Questions and Answers
What is the most common mode for initial entry into international markets?
What are the five main entry modes of indirect exporting?
Export buying agent, broker, export management company/export house, trading company, piggyback.
What describes a reactive motive in internationalization?
Mindshare is a measurement of the strength of a relationship in terms of trust, commitment and cooperation.
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Name the two main entry modes of direct exporting.
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The five main entry modes of indirect exporting include export buying agent, broker, export management company/export house, trading company, and ______.
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Match the following export modes with their definitions:
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Study Notes
Major Motives to Export
- Exporting is a common initial entry method into international markets.
- Unsolicited orders and expanding domestic customers can encourage firms to explore international markets.
- Exporting often starts small and can evolve into more extensive foreign operations.
- High fixed costs or limited global buyers may lead to concentrated production supplemented by exporting.
Proactive vs Reactive Motives
- Proactive motives: Driven by a firm's desire to leverage unique competencies or new market opportunities.
- Reactive motives: Response to pressures in the home or foreign markets, leading to adjustments over time.
Mindshare in Exporting
- Mindshare measures the strength of relationships in trust, commitment, and cooperation.
- High mindshare levels correlate with better sales performance and willingness to prioritize a brand.
- Key drivers of mindshare:
- Commitment and trust
- Collaboration
- Mutuality of interest and common purpose
Entry Modes
Indirect Exporting
- Involves third-party organizations managing export activities, suitable for firms with limited international objectives.
- Allows gradual market entry and lower resource commitment.
Types of Indirect Exporting
- Export Buying Agent: Represents foreign buyers in the exporter's home country; operates on buyer's commission.
- Broker: Acts as an intermediary between buyers and sellers, facilitating deals.
- Export Management Company/Export House: Full-service firms managing all aspects of exporting for manufacturers.
- Trading Company: Buys and sells foreign goods, handling logistics and sales.
- Piggyback: Smaller firms use larger firms' established export operations to enter new markets.
Direct Exporting
- The manufacturer directly engages in exporting activities, maintaining direct contact with foreign intermediaries.
- Allows full control over pricing, delivery, and market strategy.
Cooperative Exporting
- Involves partnerships or agreements with other firms for shared export marketing efforts.
- Can optimize resources and expertise in foreign markets.
Advantages and Disadvantages of Export Modes
- Indirect Exporting: Lower risk, gradual entry; may lack control and market insight.
- Direct Exporting: Greater control and potential profit; higher risk, more resource-intensive.
- Cooperative Exporting: Shared resources reduce risk; requires strong partner alignment and trust.
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Description
Explore the key entry modes in exporting with this quiz. You will learn about indirect and direct exporting methods, including the roles of agents, distributors, and various companies. Test your understanding of the advantages and disadvantages of these entry modes for international trade.
