BIBM

• Research to gather knowledge and intelligence
• Choose the most appropriate entry strategies
• take advantage of foreign trade zones
• seek favorable customs classifications for exported products
• take advantage of investment incentives and other government support programs
• Lobby for freer trade and investment

• Free trade area
• Customs union
• common market
• Economic union
• (Political union)

It is the simplest and most common arrangement in which member countries agree to eliminate formal barriers gradually to trade in products and services within the bloc.

it is similar to a free trade area except that member states harmonize their external trade policies and adopt common tariff and nontariff barriers on imports from nonmember countries. An exporter from outside the bloc faces the same tariffs and nontariff barriers when trading with any member country of the bloc.

It is a market, in which trade barriers are reduced or removed, common external barriers are established, and products, services, and factors of production such as capital, labor and technology are allowed to move freely among the member countries.

Member countries enjoy all the advantages of early stages but also strive to have common fiscal and monetary policies.

• Expand market size
• achieve scale economies and enhanced productivity
• attract direct investment from outside the bloc
• acquire stronger defensive and political posture

• Increases overall sales and market share
• increases economies of scale
• diversifies customer base
• minimizes the cost of foreign market entry
• minimizes risk and maximizes flexibility

• fewer opportunities to learn about customers because no physical presence
• exposes the firm to tariffs and other trade barriers as well as fluctuations in exchange rates

In indirect exporting (mostly smaller) firms are contracting with intermediaries located in their home market. In direct exporting, exporting is typically achieved by contracting with intermediaries located in the foreign market.

it means modifying a product to make it fit the needs and tastes of the buyers in the target market.

It means "auf Rechnung"

1. Cash in advance
2. Letter of credit
3. Open Account (auf Rechnung)
4. Countertrade

• Barter (direct exchange of goods without any money)
• Compensation deals (payment in both goods and cash)
• Counterpurchase (the seller agrees to sell for a price and gets cash from buyer, in the second contract, the seller agrees to purchase goods from the buyer for the same amount of cash)
• Buy-back agreement (the seller agrees to supply technology or equipment to construct a facility, receives payment in form of goods the facility produces)

1. Foreign distributor
2. manufacturer's representative
3. trading company
4. export management company

He is a foreign market-based intermediary that works under contract for an exporter. He takes title to and distributes the exporter's products in a national market or territory. it often performs marketing functions such as sales, promotion, and after-sales service.

An intermediary contracted by the exporter to represent and sell its merchandise or services in a designated country or territory. They do not take title to the goods they represent and are most often compensated by commission. they do not maintain physical facilities, marketing or customer support. the exporter must handle these functions.

it serves as an intermediary that engages in import and export of various commodities. It assumes the international marketing function on behalf of producers, especially those with limited international business experience.

it acts as an export agent on behalf of a usually inexperienced client company. it finds export customers, negotiates terms of sale and arranges for international shipping.

Because they are not superior at performing all value-chain activities, and it is more cost effective to outsource these activities.

it refers to the procurement of services such as accounting, human resource functions, IT services.

1. Cost efficiency
2. ability to achieve strategic goals

• lower-than expected cost savings
• environmental factors
• weak legal environment

1. Advanced economies
2. developing economies
3. emerging markets

• EM are target markets (demand is growing fastest, growing middle class and businesses in emerging markets are important targets for machinery, equipment and technology sales)
• EM are Manufacturing bases (Home to low-wage, high-quality labor for manufacturing, large reserves of raw materials and natural resources)
• EM are Sourcing Destinations

1. Per-Capita Income (PPP)
2. Middle Class

• Political instability
• weak intellectual property protection
• bureaucracy, red tape, and lack of transparency
• poor physical infrastructure
• partner availability and qualifications
• likely resistance from family conglomerates

• Customize offerings to unique emerging market needs
• partner with family conglomerates
• target governments in emerging markets
• Skillfully challenge emerging market competitors

1. Franchising
2. Licensing

What does the licensor provide?

Intellectual property, supporting products

What does the licensee do to compensate the licensor?

lump-sum payment, down-payment plus royalty, products, know-how, cross-licensing

Advantages: does not require substantial capital investment, does not need a physical presence in the market

Disadvantages: licensing is a relatively passive entry strategy, profits tend to be lower than those from exporting or FDI

What does the franchisor provide?

Trademark-protected business concept, everything needed for its implementation (patents, know how etc.)

What does the franchisee do to compensate the franchisor?

Lump-sum payment, down-payment and royalty, other mark-ups and contributions

1. Turnkey contracting
2. Build-Operate-Transfer arrangements (BOT)
3. Management contracts
4. Leasing
5. Internationalization by professional service firms

The focal firm plans, finances, organizes, manages and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.