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COMM 211 > Quiz 2: Chapters - 12, 13 > Flashcards

Quiz 2: Chapters - 12, 13 Flashcards

1
Q

CHPT 12: What must be done before starting business in a foreign market

A

Weight out the risks and rewards associated with doing business in that country

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2
Q

CHPT 12: how does entering early affect starting a business in a foreign market

A

First/ Early entry:
- Advantages: establish brand, sales volume, experience curve, market share
- disadvantages: pioneering costs

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3
Q

CHPT 12: how does being a late mover/enterer affect starting business in a foreign market?

A

ADVANTAGES:
- more experience, avoid pioneering costs
DISADVANTAGES:
- switching costs, cost disadvantage

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4
Q

CHPT 12: DEFINITIONS:

  1. pioneering costs
  2. switching costs
  3. cost disadvantages
  4. EXPERIENCE CURVE
A
  1. pioneering costs = costs associated with establishing the market: promotion, regulation, legal
  2. SWITCHING COSTS = costs associated swithcing suppliers, brands; could be time, loss of product, loss of revenue from seller
  3. COST DISADVANTAGES = having a higher cost of operation/production than competitors within the same industry
  4. EXPERIENCE CURVE: more experience = less cost of production and increase efficiency
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5
Q

CHPT 12: what is scale of entry? how does it affect entering a foreign market?

A

scale of entry refers to the amount of resources required to start business in that foreign market ex:

Large scale: Factories, large shopping stores (has to be built, lots of capital needed to start)

small scale: a single retail clothing location

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6
Q

CHPT 12: properties of large and small scales of entry

A

Large:
- requires significant commitment and rapid entry
- long term impact and cannot be easily reversed,
- captures first mover advantages
-large commitment to one country often = less resources to support expansion to other markets

SMALL;
-limits firms exporsure to just one market
-allows firm to learn and diversify by building a presence in that market.

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7
Q

CHPT 12: what are the 5 general indicators of market potential

A
  1. Demographic characteristics
  2. Geographic characteristics
  3. Economic characteristics
  4. sociocultural characteristics
  5. Political and legal characteristics
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8
Q

CHPT 12: What are the Demographic characteristics ?

A
  • education
  • population size and growth
  • population age composition
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9
Q

CHPT 12: what are the geographic characteristics?

A
  • climate
    -country size
  • population density
  • transportation/ accessibility
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10
Q

CHPT 12: what are the economic characteristics?

A

GDP size and growth
income distribution
industrial infrastructure
natural resources
financial and human resources

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11
Q

CHPT 12: what are the Sociocultural characteristics?

A
  • consumer lifestyles, beliefs, and values
  • business norms
    -cultural norms
  • languages
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12
Q

CHPT 12: what are the Political/legal characteristics?

A

national priorities
political stability and compatibility
government attitudes
government bureaucracy
monetary and trade regulations

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13
Q

CHPT 12: ADVANTAGES AND DISADVANTAGES OF EXPORTING:

A

advantages:
- avoids costs of establishing manufacturing opeerations in the host country
- helps a firm achieve experience curve and location economies

disadvantages:
- exporting from firms home base may not be appropriate if there are lower cost locations for manufacturing abroad

  • high transport costs can make exporting uneconomical, particularly for bulk products
  • tarrif barriers can make exporting cost $$$

-foreign agents often carry the products of competing firms and so have divided loyalties

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14
Q

CHPT 13: Don’t change Product + Don’t change communications =

A

Straight extension

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15
Q

CHPT 13: Don’t change Product + adapt communications =

A

Communication adaptation

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16
Q

CHPT 13: Adapt product + Don’t change communications =

A

Product adaptation

17
Q

CHPT 13: Adapt product + Adapt communications =

A

Dual adaptation

18
Q

CHPT 13: Readiness to export/import is made up of what factors

A

export:
Product readiness
(What international customer needs does your product satisfy?)

Company Readiness
(Do you have top-level commitment, resources, skills, and knowledge?)

IMPORT:
Product readiness
(What needs does the product or part satisfy for your value chain?)

Company Readiness
(Do you have top-level commitment resources, skills , and knowledge?)

19
Q

CHPT 13: Why would a firm choose to export? What are the Promises of exporting?

A
  • large revenue and profit opportunities are to be found in foreign markets
  • international market is normally much larger than the firm’s domestic market therefore increase ^^

-achieve economies of scale, lowering unit costs

  • not exporting often means loss of gains
20
Q

CHPT 13: Why would a firm choose not to export? what are the pitfalls of exporting?

A
  • Fucktons of paperwork, complex formalitites, delays, errors, sooooo mcuh work
  • time involved in preparing documentation often amounts to 10% of the final value of goods exported

-poor market analysis, identification of opportunities, expertise, failure to customize the product based on foreign market needs, failure to effectively communicate the product (promo, distribution, etc)

  • poor securing financing
21
Q

CHPT 13: what are the keys to improving export performance? (4) ESII

A

-Export strategy
-Service Providers
- International Comparisons
- information source

22
Q

CHPT 13: what comprises of international comparisons:

A
  • Collect information: trade associations, government agencies, banks
  • Japan, Germany

-MITI (ministry of international Trade and Industry,

-Sogo shosha

23
Q

CHPT 13: what comprises of information sources:

A

Its a source for information, Canadian businesses use these for the scoop:

Federal level:
-Global affairs canada, ISEDC, stats canada, EDC
-international trade Centers, Canada Trade Missions
-Forum for international Trade training (FITT)

Provincial Level:
-Local Chambers of commerce, trade representation offices
- commercial banks

24
Q

CHPT 13: what comprises of Service providers:

A

Service providers = freight forwarders, export management companies, export trading or packaging companies, customs brokers, confirming houses, export agents and merchants, economic processing zones

AND

EMCs

25
Q

CHPT 13: What is an EMC

A

EMC = Export management company

-export specialists act as export marketing department/ international department for their clients
-hire one of these mfs if you wanna have all your exporting concerns taken care of.

26
Q

CHPT 13: what is “PREFERENCE” in exporting

What can be used if there is a lack of trust?

A

When the importer pays for the good before it ships, that exporter preference

vice versa for importers

BAnk issued letter of credit

27
Q

CHPT 13: What 7 steps make up Export strategy? HIRE BHK

A
  1. Hire EMC
  2. Initially focus on-a few markets
  3. Recognize time and managerial commitment
  4. Enter market on small scale
  5. Build relationships with local distributors/customers
  6. Hire local personnel
  7. Keep option of local production in mind
28
Q

CHPT 13: What are the 6 entry modes? J.W. TELF

A
  • JOINT VENTURE
  • WHOLLY OWNED SUBSIDIARY
  • TURNKEY PROJECTS
    -EXPORTING
  • LICENSING
  • FRANCHISING
29
Q

CHPT 13: what is countertrade? What are its 5 types?

A

Counter trade is an alternative means of structuring international sale (non-monetary)

  • Barter (Good for Good)

-Counter purchase (ill buy ur company’s goods if u buy my company’s goods)

  • offset (I’ll buy your company’s goods if you buy my country’s goods)
  • Switch trading (trading goods in credits like optimum)
  • compensation of buybacks (when a firm supplies some kind of tech/equipment or service to a country, and the country takes a percentage of the firms output as payment)
30
Q

CHPT 13: Pros and cons of Countertrade:

A

Pros :
- gives firm a way to finance export deals
- often the only option when doing business in poor countries
- many countries prefer it
- export opporitunity
- government requirement

Cons:
- may involve exchanges of unusable goods
- most attracting to large multinationals
- small and medium sized exporters may need to avoid countertrade bc of lack of worldwide network

31
Q

CHPT 13: Implications for business?

A
  • Accurate documentation is necessary, shit can get fucked up quick
  • EDC (export development Corporation Canada) is often used as a saftey net for Canadian exporters
32
Q

CHPT 13: What is Franchising?

A
33
Q

CHPT 13: What is Licensing?

A

granting a foreign entity (the licensee) the right to produce and sell the firms product in return for a royalty fee on every unit sold.

34
Q

CHPT 13: What is Exporting?

A

the sale of products produced in one country to residents of another country

35
Q

CHPT 13: What is a wholly owned subsidiary?

A

A subsidiary in which the firm owns 100 percent of the stock.

36
Q

CHPT 13: What is a turnkey project?

A

A venture in which a firm agrees to set up an operating plant for a foreign client and hand over the “key” when the plant is fully operational.

37
Q

CHPT 13: what is a joint venture?

A

A cooperative undertaking between two or more firms.

COMM 211 (7 decks)

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