GBA 440 – Module 7 AVP Transcript

Slide 1

Title slide

Slide content:

GBA 440 Module 7

Slide 2

Slide title:

Company Exports

Slide content:

  • Corporations export for a number of reasons.
  • Expand sales
  • Diversify sales
  • Gain experience
  • Companies may sell their products to buyers directly or indirectly.

Narrator:

Corporations use a number of strategies to enter new markets. They use exporting, importing, countertrade, contractual agreements, and investments to enter new markets. These tactics help expand sales, diversify sales, and gain experience.Companies expand sales to increase market share. Companies may diversity sales in order to decrease risk and production costs. Corporations may use export strategies to gain experience in foreign markets.Companies may also sell their products to buyers directly or indirectly. They are represented by agents and export and import management companies. Exports are financed through advance payments or open accounts. Businesses can hire agents, export management companies, or use direct exporting to enter new markets.

Slide 3

Slide title:

Countertrade

Slide content:

  • Tangible goods and services are sold through a variety of methods.
  • Countertrade
  • Bartering
  • Offset
  • Switch trading
  • Buyback

Narrator:

Tangible goods and services are sold through a variety of methods including countertrade, barter, offset, switch trading, and buyback. Countertrade occurs when good or services are fully or partially paid for with other goods and services. Bartering occurs when no money is exchanged. Countertrades involve the sale of goods or services to a country by a company that promises to purchase a specific product in the future. Offset agreements involve use of hard currency in the exchange for a promise to purchase an unspecified product in the future. Switch trading occurs when one company sells its obligation to another. Buyback occurs when companies trade equipment in return for products created with the equipment.These methods are used when importers do not have the necessary currency for purchasing goods or services.

Slide 4

Slide title:

Contractual Entry Modes

Slide content:

  • Intangible goods are sold through a variety of contractual entry modes.
  • Licensing
  • Franchising
  • Management contracts
  • Turnkey projects
  • Investments can be made through joint ventures, strategic alliances, or wholly-owned subsidiaries.

Narrator:

Intangible goods are sold through a variety of contractual entry modes including licensing, franchising, management contracts, and turnkey projects.

Licensing involves use of property rights for a specified period of time. Examples include images or software.Franchising involves an agreement in which the buyer receives the right to intellectual property and support over a period of time. Franchisees usually pay royalties to the franchiser.Management contracts involve use of expertise over specific periods of time. Examples include power plants and theme parks. A turnkey project involves design, construction, and test production facilities of one company for another.These expansion methods have a number of advantages and disadvantages, and each requires different levels of investment.

Slide 5

Slide title:

Investment Entry Modes

Slide content:

  • Investments can be made through a number of entry modes.
  • Joint ventures
  • Strategic alliances
  • Wholly owned subsidiaries
  • Each mode has advantages and disadvantages.

Narrator:

Investments can be made through joint ventures, strategic alliances, or wholly owned subsidiaries.

Joint ventures occur when two or companies come together to achieve a common business objective. Configurations may include forward integration, backward integration, buyback, or multistage joint ventures.Strategic alliances occur when two or more companies come together to achieve objectives associated with each organization. Wholly-owned subsidiaries are owned and controlled by a single parent company. Companies consider cultural, political, and legal environments, market size, production and shipping costs, and their level of international experience when choosing one of these entry modes.

Slide 6

Slide title:

Product Development Strategies

Slide content:

  • Companies create new business opportunities through globalization and must address the wants and needs of new audiences.
  • Standardization versus adaptation
  • Laws or regulations in the host country
  • Cultural differences
  • Brand recognition
  • National image
  • Counterfeit goods
  • Shortened product life cycles

Narrator:

Companies create new business opportunities through globalization. They must address the wants and needs of new audiences. Concerns include standardization versus adaptation, laws or regulations in the host country, cultural differences, brand recognition, national image, counterfeit goods, and shortened product life cycles.

Companies may decide to standardize or adapt their products to customers’ tastes within the home country. This decision may be influenced by similarities between the home and host country’s culture, markets, purchasing power, and laws or regulations within the host country. The company’s brand recognition may be influenced by translation, the product’s country of origin, and reputation. These factors may influence customer choices and encourage unauthorized reproductions on the black market. Customers in various markets use technology to access the latest information on products and services. Customers may use the Internet to stay up-to-date on new products or services and purchase items before they are even launched in their countries. These practices may force companies to enter new markets before they planned to do so. These changes shorten product life cycles. Businesses consider these issues when creating promotion and distribution strategies.

Slide 7

Slide title:

Pricing

Slide content:

  • Companies consider a number of factors while pricing product in foreign markets.
  • Advertising costs
  • Distribution costs
  • Value density
  • Controls

Narrator:

Companies consider a number of factors when pricing product in foreign markets. These issues include advertising and distribution costs, value density, and controls. Advertising costs include costs associated with creating and disseminating sales messages to the target audience. Considerations include access to culture, mass media, distribution systems, pricing and the type of product. Distribution costs include those associated with agreements between wholesalers and retailers. Companies may consider channel type, length, or level. The number of wholesalers and distributors can affect the price. However, the size and weight of the product or value density, can affect distribution costs as well. Corporations set policies as a means of control. Differences in culture and interpretation may cause retailers to lose money as they interpret return policies based on relative sets of standards. These issues, along with theft and corruption, cause higher prices for consumers.