CBA 300 Lecture Notes - Lecture 10: Sogo Shosha, Contract Manufacturer, Franchising
11 Jan 2017
School
Department
Course
Professor
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
find more resources at oneclass.com
find more resources at oneclass.com
