How do companies enter foreign markets International Business I

Exporting Send a firm’s products or services to international destinations. – Indirect: without the firm’s ultimate involvement Cost  CEM (ads), MEA (no ads, own name) – Direct: Import without intermediaries  Export department. Export Sales Subsidiary

Countertrade Arrangements in which the flow of goods and services in both directions is the core of the transaction. – Pure Barter: acceptance of goods or services as payment. (sugar for oil) – Swith trading: three or more countries. PCs for Coffee UK Coffee for PCs Brazil Cofee from UK Italy

Countertrade (cont.) – Counterpurchase: Country A exports to Country B in return promises to spend some or all of the receipts on imports from B. No details, specific time (2 or 3 years) – Buyback: requires a company to provide machinery, factories, or technology and to buy products made from this machinery over an agreed period. – Offset: a foreign supplier is required to manufacture/ assemble the product locally and/or purchase local components as an exchange for the right to sell its products locally.

Contract manufacturing Contractual agreement between a company and a foreign producer under which the foreign producer manufactures the company’s product. – The company controls promotion and distribution. – Pharmaceutical industry.

Licensing In this agreement, the international company, the licensor, agrees to make available to another company abroad, the licensee, use of its: – Patents and trademarks – Manufacturing process – Know-how – Trade secrets – Managerial and technical services.