Introduction Exporting and importing are the most common modes of international business Exporting and importing are one of the fastest growing activities in the world
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World Trade 1960-2010
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Exporting Exporting the sale of goods or services produced by a company based in one country to customers that reside in a different country
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Exporting Entry mode is influenced by Ownership advantages the firms core competencies Location advantages the combination of sales opportunity and investment risk that creates favorable locations in foreign markets Internalization advantages reflect companies response to market imperfections that often create uncertainties Copyright 2015 Pearson Education, Inc. 14-5 Why Export? Reasons to export include Profits Productivity Diversification
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Importing and Exporting: Problems and Pitfalls Financial risks Dealing with Customer demand Dealing with communication technology Lack of international business experience Marketing challenges Top management commitment Government regulation Trade documentation
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Exporters: Initiation and Development Two approaches Incremental internationalization exporting is a learning process
Born global instant internationalization
global focus
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Approaches to Exporting Export approaches include Direct exporting involves independent intermediaries- representatives, distributors, or retailers- outside of the exporters home country Indirect exporting products are sold to an intermediary in the domestic market, which then exports them Passively filling orders from domestic buyers who then export the product Selling to domestic buyers who represent foreign end users or customers Copyright 2015 Pearson Education, Inc. 14-9 Importing and Exporting: Resources and Assistance Indirect Selling: Export intermediaries third party firms that market products and services abroad on behalf of manufacturers, farm groups, and distributors Export management company (EMC): contractual basis as an agent. Export trade companies (ETC): not a perfect solution, often have limited resources, assume too much control.
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Direct Selling Distributor Foreign retailers and end users Selling over the internet.
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Importing Importing the purchase of a good or service by a buyer in one country from a seller in another Types of importers Input optimizers: sourcing as a part of their global supply chain Opportunistic: looking for products that generates profit for them Arbitrageurs: highest quality products in lowest price
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Why Import? strategic advantages Reasons to import Specialization of labor Global rivalry Local unavailability Diversification
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Importing and Exporting: Resources and Assistance Customs agents enforce the rules of trade for a particular country Customs brokers help importers navigate the regulations imposed by customs agencies
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Countertrade Countertrade different arrangements that parties use to trade products via transactions that use limited or no currency.