16 Questions
What is the usual entry strategy for a firm's first foreign market entry?
Exporting
Which type of firms commonly favor exporting as a foreign market entry strategy?
Small and medium-sized enterprises (SMEs)
What is the main focus of most exports?
Manufactured goods
Which of the following is NOT an export channel for firms?
Franchising
What does global sourcing primarily focus on?
Importing raw materials from foreign suppliers
What is the main reason for firms to engage in global sourcing?
To lower production costs and gain access to specialized skills
What is a primary benefit of exporting mentioned in the text?
Access to a broader customer base
Which industry has the highest example firm's international sales as a percentage of total sales?
Information Technology
What is the average international sales percentage in the Materials industry?
53%
Which one of the following is NOT listed as an advantage of exporting mentioned in the text?
Enhance domestic market presence
What type of service can typically be exported via foreign direct investment (FDI)?
Retailing services
In which industry does the example firm have the lowest international sales as a percentage of total sales?
Consumer Staples
Which industry has the example firm with international sales closest to the industry average?
Industrials
What is the average international sales percentage in the Healthcare industry?
37%
Which advantage of exporting helps businesses mitigate risk by reaching customers in different regions with varying demands?
Diversify customer base
What is an advantage of exporting that helps businesses maintain a more consistent revenue stream by providing a buffer against seasonal or regional economic downturns?
Stabilize sales fluctuations
Study Notes
Entry Strategies and Exporting
- The usual entry strategy for a firm's first foreign market entry is not specified, but exporting is a common choice for many firms.
Types of Firms and Exporting
- Small and medium-sized enterprises (SMEs) commonly favor exporting as a foreign market entry strategy.
Focus of Exports
- The main focus of most exports is on industrial goods, including capital goods, intermediate goods, and consumer goods.
Export Channels
- The following are export channels for firms: indirect exporting, direct exporting, and cooperative exporting.
- Setting up a wholly-owned subsidiary is NOT an export channel for firms.
Global Sourcing
- Global sourcing primarily focuses on sourcing materials, components, or finished goods from suppliers in other countries.
- The main reason for firms to engage in global sourcing is to reduce costs and improve efficiency.
Benefits of Exporting
- A primary benefit of exporting mentioned in the text is that it helps businesses mitigate risk by reaching customers in different regions with varying demands.
- Another advantage of exporting is that it helps businesses maintain a more consistent revenue stream by providing a buffer against seasonal or regional economic downturns.
Industry Examples
- The industry with the highest example firm's international sales as a percentage of total sales is the Technology industry.
- The average international sales percentage in the Materials industry is around 30%.
- The industry with the example firm with the lowest international sales as a percentage of total sales is the Healthcare industry.
- The industry with the example firm with international sales closest to the industry average is the Consumer Goods industry.
- The average international sales percentage in the Healthcare industry is around 20%.
Service Exporting
- Professional services, such as management consulting, engineering, and architecture, can typically be exported via foreign direct investment (FDI).
Test your knowledge on exporting and global sourcing with this quiz based on Chapter 13 of 'International Business: The New Realities Fifth Edition'. The quiz covers topics such as foreign market entry strategies, export-import transactions, working with foreign intermediaries, and outsourcing.
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