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Methods Of Exporting
There are two basic methods of exporting.
1. Indirect exporting
2. Direct exporting
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Indirect Method
Under the indirect method, you hire aforeign sales representative who acts asyour intermediary. This company or
individual is responsible for doing the actualexporting, thus you have no contact with theoverseas buyer. Plus, you usually assume noresponsibility for transporting the product to
its destined market.
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Filling orders fromdomestic buyers whothen export the product.
These sales are indistinguishable fromother domestic sales as far as theoriginal seller is concerned. Someone
else has decided that the product inquestion meets foreign demand. Thatparty takes all the risk and handles all of the exporting details, in some cases
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Seeking out domesticbuyers who representforeign customers.In this case a company may know its
product is being exported, but it is still
the buyer who assumes the risk and
handles the details of exporting.
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Exporting throughintermediariesWith this approach, a company
engages the services of an
intermediary firm capable of findingforeign markets and buyers for itsproducts.
Export management companies(EMCs), export trading companies
(ETCs), international trade consultants,and other intermediaries can ive the2/25/11 66
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Licensing
A business arrangement in which the
manufacturer of a product (or a firmwith proprietary rights over certaintechnology, trademarks, etc.) grants
permission to some other group orindividual to manufacture that product(or make use of that proprietarymaterial) in return for specified
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Franchising
Franchising is the practice of usinganother firm's successful business
model. A franchise is a right granted toan individual or group to market acompany's goods or services within acertain territory or location.
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Contracting
Agreements with foreignmanufacturers to produce your
product, as opposed to exporting yourproduct, are referred to as contractmanufacturing.
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Piggyback Marketing
Piggyback marketing is an arrangement inwhich one firm distributes a second firm'sproduct or service. The second company
adds value by offering a more completesolution to the foreign market.
The second company piggybacks its
products on to the international market,without incurring the marketing anddistribution costs associated with exporting.
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Remarketer
A remarketer purchases productsdirectly from the manufacturer, and
repackages the products according totheir own specifications. They then sellthese products overseas through theircontacts in their own names and
assume all risks.
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2. Direct Exporting
With direct exporting the exporterhandles every aspect of the exportingprocess.
● Market research
● Foreign distribution
● Collections
The direct method, however, requires
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Methods of directexporting
1. Sales Representatives
2. Distributors
3. A Foreign Retailer
4. Direct sales to the End User
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Sales Representatives
A sales representative is often called a
manufacturer's representative or asales agent. The term "salesrepresentative" is preferred becausethe term "agent" has legalconnotations in some countries.
He uses the company's product,literature and samples to present the
roduct to otential bu ers. And he2/25/11 1414
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Distributor
A foreign agent who sells for a supplier
directly and maintains an inventory of
the supplier's products.
Use a distributor if you need to
maintain inventory on the foreign
country and do not want to maintain
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Foreign Retailer
A Company may sell directly to a
foreign retailer. These transactions
often involve consumer products.
Effective in countries that have large
retail chains.
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End User
A company may sell directly to a foreignend user. Selling overseas may incur someadded costs. Unless other arrangements
are made, the seller is responsible for:
Shipping
Payment collection
Product support and service
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Other Methods Of Exporting
1. Subsidiary
2. Joint Venture
3. Strategic Alliance
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1. Subsidiary
Companies that truly want to commit toexporting to a market form a subsidiary.
Subsidiaries are usually formed aftermarket success has been achieved byother methods.
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2. Joint Venture
A joint venture brings together yourfirm and a foreign company withsimilar goals to establish a market
entry and a distribution network.Each partner brings specialized skillsand contributes to the endeavor.
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Strategic Alliance
A strategic alliance is a form of presence in an overseas market that ismore than a simple buy/sellagreement.
A strategic alliance may be one ormore of the following agreements:
1. Product development
2. Distribution agreement
3 Cross licensing2/25/11 2121
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