In this section, we're going to look at
trade. That is, international trade
usually, although it could be trade
between any company, but I think we're
going to focus on international trade. It
has a long process, and sometimes it
seemes a little bit complicated, but
let's go ahead and jump in from the
beginning, and we'll take it step by step.
Of course, when you want to execute trade
between companies, you have a buyer and a
seller. And that's usually the way I'm
going to talk about it in this lesson,
which is the buyer and the seller or we
could say the importer and the exporter.
When a business wants to sell a product,
they need to first produce it, and then
they need to find buyers. Usually, that
would be in an overseas market.
Now, there's a first step to this, and
that will be the offer, so in this
section we're going to be talking about
the offer, and that is the details of the
product and the price of the product.
Later you may have a counteroffer. That
is something about the offer is not
acceptable to the buyer, and so they want
to change something in the offer. That's
called a counteroffer.
So those are just a couple of the first
steps that are involved in the trade
process, but it gets even more
complicated than that. Because if the
buyer is not satisfied they have a
counteroffer, but then there can also be
the sellers not satisfied, and that would
be a negotiation offer.
Well, that all seems to be getting a
little bit complicated.
What we're talking about is a back and
forth or a negotiation. Sometimes it'll
be simple. There's just an offer, and
everybody's happy. Sometimes it'll be a
counteroffer, then everybody's happy.
Sometimes they'll be a negotiation offer,
then everybody's happy,
or sometimes you can go on much much
longer. There can be a counteroffer to
the negotiation offer and a counteroffer
to that, so it can go back and forth for
a very long time. On the other hand, it
could be very fast.
The goal of course is to reach an
agreement, or what we say agree on terms.
That is, we agree with the product. We
agree with the price. We agree with the
shipping and any other details that are
involved with the sale. Once that's all
done, we can make an order, and then both
sides should be happy with an order.
We are gonna talk about order but not in this
part. Today... this
video is going to focus on offers. So
what's involved in an offer?
Well, offers need to make an offer, that
is, a proposition to enter a business
transaction. And usually, when we talk
about offers, we often talk about it in
the context of a product, but it doesn't
have to be a product. It could be a
service, so you sell a product or a
service, but we often just talk about it
like a product. But in today's world, the
service economy is huge, so it could be a
service also. Again it begins the same
way. You have an offer.
If someone agrees to an offer, it means
that they're going to go ahead and be
legally bound to fulfill their part of
the agreement. And what that means is
that the buyer says, "Yes, I'll buy now." You
have to buy. You cannot say, "Oh well, I
changed my mind" at the last minute. But
it's also important to remember the
seller will also be legally bound, so
when a seller makes an offer that means
I will give you this product for $1000.
I cannot later then say, "Oh well, no it's
$1100."
I can't change it, so that's what this
legally bound means. So when you make an
offer, you must be very careful to be
clear in the offer to make sure the
offer is really what you can do and to
make sure you're not going to have to
change the offer later. Don't offer the
price if you're not sure. Don't offer the
volume, if you're not sure you can
produce that much. So these are key
points to the offer. Another way we can
think of the offer is it's sometimes
called a firm offer.
F-I-R-M--firm offer. And the reason I like
to think about it as a firm offer
it means it's unchangeable,...cannot
be changed.
Now, of course cannot be changed means
that if the buyer agrees, then it cannot
be changed. But if the buyer disagrees, if
the buyer says, "I don't like it. I want
to make a counteroffer," then in that case
the offer is over. It's not legally
binding anymore.
So if I tell you I can sell this product
to you one unit for one thousand dollars,
and you say no, then everything is over. I
do not have to give you one unit for one
thousand dollars. Later if you say, "You
know. I want to buy it for $1,000." I can
say no because you refused. You refused my
firm offer. On the other hand, if you
accept my firm offer, I must give it to
you I cannot change and say, "Well, you
know I changed my mind" or "I can't not do
it" or "I'm out of stock" or "I'm out of
inventory." You really cannot use an
excuse like that, so this is why I like
to use this idea of firm offer,
meaning unchanging.
The offer must contain the details of
the offer, so this will usually include
things like price, shipping terms,
the timeframe of delivery, and any other
details about the products, such as for
example maybe your product has something
special, like a special feature or
insurance, or some kind of color. All of
those things must be in the offer. It's
very important. If you forget to put it
inside the offer, then later the buyer
accepts your offer, what are you gonna do
when the buyer says that you sent the
wrong color. It's hard to argue you sent
the right color because in your offer
you did not make it clear. So it's very
important when you make an offer, that
you really have all the details very
very clear.
An offer can be sent as a response to an
inquiry. So in another video we learn
about enquiries, which are really asking
for information from a company, so I may
receive an inquiry, and then in response
to an inquiry
I will send back an offer. That's very
normal, so this is one way you can answer
inquiry: Just go ahead and make an offer.
Offers often our normal business letters.
That is, they have a heading. They have
an opening, and they have a body and a
closing, very normal, very formal. Now of
course, you would use an email, but you
could send it on paper to be very
legally binding and formal, but it's very
normal these days to use an email. Now,
you have to remember the heading, opening,
body and closing are the key parts to
make this look very formal. You don't
want to write an email and just say, "Well
how about 10000 units at 150 a unit? How
about that? Something like that okay?"
That's not really a clear firm offer,
and you may end up regretting that you
say something that's not formal because
you make a mistake, where the buyer
assumes something that's not true.
They can be faxed messages, which means
you send it to their fax machine, which
would be printed out on paper.
And of course most commonly today, they'd
be email messages. But you know another
thing that's possible is they actually
could be spoken. That is, I can make an
offer to you just by talking to you. You
can make an offer on the telephone, or
face to face, or in a meeting, or in a
teleconference over a video screen, using
a video camera.
Those are offers too, and the same thing
applies. You need to be careful because
if you don't say the information clearly,
then the other side may get something
wrong, and you could get in trouble. So
usually if it's a face to face or a
verbal that is, talking agreement, usually
at the end, we'll also write it up as a
formal offer, and then I'll sign it send it to
you, and you can send me an acceptance
letter or an order, usually, because that
makes it more legal, more formal.
Offers always include quotations, but
quotations are not always offers. So in
this case, what we're saying is an offer
must include a price. A quotation is a
price, but if I give you a price that's
not necessarily an offer. So I may say to
you, "Huh, our products cost about a
thousand dollars each." And then you say,
"Oh, I would like to buy for one thousand."
Well, that was not an offer. I was just
telling you an idea. I was just telling
you a numberm, a price, but I did not make
an offer to you. An offer means I sit
down and I actually tell you this is my
offer. I am making a firm offer to you.
Now, will you accept or will you reject?
So a firm offer must have a quotation,
but a quotation is not always a firm
offer.
A quotation will include a time frame
usually, and this time frame is a
beginning and an ending time, which means
I have a deadline, so it's a beginning
and an ending time. So maybe today you
open the letter, and today is the
beginning, and maybe 10 days later is the
end. This time is called a time frame-- a
frame of time. It has a beginning, and it
has an end. After that time, after 10 days
the offer is over. It's closed. If you say
yes, it's already too late. I can change
the price. I can change the units. I can
even change the product. I can even tell
you... there's no way I can
give it to you, even if you want it.