13.1: The Promice and Pitfalls of Exporting Flashcards
What is exporting from a strategic perspective?
Exporting from a strategic perspective is considered one of several strategic options for profiting from international expansion, involving the sale of goods or services to foreign markets.
What is the difference between importing and exporting?
Importing is like exporting in reverse; the importing country and its companies buy from companies in other countries, and the rules and regulations for both are often different and complex.
Why is exporting a preferred mode of foreign market entry?
Exporting is preferred because it represents a low commitment way for companies, especially SMEs, to engage in the global marketplace and reach international customers.
What percentage of companies going international are SMEs (Small and Medium Enterprises)?
More than 80 percent of companies going international are SMEs.
How has the volume of export activity in the global economy changed recently?
The volume of export activity has increased due to the ease of exporting from a large number of countries, reduced trade barriers, and economic agreements like the European Union and CUSMA.
How have modern communication and transportation technologies impacted exporting?
These technologies have alleviated logistical problems, reducing costs, distance, and cycle time associated with exporting, although most goods still travel via large ships.
What proportion of U.S. companies that trade internationally do so via exporting?
Approximately 85% of U.S. companies that trade internationally are engaged in exporting, with a significant portion being SMEs.
What challenges do companies face when exporting?
Companies must identify market opportunities, avoid unanticipated problems, understand export and import financing, and manage foreign exchange risk, among other challenges.
What is countertrade and why might it be used?
Countertrade is an alternative to traditional purchasing and allows payment for exports to countries with weak currencies through the exchange of goods and services rather than money.
What is autarky, and is it generally considered a practical economic policy?
Autarky is the quality or belief that a country should be self-sufficient and avoid external trade. It is generally viewed as idealistic and impractical since countries cannot produce all goods and services efficiently on their own.
What is the bottom line for companies as the global marketplace becomes more viable?
Companies must adapt by strategically engaging in exporting and operationally seeking opportunities globally, using suppliers from various regions and exporting to new markets.
What is the great promise of exporting for most firms?
The great promise of exporting is the large revenue and profit opportunities found in foreign markets, which are often much larger than domestic markets.
How can exporting enable a firm to achieve economies of scale?
By expanding the market size, exporting can lower a firm’s unit costs through economies of scale, leading to growth and cost reduction opportunities.
What is often the most used way to conduct cross-border trade for companies?
Exporting is the most commonly used method for conducting cross-border trade.
How can product naming affect exporting?
Product naming can be tricky due to language differences and cultural nuances, as seen with the Boggs Cranberry Liqueur case where the product name had an unintended meaning in the UK
