Modes of entering global markets

Question 1

name the 5 modes of entering global markets

Answer 1

1. Import and export
2. Contractual agreements (licensing)
3. Joint venture and Strategic alliance
4. Offshoring
5. Outsourcing

Question 2

Explain importing and exporting

Answer 2

Importing is when goods are received from another country.
Exporting is when goods are sent to another country.
(This strategy doesn’t require significant capital as operations remain in the same country)

Question 3

Explain licensing in global expansion

Answer 3

licensing refers to a contractual agreement that allows one business to use the intellectual property of another. (e.g. patents, brand designs and business knowledge).

Question 4

Explain joint ventures and strategic alliances in reference to entering a global market

Answer 4

A joint venture is an association formed by 2 or more business entities and creating a new legal entity in the process.
A strategic alliance is an arrangement between 2 companies to undertake a mutually beneficial project while each retains its independance

Question 5

Explain offshoring

Answer 5

To have work completed in a different country (may be used to take advantage of specialist skill, cost of production, efficiencies and labour flexibility)

Question 6

Outsourcing

Answer 6

To contract work out to an external organisation (may be used to take advantage of specialist skill, exchange rates, cost of production, efficiencies and labour flexibility)