International Business – Chapter 13

Most firms begins their involvement
in overseas business by exporting that is, by selling some of their regular production overseas.
Indirect exporting is simpler than direct exporting because it requires neither special expertise nor large cash outlays by the company producing the products. Instead, the work of exporting the product
is done by other home country-based companies,which can (a) sell for the manufacturer, (b) buy for their overseas customers, (c) buy and sell for their own accounts, or (d) purchase on behalf of foreign middlemen or users
Cooperative exporters
Established international manufacturers that export other manufacturers’ goods as well as their own.
Direct exporting
The exporting of goods and services by the firm that produces them
To engage in direct exporting
the export business is handled by someone within the firm.
Sales company
a business established for the purpose of marketing goods and services, not producing them.
Trading companies
Firms that develop international trade and serve as intermediaries between foreign buyers and domestic sellers and vice versa
licensing
A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee.
Turnkey project
is an export of technology, management expertise, and, in some cases, capital equipment
By means of a licensing agreement,
one firm (licensor) will grant to another firm (licensee) the right to use any kind of expertise, such as manufacturing process (patented or unpatented), marketing procedures, and trademarkds for one or more of the licensor’s products.
Franchising
A form of licensing in which one firm contracts with another to operate a certain type of business under an established name according to specific rules.
Management contract
An arrangement by which one firm provides management in all or specific areas to another firm
Contract manufacturing
An arrangement in which one firm contracts with another to produce products to its specifications but assumes responsibilities for marketing
When management does decide to make a foreign direct investment, it usually has several alternatives available, though not all of them may be feasible in a particular country:
1. Wholly owned subsidiary
2. Joint venture
3. Strategic alliances
Wholly owned subsidiary
A company that which to own a foreign subsidiary outright may (1) start from the ground up by building a new plant (greenfield investment) or (2) acquire a going concern.
Joint venture
A cooperative effort among two or more organizations that share a common interest in a business enterprise or undertaking.
Strategic alliance
A partnership between or among competitors, customers, or suppliers that may take one or more or various forms, both equity and nonequity
Pooling alliance
An alliance driven by similarity and integration among partners
Trading alliance
An alliance driven by the logic of partners contributing dissimilar resources