global players to provide you a diverse
30:30range of products Apple India talking
30:32about Indian market only they are
30:34importing all the uh products like
30:37iPhone iPads MacBooks to Indian market
30:39and selling through the uh their uh
30:42authorized distributor counter trade is
30:44something which will avoid your usually
30:47we can see it as a very good viable
30:49option when you want to avoid the
30:51financial
30:52transaction what we'll do two companies
30:54will be there one is saying that I'm
30:58producing worth, rupees goods and you
31:00are producing worth th000 rupees Goods
31:03will not deal in financially you this is
31:05a kind of batter system you give me your
31:08products I'll give you your products
31:10right so that way we can remove all the
31:13intermediator we'll somehow we can
31:17remove all those documentation and
31:19exchange rates TR all the stakeholders
31:22we talked about uh currency transactions
31:25and all that Banks and the role of all
31:28those agents will be eliminated in that
31:31way counter trade is preferred right so
31:33it involves reciprocal trade agreements
31:36between trading partners incompasses
31:39various forms of trade agreements widely
31:41used in international trade and not only
31:44private Farms are so government
31:45organization are also using this kind of
31:48strategy which is obviously to you know
31:50cut down the
31:52cost again those all advantages are
31:56there if you are doing that advantages
31:59are there but what about the challenges
32:01one major challenge is to fix that these
32:04many goods are uh equal to these many
32:07Goods coming from you so to evaluate to
32:11curate that, rupees Goods in your
32:13industry thousand rupees Goods in my
32:15industry this is a big Challenge and
32:18then maybe I'm selling you a kind of uh
32:22product which can be easily packed which
32:24can be easily transported and like that
32:27but and easily stored no special Cold
32:31Storage is required Warehouse handling
32:33is required that kind of product is
32:34there but you are sending me, rupees
32:37product which requires very special
32:39attention special handling cold storage
32:43and packaging is difficult and expiry
32:46dates are coming then it is very
32:48difficult to negotiate so that
32:50complexity is there negotiation with
32:52those Partners is difficult but once you
32:55will clear the things maybe you can
32:57include those transaction cost and
33:00Logistics cost so then it will be fair
33:02good for both the parties will be bin
33:04bin situations right already I talked
33:06about transaction cost may be different
33:08for two players right not only
33:11transaction the legal fees and the uh
33:14you know uh the local framework
33:16requirements trade uh requirements may
33:19be different for these two different
33:22Industries then operational L risk will
33:24be there delivery delays inventory
33:27management challenges all those things
33:30will be there and because you are
33:31equating Goods with Goods so if delivery
33:34is delayed at one end obviously the
33:36other end will suffer so uh somehow we
33:40can say Financial Risk that fluctuating
33:43uh exchange rates still you can manage
33:45because there is no real currency
33:47involved so that way you can manage
33:49right in a better way if I compare with
33:52other models so counter trade uh example
33:55if you see Indian Oil Corporation
33:58they are uh uh they are importing the
34:01crude oil from Saudi Arabia and setting
34:04the selling them agriculture products
34:06and infrastructure development they are
34:07involved in those kind of products OMC
34:10with their B limited Sim scheme they are
34:13also you know oil and natural gas
34:15corporation uh they are also offering so
34:17many technical expertise and investment
34:20and in in terms they are exchanging the
34:22energy resources so this is how these uh
34:26uh trade partners are uh working you can
34:28see FedEx and uh ryer Expo Logistics U
34:33UPS United uh your Parcel Services DHL
34:36these are major companies carrying
34:38maximum share talking about Indian LOC
34:40Logistics Blue Dot gy and FedEx and uh
34:45Mahindra Logistics all these uh got KV
34:48KV kwe so these are the some big players
34:52and delivery you might be very aware
34:54about these because they are making the
34:56deliveries and Cor partners with the
34:59earlier they were with the Amazon and
35:00flip card as well now they are I think
35:02they are doing eBay or some other
35:04players misho and all this is very small
35:08case study quickly we'll go through
35:10during covid-19 Peru they faced this uh
35:14obviously uh each country they
35:16faced sudden rise in the demand of
35:19medical devices but this I I have taken
35:22special this uh case on shipment of
35:24syringe from China to Peru right so
35:27because uh to successfully run the
35:30vaccination program they need the
35:32continuous supply of uh syringes right
35:35but logistic congestion caused by
35:37Transportation restrictions and
35:40obviously shutdown operations were there
35:42everything was banned so how we can
35:44ensure that so then they planned some
35:46strategy so how we can go for within
35:49just 48 48 hours from shangai to Peru
35:53how we can deliver the syringes so uh
35:56you can go through the the detailed case
35:58but here I'll just talk about the
36:00solution they contacted with the charter
36:02flights and then they worked out what
36:06what is the passenger area required in
36:08each flight so whatever area is left out
36:12they started tapping that area and they
36:15started you know transporting the
36:17syringes uh using that unused area so a
36:21total of eight air Charters and part
36:23Charters were made from Southern China
36:26where the this Factory was located to
36:28Peru and you can see from singai Alaska
36:31Los Angeles Mexico and liar route this
36:33is how uh these uh they they they had to
36:37pick this difficult route because the
36:39slots were not available and their
36:41continuous Supply from shingai to uh
36:44Peru was required of syringes right so
36:47result is that uh uh after evaluating
36:51different options that allowed us to
36:53comply with the timing established by
36:55client and maintain reasonable transport
36:57cost
36:58the results was success and the syringes
37:00arrived on time every month to complete
37:03the different phases of vaccination
37:05campaign in Peru right so see uh this
37:09International Trade we spent couple of
37:12sessions on this but is very important
37:14because no business in these days is a
37:17kind of you can say local business right
37:19so when you are saying your promises are
37:22that you exist overseas as a customer I
37:25will always feel that more Comfort right
37:28I'm dealing with I'm taking those Brands
37:30which are internationally you know
37:33available so every anywhere if I'll go
37:35I'll get the services that kind of
37:37familiarity is there so but the
37:40challenge is huge in terms of so many
37:42stakeholders are involved then I
37:44obviously we talked about in that video
37:46that how Amazon Global Logistics as
37:49partner can solve your problems the
37:51other problem was the transactions how
37:54Amazon wallet can help you you know to
37:56reduce the cost of the transactions
37:58among the multiple vendors stakeholders
38:01involved that so this is how we can
38:03conclude this that International
38:04Logistics is very important part these
38:07days of e-commerce players when you are
38:10sourcing your products from different
38:12locations and you are finding your
38:14customers in different locations so
38:17these are the references and textbooks
38:19you can refer for detailed content and
38:22the case is also included there so thank
38:25you very much that's all from my side

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