Sess 10-11 Dtd 28.1.14 - Modes of Entry

7/23/2019 Sess 10-11 Dtd 28.1.14 - Modes of Entry

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Terracotta sculpturesdepicting the armies ofQin Shi Huang, the rstEmperor of China.

Shaanxi province Date to 3rd centur !C Discovered " farmer in

#$%&. ' form of funerar art

"uried (ith the emperorin )#*+)*$ !C.

urpose (as to protectemperor in his afterlife -to ma e sure that hehad people to rule over.

Terracota Army,Xian


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Modes of Entry into Global MarketsSession #*/## dtd )0.#.#&


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Global MarketingGlobal marketers have to make global marketing

strategy decisions like:1. Target product/market

2. Mode of entry3. Time of entry. Marketing!mi" plan

#. $ontrol systems to check the performancein the foreign markets


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Modes of Entry into Global Market

%esource &eployment

$ o n

t r o l a n

d

' o r e

i g n

M a r

k e t ( r e s e n c e

)ndirect*"porting

&irect*"porting

+icensing

'ranchising

,oint-entures

c uisition/0holly! ned ubsidiary

Production in the

Home Market

Production Abroad

lo high

lo

high

'ssem"l - Contract 1fg


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'actors a ecting Modes of Entryinto Global Markets

1. 'irm si/e!. 0eso#rces. 0isk capacity2. Mgt. Attit#de3. Market potential4. "ro5t Target6. %ompetition7. 8no-ledge$experience9. :#siness En;ironment1


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Indirect Exportsrocess of exporting through domesticall

"ased exportintermediaries

. The exporter has no control over its productsin the foreign mar et.2sed " companies (hich lac resources,no(ledge or (ant to avoid nancial ris .

Types of Indirect Exports=#.Export Trading Companies).Export agents3.1erchant Traders&.!u ing houses


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Indirect Exports ntermediar provides support

services li e (arehousing, shipping,insuring and "illing for one or moresuppliers.

4ocate "u ers, present the product,ma e 5uotations, do documentationetc. in their o(n name.

'ct li e an outsourced ExportDepartment.

'ttractive to suppliers not familiar


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Indirect Exports7.cont7 ndirect exports

8ften "ear all commercial ris of exports.

)apan > half of the exports is throughlarge ETCs called 9Sogo shosha: ;Top 6 ET%s =

#.1itsu"ishi Corporation).1itsui - Co.3.Sumitomo Corporation

&. tochu


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'?0:E@> orlds biggest Trading %os as onApril !


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'?0:E@> orlds biggest Trading %os as onApril !


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Indirect ExportsAd;antages= ast mar et access - 4o( ris . 4ittle or no nancial commitment. The export

partner usuall covers most expensesassociated (ith international sales.

@ood for companies (hich consider theirdomestic mar et to "e more important.

@ood for companies >ust enteringinternational mar ets and have nointernational exposure.

The management team is not distracted. o direct handling of export complexities.


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Indirect Exportsisad;antages= 4o(er margin due to pa ment to

intermediar o control over price, distri"ution, sales,

mar eting, "u er etc. DonAt learn ho( to operate overseas. Lrong choice of mar et and distri"utor

ma lead to inade5uate mar et feed"acaMecting the international success of thecompan .

otentiall lo(er sales as compared todirect exporting.


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irect Exports Co.As have their o(n Export Dept. or some

direct foreign presence. 'llo(s economies of scale in production

"ased in the home countr . 'Mords "etter control over distri"ution. Lor s (ell till volumes are moderateN

Oer large volumes of export ma triggerprotectionism.

Types of irect Exports#. 1anufacturer or Service providerExporters.

). Sales epresentatives 6 mportingDistri"utors.


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irect ExportsMan#fact#rer ExporterExporters (ho manufacture the product in theirprocessing unit and then export.

@er;ice pro;idersrovide services, usuall T, TES, Soft(are - e/

"usiness.

1anufacturer Exporter6Service roviders can "e;E? s#**K Export 8riented 2nits2nits in ;E"Bs Export rocessing Pones


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irect Exports@EBs

Special Economic PonesAEBs'gri Export Pones F'EPsGECT"sElectronic Hard(are Technolog ar s@T"sSoft(are Technolog ar s:T"s

!iotechnolog ar s


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@tat#s ColdersStatus Holder Incentive Scheme (SHIS)

@tat#s %ategory Export"erformance

'?:$'?0*al#e D0s %rores

#. Export House FEHG

)*). Star Export House FSEHG#**

3 Trading House FTHG

Sess 10-11 Dtd 28.1.14 - Modes of Entry

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