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Summarizing of exporting, global
sourcing(importing), licensing,…
Summarizing of exporting, global
sourcing(importing), licensing, franchising,
FDI, and other contractual agreements as a
method of doing business abroad
EXPORTING
The firm’s first foreign entry strategy.
Low risk, low cost, and flexible.
Popular with SMEs
Trade, trade deficits, trade surpluses are refers to
exporting.
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ADVANTAGES OF EXPORTING
Increase sales volume; improve market share.
Generate better profit margins.
Increase economies of scale.
Diversify customer base.
Minimize risk.
Maximize flexibility
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EXPORT DOCUMENTATION
Quotation or pro forma invoice
Commercial invoice
Bill of lading
Shipper's export declaration
Certificate of origin
Insurance certificate
GLOBAL SOURCING
Procurement of products or services from
suppliers located abroad for consumption in the
home country or a third country
It also called as global outsourcing, global
procurement or global purchasing (it amounts to
importing)
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RISK IN GLOBAL SOURCING
Lower-than-expected cost savings.
Weak legal environment, which can affect protection of
intellectual property.
Inadequate or low-skilled workers.
Overreliance on suppliers.
Risk of creating competitors
BENEFIT
Cost Efficiency :due to lower wages abroad, leading to
improve profitability.
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Franchising
Arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties or other compensation.
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Licensing
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Advantages for licensor
Low investment-
Low involvement-
Low effort, once established -
Low-cost initial entry strategy-
An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation
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