Market entry strategies Flashcards
Direct Exporting
Small and medium sized firms, cheap/flexible
Do everything yourself
Indirect Exporting
Manufacturer uses independent organizations located in the producer’s country
Export buying agent
Finds best stuff in country for you
Broker
Puts you in touch with companies and customers in foreign countries (expensive)
5 main entry modes of indirect exporting
Export buying agent Broker Export management company/ export house Trading company Piggyback
Export management company/export house
Runs everything related to export procedure
Trading company
Does everything related to export procedure + shipping+ insurance
Piggyback
Share responsibility (rider uses distribution channel of carrier)
Advantages to licensing (4)
Provide additional profitability with little initial investment
Provides method of circumventing tariffs, quotas and other export barriers
Attractive ROI
Low costs to implement
Disadvantages to licensing (5)
Limited participation Return may be lost Lack of control Licensee may become competitor Licensee may exploit company resources
Contract Manufacturing
- Company provides technical specifications to a subcontractor or local manufacturer
- Allows company to specialize in product design while contractors accept responsibility for manufacturing facilities
Franchising
Contract between parent company-franchisor and franchisee that allows the franchisee to operate a business developed by the franchisor in return for a fee and adherence to franchise-wide policies
Joint Venture
Entry strategy for a single target country in which the partners share ownership of a newly-created business entity
Forms of investment
Joint ventures
Minority or majority equity stakes
Outright acquisition
