Export Strategy (Matt)

Question 1

What are the benefits of being a first mover?

Answer 1

o Pre-empt the key resources
o Establish standards
o Block brands and distributions
o Learn everything before its competitors

Question 2

What are the benefits of being a follower?

Answer 2

o Benefit from mistakes of the first movers
o Capitalise on blind spots
o Ride on the efforts of the first movers

Question 3

What are the entry mode levels?

Answer 3

o Intensity of investment (low or high)

o Control / Ownership (none / low or full / absolute)

Question 4

When should counter-trade be used?

Answer 4

Companies use countertrade when exporting and importing and when cash transactions are not an option

Question 5

Why do firms export?

Answer 5

• Expand sales
• Diversify sales
• Gain international experience

Question 6

What are the steps in an export strategy?

Answer 6

	Identify a potential market
	Match needs to abilities
     •	Does the firm have the capacity to meet the demand?
     •	Standardise or adapt products?
	Initiate meetings
     •	MUST BUILD TRUST with local distributors / partners / buyers
     •	May need a lot of meetings
     •	Negotiations conducted on terms 
	Commit resources

Question 7

What are the degrees of export involvement?

Answer 7

Direct and Indirect

Question 8

What errors are committed by businesses new to exporting?

Answer 8

• Lack of adequate market research

* Failure to attain expert advice

Question 9

What are the types of counter-trade?

Answer 9

• Barter
• Counter purchase
• Offset
• Switch trading
• Buyback

Question 10

Why would a contractional entry mode be used?

Answer 10

To market highly specialised assets and skills (intangibles)

Question 11

What are the different types of contractional entry modes?

Answer 11

	Licensing
	Franchising
	Management contracts
     •	One company supplies another with managerial services for a specific period of time
	Turnkey projects

Question 12

What are the different types of investment entry modes?

Answer 12

• Wholly-owned subsidiary
• Joint venture
• Strategic alliance

Question 13

What is the difference between joint ventures and strategic alliances?

Answer 13

A joint venture is two or more companies coming together to make a new company. A strategic alliance is a legal agreement with two or more companies to share resources, intel, trademarks and other assets. Entities also share the cost.

Question 14

What are the different types of joint ventures?

Answer 14

o Forward integration
o Backward integration
o Buyback joint venture
o Multistage joint venture

Question 15

What factors influence entry mode selection?

Answer 15

o	Cultural environment
o	Political and legal environment
o	Market size
o	Production and shipping costs
o	International experience