CBA 300 Lecture Notes - Lecture 10: Sogo Shosha, Contract Manufacturer, Franchising

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Market Entry
1. Exporting
o Direct Exporting
o Indirect Exporting ( via intermediaries)
Types of exporting
Directing exporting to host country importers
Indirect exporting (via export trade intermediaries) to host country importers
Indirect Exporting Intermediaries
Agents v. merchants
Trading companies (called sogo shosha in Japan)
Export management companies
Exporter consortia
Types of Importers
Distributors & retailers
Firm subsidiaries in host country
Exporting Directly to Foreign End Users
Typically for selling to OEMs & governments
Used for costly industrial products
Less common is selling to ultimate consumer
2. Contractual agreements
o Licensing
o Franchising
o Contract manufacturing
3. Strategic Alliances
o Equity based joint ventures
o Nonequity SAs: R&D, distribution, & manufacturing
4. Wholly Owned Subsidiaries
o Acquisitions
o Greenfield
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Analysis of Entry Modes
No single strategy suits all products or all countries. Many firms use multiple strategies
Wholly owned subsidiaries & joint ventures entail more capital & risk than exporting &
contractual agreements, but deliver more control & profits.
Services & service-intensive products are usually produced near the site of consumption
Inexpensive, bulky products usually require local manufacture. Expensive, compact
luxury goods can be exported
Political & cultural variables influence entry strategies
o Many developing countries still prohibit or discourage foreign ownership
o Japanese & Korean companies resist acquisition
U.S imports & Exports
U.S depend less on exports than other nations
U.S Energy Net Imports
Overall U.S. energy imports have declined & the U.S. may become a net exporter by
2030.
The export Process: Shipping
Modes of Transportation
o Air
o Water (ocean & inland)
o Land (rail & truck)
o Pipeline
Choosing a shipping mode
o Market location
o Speed v. cost
o Intermodal transportation
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