The article on entering international markets continues, part 8
6. Direct EXPORTING
A. DIRECT: selling a product or service directly to a foreign firm by the home-country firm. Costs and prices may be lowest if production occurs in only a few locations around the world and the efficiently produced goods are exported to most markets. Pharmaceutical and clothing companies use this mode frequently for globalizing.
1. Sales Representatives/Paid by seller: foreign-based representatives who work on a salary/retainer plus incentive basis to locate buyers for a company’s products.
2. Distributors/Agents: purchase merchandise directly from the home-country firm to re-sell at a profit.
3. Direct Sales to End-User: A manufacturer of medical equipment, may be able to sell directly to hospitals. Other major end-users include foreign governments, schools, businesses and individual consumers.
ADVANTAGEOUS WHEN: there is limited sales potential in target country; little product adaptation is required; distribution channels are close to plants; there are high target-country production costs; there are liberal import policies; high political risk exists.
1) No investment in foreign production facilities is required;
2) Maintain more control; minimized risk and investment; speedy entry;
3) Maximize economies of scale; to prevent competitors from gaining ‘first-mover’ advantages in new markets;
4) Gain information about foreign competition;
5) Stabilize seasonal market fluctuations;
6) Reduces dependence on existing markets.
1) More expensive due to tariffs, marketing expenses, transport costs;
2) Sometimes difficult to coordinate the cooperation of exporter, importer, transport provider, and government;
3) Limited access to local information; company viewed as “outsider”;
4) Need to develop customer base and logistics of moving the goods overseas;
5) May be difficult to overcome trade barriers;
6) May lose control over product’s pricing and marketing;
7) Task of finding customers.
[tags] Market Entry, International business consultant, international business videos, what is international marketing, china podcast, international business podcast, global podcast, international marketing, international marketing tools, strategy, market research, international research, planning, international business, off shoring, outsourcing, Global business, marketing, business planning, marketing abroad, strategic consulting [/tags]