Unit18.International Marketplace
Unit 18. International Marketplace
InternationalMarketplace Onceacompanyhasdecidedto sell inaforeigncountry,it must determine the best mode ofentry.Its choices are exporting,joint venturing,and direct investment.Figure 18.1 shows threemarket entry strategies,along with theoptionseach one offers.As thefigure on the next chartshows,each succeeding strategy involvesmorecommitment and risk,but also more controlandpotentialprofits
International Marketplace ◼ Once a company has decided to sell in a foreign country, it must determine the best mode of entry. Its choices are exporting, joint venturing, and direct investment. Figure 18.1 shows three market entry strategies, along with the options each one offers. As the figure on the next chart shows, each succeeding strategy involves more commitment and risk, but also more control and potential profits
DecidingHowtoEntertheMarket(See P306 Fig. 19.1)Joint yenturing (Jy)ExportingDirectinvestmentLicensing.Contract manufacturingIndirectAssemblyfacilities.Management Contracting.Manufacturing facilities·Direct.Joint OwnershipAmountof Commitment,risks,control and profit potential involved
3 Deciding How to Enter the Market (See P306 Fig. 19.1) Exporting •Indirect •Direct Joint venturing（JV） •Licensing •Contract manufacturing •Management Contracting •Joint Ownership Direct investment •Assembly facilities •Manufacturing facilities Amount of Commitment, risks, control and profit potential involved ➔
ExportingExportingis thesimplest wayto enteraforeignmarket is through exporting.The company maypassively export its surpluses from time totime,orit may makean active commitment toexpand exports to a particular market.In eithercase,the company produces all its goods in itshome country.It may or may not modify themfor theexport market.Exporting involves theleast change in the company's product linesorganization,investments,ormission
Exporting ◼ Exporting is the simplest way to enter a foreign market is through exporting. The company may passively export its surpluses from time to time, or it may make an active commitment to expand exports to a particular market. In either case, the company produces all its goods in its home country. It may or may not modify them for the export market. Exporting involves the least change in the company's product lines, organization, investments, or mission
Companies typically start with indirectexportingworking through independent internationalmarketing intermediaries.Indirect exportinginvolveslessinvestmentbecausethefirm doesnot reguire an overseas sales force or set ofcontacts.It also involves less risk.Internationalmarketingintermediaries-domestic-basedexportmerchants or agents,cooperative organizations,and export-managementcompanies-bringknowhow and servicesto the relationship,sothesellernormallymakesfewermistakes
◼ Companies typically start with indirect exporting, working through independent international marketing intermediaries. Indirect exporting involves less investment because the firm does not require an overseas sales force or set of contacts. It also involves less risk. International marketing intermediaries—domestic-based export merchants or agents, cooperative organizations, and export-management companies—bring knowhow and services to the relationship, so the seller normally makes fewer mistakes