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Selecting and Managing Entry Modes - Coggle Diagram
Selecting and Managing Entry Modes
Three Levels of Entry Modes
Contractual Entry
Franchising
Licensing
Management Contracts
Turnkey Projects
Direct Entry Modes
Joint Ventures
Strategic Alliance
Wholly-owned subsidiaries
Common Entry
Importing
Countertrade
Expoting
Entry Mode
Institutional arrangement by which a firm gets its products, technologies, human skills, or other resources into a market.
Why Companies Export?
Expand sales - to achieve economic of scale when the domestic market saturated.
Diversify sales - offset slow sales in one national market another and level off cash flow
Gain experience- low cost, low risk way to gain valuable international experience.
4 steps in develop an export strategy
Step 2: Match needs to abilities = satisfy design/ prod
Step 3: initiate meetings = local distributors & buyers
Step 1: Identify a potential market = market research
Step 4: commit resources = objectives & resources
Degree of export involvement
Direct - rely on either local sales representatives or distributors.
Indirect - use intermediaries such as agent, export management company, and export trading companies
2 basic forms of exporting: direct and indirect
Direct exporting: Practice by which a company sells its products directly to buyers in a target market.
Indirect Exporting: Practice by which a company sells its product to intermediaries who then resell to buyers in a target market.
Agent: tends to focus their promotional efforts on the products of the company paying the highest commission.
Countertrade
Selling goods or services that are paid for, in whole or part with other goods or services.
Provide access to markets that are otherwise off-limits because of a lack of hard currency.
A major benefits is that it conserves foreign currency for cash-strapped nations.
Four Contractual Entry Modes
Licensing, 2. Franchising, 3. Management Contracts, 4. Turnkey Projects
Selecting Partners for Cooperation
Commitment: Each partner must be firmly committed to the stated goals.
Trustworthiness: Each partner must be trustworthy
Cultural knowledge: Each party's managers must be comfortable working with people of other cultures
Valuable contribution: A suitable partner must have something valuable to offer.