Modes_of_Entry-2

Modes_of_Entry-2 - Business Strategy Mode of Foreign Entry Entry Mode Classification Exporting Home Country Indirect Exporting Direct Exporting

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Business Strategy -- Mode of Foreign Entry
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Entry Mode Classification Exporting Indirect Exporting Direct Exporting Licensing Franchising Strategic Alliances (SA) Collaborations between companies Joint ventures Wholly Owned Manufacturing Subsidiary (WOMS) The company commits investment capital in plant and machinery. Home Country Host Country Degree Of Involvement (e.g., Ownership and Control Operation/Production)
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Different Export Models Firm Trading Company Or EMC Local Distribution Indirect Exporting , using piggybacking, consortia, export management companies, trading companies Direct Exporting , using host country agent or distributor using own sales subsidiary including mail order and Internet Home Country Host Country Exporting accounts for some 10% of global activity.
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Direct Exporting Product Shipment Export Pricing Local Distribution Getting paid Legal Issues After-Sales Services
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Product Shipment Duty Free Depot Warehouse Warehouse Home Country Host Country Customs Shipping Documents -- Bill of Lading e.g., SEZ in China Maquilas in Mexico
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Product Shipment Transportation The shipment of the product to the border of the country is usually handled by an independent freight forwarder Clearing through Customs Unloaded at the national border, the product will go from the ship or airline to a customs-free depot before being processed through customs Warehousing After entering the country, the goods will often require storage Shipping Documents – Bill of Lading
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Export Pricing Price Quotes Prices quoted CIF (cost-insurance-freight –the seller accepts the responsibility for product cost, insurance, and freight) is the recommended alternative for an export marketer. Trade Credit A high price can often be counterbalanced by beneficial trade credit terms arranged by sellers Price Escalation Due to transportation costs, tariffs and other duties, special taxes, and exchange rate fluctuations, export prices tend to escalate – FDI as a “Knockdown” Plant to reduce tariffs Lowering export price to subsidiary to avoid tariff, but harder repatriating funds
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Wholesaler Retailer Wholesaler Retailer Manufacture Wholesaler Retailer Wholesaler Retailer Foreign Importer
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This note was uploaded on 02/14/2012 for the course MKT 4443 taught by Professor Robertmcclaren during the Fall '10 term at LSU.

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Modes_of_Entry-2 - Business Strategy Mode of Foreign Entry Entry Mode Classification Exporting Home Country Indirect Exporting Direct Exporting

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