WAYS TO ENTER FOREIGN MARKETS
4 strategies involving the use of agents, or direct export
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updated 2014 July 02
 
INTRODUCTION There are several ways of talking about getting involved in international business. 

First, you can discuss your overall reasons - are your reasons proactive because you thought about it logically, or are they reactive because you are reacting to some business situation.
 www.witiger.com/internationalbusiness/whyexport.htm

You can discuss it from the perspective of whether you do it by yourself, or with someone else- and there are many types of collaborative relationships 
 www.witiger.com/internationalbusiness/collaborativerelationships.htm

And you can discuss whether you will try to develop the relationship by yourself, or with an agent, and if you use an agent, what are the advantages and disadvantages - which is what we will do in this unit.
..
 
http://www.witiger.com/powerpoints/going~international/sld009.htm If you are viewing this material online, click on the screen capture to the left and go through slides 9 - 14

It is good for management students to reflect on this because it is similar to the "decision tree" you'd use in the real world.

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Ways to enter foreign markets - the main categories
  • exporting
    • direct to customer
    • through agents
    • through trading house (Korea, Japan)
  • importing
    • direct from source
    • through broker
    • through trading house (Korea, Japan)
  • foreign manufacturing
    • wholly owned subsidiary
    • joint venture
    • alliances
    • contract manufacturing
  • franchising
    • food service
  • licensing
    • branded clothing
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Various "Choice of Entry Modes", or methods of Exporting
 
Mode 1 Mode 2 Mode 3 Mode 4 Mode 5 Mode 6
Exporter Exporter Exporter Exporter Exporter Exporter
|
direct
|		 agent for 
Exporter
|		 |
agent for
Buyer		 agent for
Exporter
|
agent for
Buyer		 |
mail order
catalogue sales
|		 |
e-commerce
|
Buyer Buyer Buyer Buyer Buyer Buyer
A powerpoint explaining the relationships noted above, along with an explanation of the Advantages and Disadvantages of each Entry Mode, can be found online

It can be downloaded at http://www.witiger.com/powerpoints/export~import~routes.ppt

The decision of an Exporter to use a particular Entry Mode depends on several factors

A powerpoint explaining the relationships noted above, can be found online
It can be viewed at http://www.witiger.com/powerpoints/ex~im~routes/sld001.htm
 

http://www.witiger.com/powerpoints/ex~im~routes/sld001.htm
When you look at this powerpoint, note the advantages and disadvantages of each option.
 
http://www.witiger.com/powerpoints/ex~im~routes/sld003.htm When you have no middle person and deal direct between the exporter and importer there are advantages and disadvantages

Advantages
- costs minimized
- save money not hiring an agent
- communicate directly with customer protects against misunderstandings

Disadvantages
- you will need people in the company who have all the skills to deal directly with the customer
including language capability
- you need to have access to people on your own staff who know all the trade documentation processes

Additional Advantages and Disadvantages for each Entry Mode are found
www.witiger.com/powerpoints/ex~im~routes/sld004.htm to  sld008.htm
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This is a screen capture from the powerpoint showing the slide discussing an expanded explanation of the "Buyer"
http://www.witiger.com/powerpoints/ex~im~routes/sld009.htm

For the purposes of this unit, the buyer was simply a label put on the diagram, but in reality the buyer is a complex combination of several entities.

Who is the buyer
buyer = a group of people including

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