answer 9 questions with online sources for each question

Foreign market entry decision criteria Entry Mode selection Ways of entering foreign markets Contracts Distribution 1 International Marketing 11e: Terpstra, Foley, Sarathy 2 International Marketing 11e: Terpstra, Foley, Sarathy 1 of 3 Company goals and global strategy Size of the company in sales and assets. Prior international experience Risk tolerance Financial and management resources for expansion. Product line and the nature of the products Level of competition in a particular market. Criterion Indirect Direct Control Less control Higher the Control Incremental Marketing Costs Lower cost Higher the Costs Investment Requirements Less capital More capital required Administrative Requirements Less admin required Higher the administrative work Personnel Requirements Less skill required Higher levels of skilled management Legal and Political Environment More legal and political issues Risk Low risk High risk Market Potential Low potential Higher potential 3 Low Readiness = less intense entry modes (e.g., indirect export or export without FDI) High Readiness = more intense entry modes (e.g., FDI) 4 International Marketing 11e: Terpstra, Foley, Sarathy Indirect Exporting Direct Exporting Direct Exporting with FDI Foreign Manufacturing, Sales, and/or Distribution Licensing Joint Ventures and Strategic Alliances 5 International Marketing 11e: Terpstra, Foley, Sarathy 6 International Marketing 11e: Terpstra, Foley, Sarathy MARKET ENTRY MODE DETAILS  Indirect Exporting  Direct Exporting  Direct Exporting with FDI  Foreign Manufacturing and Sales  Licensing  Joint Venture International Marketing 11e: Terpstra, Foley, Sarathy 7 8 International Marketing 11e: Terpstra, Foley, Sarathy 1 of 2 Indirect Exporting - entry mode in which the manufacturer is not the exporter; instead, a third party conducts the export transaction. The Upside: Offers benefits of additional sales without risk and cost of direct involvement nor prior experience The D ownside: Provides the manufacturer with very little control or feedback and prevents the manufacturer from gaining important internationalization knowledge 9 International Marketing 11e: Terpstra, Foley, Sarathy 2 of 2 Piggybacking - a form of indirect export in which one product “rides” on the back of another from one national market to another. Export Management Companies (EMCs) - companies that specialize in exporting and handle the export transaction on behalf of the manufacturer. Export Trading Companies (ETCs) - companies that specialize in international trade, generally organized as vertically or horizontally integrated entities. 10 International Marketing 11e: Terpstra, Foley, Sarathy 1 of 2 Direct Exporting - entry mode in which the manufacturer directly sells to an importer in another country. The foreign importer may be the final consumer or an intermediary like an agent or distributor. Direct exporting offers greater control and feedback than indirect exporting but the costs and risks are greater. 11 International Marketing 11e: Terpstra, Foley, Sarathy 2 of 2 Agent - an individual or organization located in the foreign market that makes the international sale on behalf of the manufacturer. Distributor - an organization located in the foreign market that takes title of the manufacturer’s product and sells the product. Direct Sales - occurs when a manufacturer sells direct to foreign buyers; also called B2C ( such as through the internet) Direct exporting varies by the type of foreign partner used such as: Factors Forcing FDI: • Barriers to export success • Need for increased control and feedback • Sales and customer needs Types of FDI: • Marketing and sales offices • Overseas distribution • Foreign manufacturing 12 International Marketing 11e: Terpstra, Foley, Sarathy Foreign Direct Investment ( FDI ) means a financial investment in a foreign market involving ownership of foreign assets and/or foreign offices and employees. 1 of 3 13 International Marketing 11e: Terpstra, Foley, Sarathy Transportation costs or tariffs are high Direct or through licensing Foreign Assembly - produces domestically all or most of the components or ingredients of its product and ships them to foreign markets for assembly. Completely Knocked Down (CKD) - product is shipped in components and then assembled in the foreign market. 14 International Marketing 11e: Terpstra, Foley, Sarathy Marketing is handled by the firm. Best when marketing is the firm’s competitive advantage. Quality control and limited profits are drawbacks. Contract Manufacturing - when a firm’s product is produced in a foreign market by another producer under contract with the firm. 2 of 3 3 of 3 15 International Marketing 11e: Terpstra, Foley, Sarathy Wholly Owned Foreign Production Acquiring an existing local manufacturer is fast , eliminates a potential competitor, and takes advantage of existing contacts with labor and government. Greenfield longer but enables the use of the latest technology , avoids organizational culture clashes, and a ‘fresh start’ on building the brand. Wholly owned operations result in a greater percentage of the profits , more control, and increased experience and feedback. Wholly owned operations cost capital and management resources ; greater economic and political risk. 1 of 2 16 International Marketing 11e: Terpstra, Foley, Sarathy • Requires no capital for the licensor • Fast way into a foreign market • Gain in foreign market knowledge • Potential future competitor or opportunities for piracy. • Limited financial returns compared to other entry modes • Problems of controlling the licensee Licensing - arrangement with specified performance and payments from the licensee. 17 International Marketing 11e: Terpstra, Foley, Sarathy Typically, licensing income comes from a combination of at least 5 different sources. • Royalties • Technical assistance fees • Sale of materials or components to license • Lump -sum payments for rights/technology transfers • Technological feedback • Reciprocal license rights • Fees for engineering services • Management fees 2 of 2 1 of 3 18 International Marketing 11e: Terpstra, Foley, Sarathy P otentially greater returns, greater control, better market feedback, and more gains in international and market knowledge. Two or more firms create a new (third) firm that has shared ownership 19 International Marketing 11e: Terpstra, Foley, Sarathy Joint Venture - enough equity in a new company to have a voice in management but not enough to completely dominate the venture. Mixed Ventures - foreign government entities as opposed to foreign firms. 2 of 3 20 International Marketing 11e: Terpstra, Foley, Sarathy Strategic Alliances Involve partnerships between two or more firms but without the equity commitment of a joint venture Way to enter international markets, especially when local know -how is critical Objectives vary from research and development to marketing to distribution and covers most aspects of international market entry 3 of 3 21 International Marketing 11e: Terpstra, Foley, Sarathy 1 of 2 Financial and Pricing Considerations Marketing Support Considerations Communication Market Exclusivity 22 International Marketing 11e: Terpstra, Foley, Sarathy 2 of 2 23 International Marketing 11e: Terpstra, Foley, Sarathy • Primary and secondary research using online databases, identifying distributors of complementary products, and making use of trade associations, trade shows, and trade missions • Government resources such as the U.S. Commercial Service’s Gold Key or state -based resources Step 1: Identify as many potential partners as possible 1 of 2 24 International Marketing 11e: Terpstra, Foley, Sarathy Vertical Trade Mission - single industry. Horizontal Trade Mission a wide spectrum of industries but a single market or region. Vertical Trade Show - single industry. Horizontal Trade Show – wide spectrum of industries 2 of 2 Trade Missions Trade Shows Step 2: Visit the country and meet with potential partners 25 International Marketing 11e: Terpstra, Foley, Sarathy Not covered 26 International Marketing 11e: Terpstra, Foley, Sarathy • Size and number of wholesalers vary by country • Quality of service provided by wholesaler also varies Wholesaling in Foreign Markets 1 of 4 Sales Channel - means by which a manufacturer gets a product to market. Merchant Wholesalers - firms that perform the traditional role of buying products and selling to retailers. Single -line Wholesalers - firms that focus on a specific product line. Specialty Wholesalers - firms that carry a very narrow line of products, often to an equally narrow retail market . 27 International Marketing 11e: Terpstra, Foley, Sarathy • Sometimes a ‘dual economy’ exists between urban and rural sectors • Quality of service provided by retailers varies • Getting retailers to carry inventory can be difficult for new exporters Retailing in Foreign Markets 2 of 4 Pull Strategy - bringing consumers to the manufacturer: heavy consumer advertising. Push Strategy - incentivizing the channel (wholesalers, retailers) to “push” the product to buyers: uses promotions aimed directly at the wholesalers or retailers. 28 International Marketing 11e: Terpstra, Foley, Sarathy • Differences in physical space and expertise impacts product display • Level of promotion may force exporter to do its own advertising Retailing in Foreign Markets 3 of 4 Vending Retailers - traditional brick -and -mortar retail stores. Mail -order Retailers - catalogs and the internet. Direct -selling Retailers - a sales force to go directly to consumers. Types of retailers: 29 International Marketing 11e: Terpstra, Foley, Sarathy 4 of 4 P otential sales volume is high ------ more resource intensive. Direct Channels Indirect Channels