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EXPORTING AND BLOBAL SOURCING, FDI and collaborative ventures, licensing,…
EXPORTING AND BLOBAL SOURCING, FDI and collaborative ventures, licensing, franchising, and other constractual strategy as a method of doing business abroad
Risks of Exporting
• If you merely export to a country, the distributor or buyer might switch to or at least threaten to switch to a cheaper supplier in order to get a better price
• Someone might start making the product locally and take the market from you
• Local buyers believe that a company which only exports to them isn’t very committed to providing long term service and support once a sale is complete – They may prefer to buy from someone who’s producing directly within the country
When deciding which mode of entry to choose, companies should ask themselves two key questions: – How much of our resources are we willing to commit? – How much control do we wish to retain? • Factors to be considered: – Cultural and linguistic differences – Quality and training of local contacts and/or employees – Political and economic issues – Experience of the partner company
Companies seeking to enter a foreign market need to do the following: – Research the foreign market thoroughly and learn about the country and its culture – Understand the unique business and regulatory relationships that impact their industry – Use the Internet to identify and communicate with appropriate foreign trade corporations in the country or with their own government’s embassy in that country
Who Are the Main Actors in Export and Import? • Carrier: The entity handling the physical transportation of the goods, such as UPS, FedEx, and DHL • Customs: A governmental agency that monitors imports and collects import duties on goods coming into the country
Exporting: The sale of products and services in foreign countries that are sourced or made in the home country
• Importing: Buying goods and services from foreign sources and bringing them back into the home country – Also known as global sourcing
• Distributors: Export intermediaries who represent the company in the foreign market
What Is Global Sourcing? • Buying raw materials, components, or services from companies outside the home country
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Countertrade
- an international business transaction in which all or partial payments are made in kind rather than cash
( similar to barter)
LICENSING , FRANCHISING, AND OTHER CONTRACTUAL STRATEGIES
Contractual entry strategies in international business is a cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract.
Intellectual property is a ideas or works created by individuals or firms, including discoveries and inventions; artistic, musical, and literary works; and words, phrases, symbols, and designs.
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Know-how agreement- contract in which the focal firm provides technological or management knowledge about how to design, manufacture, or deliver a product or a service.
Master franchise is an arrangement in which an independent company is licensed to establish, develop, and manage the entire franchising network in its market and has the right to subfranchise to other franchisees, assuming the role of local franchisor.
Turnkey contracting is an arrangement in which the focal firm or a consortium of firms plans, finance, organizes, manages, and implements all phase of a project abroad and then hands it over to a foreign customer after training local workers.
Infringement of intellectual property is an unauthorized use, publication, or reproduction of products or services protected by a patent, copyright, trademark, or other intellectual property right.