International Business - Module 3

Describe some benefits and risks with global sourcing.

Benefits of global sourcing: 1. Cost efficiency - The primary rationale for global sourcing is to reduce the firm's costs of inputs and operations. 2. Ability to achieve strategic goals - The strategic view of global sourcing is called transformational outsourcing. It suggests that just as the firm achieves cost efficiencies, it also obtains the means to restructure operations, speed up innovation, and fund otherwise-unaffordable development projects. 3. Faster corporate growth - Firms can focus their resources on performing more-profitable activities such as R&D or building relationships with customers. For example, they can expand their staff of engineers and researchers while keeping constant their cost of product development as a percentage of sales. 4. Access to qualified personnel abroad. - Countries such as China, India, and Ireland offer abundant pools of educated engineers, managers, and other specialists to help firms achieve their goals. Disney has much of its animation work done in Japan, home to world-class animators 5. Improved productivity and service - Manufacturing productivity and other value-chain activities can be improved by suppliers that specialize in these activities. 6. Business process redesign - By reconfiguring their value-chain systems or reengineering their business processes, companies can improve their production efficiency and resource usage. MNEs see offshoring as a means to overhaul outdated company operations. 7. Increased speed to market - By shifting software development and editorial work to India and the Philippines, the U.S.-Dutch publisher Wolters Kluwer was able to produce a greater variety of books and journals and publish them faster. Pharmaceutical firms get new medi- cations to market faster by outsourcing clinical drug trials 8. Access to new markets - Sourcing provides an entrée to the market, an understanding of local customers, and the means to initiate marketing activities there. By moving many of its R&D operations to Russia, the telecommunications firm Nortel gained an important foothold in a market that needs telephone switching equipment and other communications infrastructure. 9. Technological flexibility - Leveraging independent suppliers abroad provides firms the flexibility to quickly change sources of supply, employing whichever suppliers offer the most advanced technologies. In this way, sourcing provides greater organizational flexibility and faster responsiveness to evolving buyer needs Risks of global sourcing: 1. Lower-than-expected cost savings - International transactions are often more complex and costly than expected. Conflicts and misunderstandings may arise from differences in the national/organizational cultures between the focal firm and foreign supplier. Establishing an outsourcing facility can be surprisingly expensive due to the need to upgrade poor infrastructure or locate it in a large city to attract sufficient skilled labor. 2. Environmental factors - Environmental challenges include currency fluctuations, tariffs and other trade barriers, high energy and transportation costs, adverse macroeconomic events, labor strikes, and natural disasters. Firms that source from countries whose currencies are strengthening experience higher costs. Many countries suffer from poor public infrastructure, as exemplified by power outages and poor road and rail networks. India is characterized by periodic shortages of electrical power. 3. Weak legal environment - Many popular locations for global sourcing (for example, China, India, and Russia) have weak intellectual property laws and poor enforcement, which can erode key strategic assets. Inadequate legal systems, red tape, convoluted tax systems, and complex business regulations complicate local operations in many countries. 4. Inadequate or low-skilled workers - Some foreign suppliers may be staffed by employees who lack appropriate knowledge about the tasks with which they are charged. Other suppliers suffer rapid turnover of skilled employees. The mean education level of workers in many developing economies is sometimes insufficient to support the manufacturing needs of companies in high-tech industries. In many such countries, educational institutions are lacking and may not produce a sufficient number of workers with superior skills. Such challenges affect the productivity and economic growth of numerous countries. 5. Over reliance on suppliers - Unreliable suppliers may put earlier work aside when they gain a more important client. Suppliers occasionally encounter financial difficulties or are acquired by other firms with different priorities and procedures. Management at the focal firm may find itself scrambling to find alternate suppliers. Overreliance can reduce the focal firm's control of important value-chain tasks. 6. Risk of creating competitors -As the focal firm shares its intellectual property and business- process knowledge with foreign suppliers, it also runs the risk of creating future rivals. Schwinn, long the leader in the global bicycle industry, transferred much of its production and core expertise to lower-cost foreign suppliers, which acquired sufficient knowledge to become competitors, eventually forcing Schwinn into bankruptcy (from which it later recovered). 7. Erosion of morale and commitment among home-country employees - Global sourcing can leave employees caught in the middle between their employer and their employer's clients. When outsourcing forces retained and outsourced staff to work side by side, tensions and uncertainty may diminish employee commitment and enthusiasm.

What are the difference between indirect exporting and direct exporting?

Indirect exporting = Exporting that is accomplished by contracting with intermediaries located in the firm's home market. Direct exporting = Exporting that is accomplished by contracting with intermediaries located in the foreign market.

What are the seven factors to consider in selecting FDI locations?

1. Human resource factors 2. Infrastructural factors 3. Profit retention factors 4. Economic factors 5. Legal and regulatory factors 6. Political and governmental factors 7. Market factors

Which are the three different ways to outsource?

1. Captive sourcing: - Sourcing from the firm's own production facilities. 2. Contract manufacturing: - An arrangement in which the focal firm contracts with an independent sup- plier to manufacture products according to well-defined specifications. 3. Offshoring: - The relocation of a busi- ness process or entire manufacturing facility to a foreign country.

What are the four different payment methods in international business?

1. Cash in Advance - When the exporter receives cash in advance, payment is collected before the goods are shipped to the customer → advantageous to the exporter but unpopular with buyers and tends to discourage sales. 2. Letter of credit - Contract between the banks of a buyer and a seller that ensures payment from the buyer to the seller upon receipt of an export shipment. 3. Open account - When the exporter uses an open account, the buyer pays the exporter at some future time following receipt of the goods. Because of the risk involved, exporters use this approach only with customers of long-standing or excellent credit, or with a subsidiary the exporter owns. 4. Countertrade - An international business transaction where all or partial payments are made in kind rather than cash, especially common when dealing with governments in developing economies and emerging markets. There are four main types of countertrade: - Barter: A type of countertrade in which goods are directly exchanged without the transfer of any money - Compensation deals: A type of countertrade in which payment is in both goods and cash. - A type of countertrade with two distinct contracts. In the first, the seller agrees to a set price for goods and receives cash from the buyer. This first deal is contingent on a second in which the seller agrees to purchase goods from the buyer for the same amount as in the first contract or a set percentage of the same. - Buy-back agreement - A type of countertrade in which the seller agrees to supply technology or equipment to construct a facility and receives payment in the form of goods the facility produces.

When managing collaborative ventures, there are 8 steps in the process for identifying and working with a suitable business partner. Describe these steps.

1. Choose "going it alone" or collaboration. - do we need a business partner in this market? - how can we choose between a collaborative venture vs. a wholly owned operation? 2. Decide on the type of ideal partner. - What qualifications should we seek in the business partner? 3. Screen and qualify partner candidates. - What advisors, consultants, and secondary sources of information and assistance can we tap to identify suitable partners? 4. Determine the nature of legal relationship with the prospective partner. - Should we seek a formal agreement or trial period? 5. Negotiate a formal agreement. - If we seek a legal agreement (distributor contract, joint venture agreement, etc.) with the foreign partner, what aspect of the relationship should the contract govern? 6. Build trust, empathy and reciprocity. - What can we do to ensure a mutually beneficial and successful relationship? - How can we provide the partner with the necessary technical and managerial support? 7. Establish explicit criteria for measuring venture performance. - What specific benchmarks should we use to measure performance of the venture? 8. Monitor and measure performance; make plans about long-term goals. - How should we monitor the performance of this collaborative venture? - What plans should we make for the future of this relationship? Success in collaborative ventures is attained by following several guidelines: 1. Be cognizant of cultural differences 2. Pursue common goals 3. Give due attention to planning and management of the venture 4. Safeguard core competencies 5. Adjust to shifting environmental circumstances.

Describe the following: - Contractual entry strategies in international business - Intellectual property - Intellectual property rights (Ch.15)

1. Contractual entry strategies in international business = Cross-border exchanges in which the relationship between the focal firm and its foreign partner is governed by an explicit contract. 2. Intellectual property = Ideas or works that individuals or firms create, including discoveries and inventions; artistic, musical, and literary works; and words, phrases, symbols, and designs. 3. Intellectual property rights = The legal claim through which the proprietary assets of firms and individuals are protected from unauthorized use by other parties.

International collaborative ventures can be divided into two types of ventures, describe them.

1. Equity joint ventures: - are traditional collaborations of a type that has existed for decades. It involves a financial investment by the MNC parties involved. In a typical international deal, the foreign partner contributes capital, technology, management expertise, training, or some type of product. The local partner contributes the use of its factory or other facilities, knowledge of the local language and culture, market navigation know-how, useful connections to the host-country government or lowest-cost production factors such as labor or raw materials. The partnership allows the foreign firm to access key market knowledge, gain immediate access to a distribution system and customers, and attain greater control over local operations. 2. Non-equity project-based ventures: - a collaboration in which the partners create a project with a relatively narrow scope and a well-defined timetable without creating a new legal entity. Combining staff, resources and capabilities, the partners collaborate on new technologies or products until the venture bears fruit or they no longer consider collaboration valuable. Such partnering reduces the enormous fixed costs of R&D, especially in technology and knowledge-intensive industries, and help firms catch up with rivals.

Foreign direct investors also choose the degree of control in the venture. What are three different types of ownership of FDI?

1. Equity participation or equity ownership - Acquisition of partial ownership in an existing firm. 2. Wholly owned direct investment - A foreign direct investment in which the investor fully owns the foreign assets. 3. Equity joint venture - A type of partnership in which a new firm is created through the investment or pooling of assets by two or more parent firms that gain joint ownership of the new legal entity.

When firms expand into international markets, they obtain economies of scale. What are the reasons?

1. Falling fixed costs: - Many industries and productive tasks have high per-unit fixed costs that decline the more the task is performed. To increase international sales, the firm must produce more of the product, say for example cars. As more cars are produced, the cost to build the factory is amortized across many cars, and the average cost per car declines. 2. Managerial resource efficiencies: - International expansion implies that the firm must employ a relatively fixed number of headquarters staff across more subsidiaries and affiliates. In this way, managerial talent is used more efficiently. 3. Specialization of labor: - When productive output increases, the firm hires more workers, who become more specialized in their tasks. As they specialize, workers become more efficient and produce more output per hour worked. 4. Volume discounts: - Suppliers usually offer discounts for large-quantity purchases. Per-unit sourcing costs fall as the firm buys more parts, components, and other inputs. 5. Financial economies: - Compared to small firms, large companies usually can access capital to lower cost. This arises because large firms are relatively powerful and tend to borrow large sums.

Which different kinds of international investment and collaboration can MNCs do? (Ch.14)

1. Foreign Direct Investment (FDI) = is an internationalization strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant and equipment. 2. International Portfolio Investment = Do not confuse this with FDI, which refers to passive ownership of foreign securities such as stocks and bonds, to generate financial returns. International portfolio investment is a form of international investment, but it is not FDI, which seeks ownership control of business abroad and represents a long-term commitment. 3. An international collaborative venture = is a cross-border business partnership in which collaborating firms pool their resources and share costs and risks to undertake a new business venture; also referred to as an international partnership or international strategic alliance. 4. A joint venture = is a form of collaboration between two or more firms to create a new, jointly owned enterprise.

What are the four different types of foreign intermediaries that you can work with?

1. Foreign distributor = A foreign market-based intermediary that works under contract for an exporter, takes title to, and distributes the exporter's products in a national market or territory, often performing marketing functions such as sales, promotion, and after-sales service. 2. Manufacturer's representative = An intermediary contracted by the exporter to represent and sell its merchandise or services in a designated country or territory. - Agents, sales representatives, or service representatives. - They do not maintain physical facilities, marketing, or customer support capabilities, so the exporter must handle these functions. 3. Trading company = An intermediary that engages in import and export of a variety of commodities, products, and services. - Manufacturers that lack the will or resources to sell their products internationally often employ trading companies. 4. Export management company (EMC) = A domestically based intermediary that acts as an export agent on behalf of a (usually inexperienced) client company. - In return for a commission, an EMC finds export customers on behalf of the client firm, negotiates terms of sale, and arranges for international shipping. - Although typically much smaller than a trading company, some EMCs have well-established networks of foreign distributors in place that allow exported products immediate access to foreign markets.

When talking about global sourcing strategies and supply-chain management, what are some managerial guidelines for global sourcing?

1. Go offshore for the right reason. - Global sourcing provides the means to achieve more beneficial, long-term goals. Management should analyze its value-chain activities and outsource those in which it is relatively weak, that offer relatively little value to the bottom line, or that can be performed more effectively by others, yet are not critical to the firm's core competencies. 2. Get employees on board. - Senior management should seek employee support by reaching a consensus of managers and labor, developing alternatives for redeploying laid-off workers and soliciting employee help in choosing foreign partners. 3. Choose carefully between a captive operation and contracting with outside suppliers. - Managers should be vigilant about striking the right balance between the organizational activities they retain inside the firm and those they source from outside. Many firms establish their own sourcing operations abroad to maintain control of outsourced activities and technologies. 4. Choose suppliers carefully. - Suppliers may engage in opportunistic behavior or act in bad faith. To ensure the success of sourcing ventures, the focal firm must exercise great care to identify and screen potential suppliers and then monitor the activities of those suppliers from which it sources. 5. Emphasize communication and collaboration with suppliers. - Global sourcing may fail if buyers and suppliers spend too little time getting well acquainted. Rushing into a deal before clarifying each other's expectations produces misunderstandings and poor results. 6. Safeguard interests. - The focal firm should protect its interests in the supplier relationship. It can advise the supplier against engaging in activities that harm the firm's reputation. The firm can share costs and revenues by building a stake for the supplier so that, in case of failure to meet expectations, the supplier also suffers costs or forgoes revenues.

What are the three types of Foreign Direct Investments?

1. Greenfield investment: - occurs when a firm places a direct investment to build a new manufacturing, marketing or administrative facility as opposed to acquiring existing facilities. One example is Ford that established its large factory in Rayong, Thailand, to manufacture small cars for emerging markets. 2. Acquisition: - is a direct investment to purchase an existing company or facility. For example, Brazil's Natura Cosmeticos acquired the Body Shop, a British retailer of cosmetic and skin care products, in order to expand Natura's reach into advanced economy markets. Another example is the Chinese personal computer manufacturer Lenovo that made an ambitious acquisition of IBM's PC business, which now accounts for some two-thirds of Lenovo's annual revenue. The deal provided Lenovo with valuable strategic assets such as brands and distribution networks and helped it rapidly extend its market reach and become a global player. 3. Merger: - a special type of acquisition in which two companies join to form a larger firm. Like joint ventures, mergers can generate positive outcomes, including inter-partner learning and resource sharing, increased scale economies, cost savings from eliminating duplicative activities, a broader range of products and services for sale and greater market power.

What are the two common types of contractual entry strategies?

1. Licensing = Arrangement by which the owner of intellectual property grants a firm the right to use that property for a specific time period in exchange for royalties or other compensation. Usually a very lucrative entry strategy. - Royalty = A fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset. 2. Franchising = Arrangement by which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation.

What are the advantages/ disadvantages with licensing and franchising?

1. Licensing: Advantages: - Does not require capital investment or presence of the licensor in the foreign market - Ability to generate royalty income from existing intellectual property - Appropriate for entering markets that pose substantial country risk - Useful when trade barriers reduce the viability of exporting or when governments restrict owner- ship of local operations by foreign firms - Useful for testing a foreign market prior to entry via FDI - Useful as a strategy to preemptively enter a mar- ket before rivals Disadvantages: - Revenues are usually more modest than with other entry strategies - Difficult to maintain control over how the licensed asset is used - Risk of losing control of important intellectual property, or dissipating it to competitors - The licensee may infringe the licensor's intellectual property and become a competitor - Does not guarantee a basis for future expansion in the market - Not ideal for products, services, or knowledge that are highly complex - Dispute resolution is complex and may not produce satisfactory results 2. Franchising Advantages from franchisor perspective: - Entry into numerous foreign markets can be accomplished quickly and cost-effectively - No need to invest substantial capital - Established brand name encourages early and ongoing sales potential abroad - The firm can leverage franchisees' knowledge to efficiently navigate and develop local markets Disadvantages from franchisor perspective: - Maintaining control over franchisee may be difficult - Conflicts with franchisee are likely, including legal disputes - Preserving franchisor's image in the foreign market may be challenging - Requires monitoring and evaluating performance of franchisees and providing ongoing assistance - Franchisees may take advantage of acquired knowledge and become competitors in the future Advantages from franchisee perspective: - Gain a well-known, recognizable brand name - Acquire training and know-how; receive ongoing support from the franchisor - Operate an independent business Increase likelihood of business success - Become part of an established international network Disadvantages from the franchisee perspective: - Initial investment or royalty payments may be substantial - Franchisee is required to purchase supplies, equipment, and products from the franchisor only - The franchisor holds much power, including superior bargaining power - Franchisor's outlets may proliferate in the region, creating competition for the franchisee - Franchisor may impose inappropriate technical or managerial systems on the franchisee

What are the three motives for FDI and Collaborative Ventures?

1. Market-seeking motives: - Gain access to new markets or opportunities - Follow key customers - Compete with key rivals in their own markets 2. Resource- or asset-seeking motives: - Access raw materials - Gain access to knowledge or other assets - Access technological and managerial know-how available in a key market 3. Efficiency-seeking motives: - Reduce sourcing and production costs - Locate production near customers - Take advantage of government incentives - Avoid trade barriers

What are the five characteristics of foreign direct investment, FDI?

1. Substantial resource commitment - As the ultimate international strategy, it is far more taxing on the firm's resources and capabilities than any other entry strategy. 2. Local presence and operations - With FDI, the firm establishes itself directly in the market, leading to direct contact with customers, intermediaries, facilitators and governments. 3. Investment in countries that provide specific comparative advantages - Managers invest in countries based on the advantages these locations offer. Thus, firms tend to perform R&D in countries with leading-edge knowledge for their industry, source from countries home to suppliers that provide superior goods, build factories in locations with low labor costs, and establish marketing subsidiaries in countries with excellent sales potential. 4. Intense dealings in the host market - Firms that enter through FDI necessarily deal more intensely with culture and other aspects of the host country. MNEs with high-profile, conspicuous operations are especially vulnerable to close public scrutiny of their actions. To minimize potential problems, managers often favor investing in countries that are culturally and linguistically familiar. 5. Substantial risk and uncertainty - Establishing a permanent, fixed presence abroad makes the firm vulnerable to country risk and intervention by local governments. In addition to local labor practices, direct investors also must contend with local economic conditions such as inflation and recessions.

Describe six unique aspects of contractual relationships.

1. They are governed by a contract that provides the focal firm with a moderate level of control over the foreign partner. - Control refers to the ability of the focal firm to influence the decisions, operations, and strategic resources of the foreign venture and ensure that the partner undertakes assigned activities and procedures. 2. They typically include the exchange of intangibles and services. - Intangibles that firms exchange include various intellectual property, production processes, technical assistance, and know-how. Firms also may supply products or equipment to support the foreign partner. 3. Firms can pursue them independently or in conjunction with other entry strategies. - In pursuing international opportunities, firms may employ contractual agreements alone, or they may combine them with FDI and exporting. 4. They provide dynamic, flexible choices. - Some focal firms use contractual agreements to make their initial entry in foreign markets. Then, as conditions evolve, they switch to another, often more advanced entry strategy. For example, franchisors such as McDonald's or Coca-Cola occasionally acquire some of their franchisees and bottlers. In doing so, they switch from a contractual approach to a direct investment strategy. 5. They often reduce local perceptions of the focal firm as a foreign enterprise. - A contractual relationship with a local firm allows the focal firm to blend into the local market. This attracts less attention and less of the criticism sometimes directed at firms that enter through more visible strategies such as FDI. 6. They generate a consistent level of earnings from foreign operations. - In comparison to FDI, contractual arrangements are less susceptible to volatility and risk. Such arrangements tend to bring both parties a predictable stream of revenue.

A third way of classifying FDI is whether integration takes place vertically or horizontally. What is the difference between vertical integration and horizontal integration?

1. Vertical integration - is an arrangement whereby the firm owns or seeks to own multiple stages of a value chain for producing, selling, and delivering a product or service. The firm may acquire: - Downstream value-chain facilities such as marketing and selling operations, or; - Upstream value-chain facilities, such as factories or assembly plants. 2. Horizontal integration - is an arrangement in which the firm owns or seeks to own the activities performed in a single stage of its value chain.

What are the advantages/ disadvantages of exporting? (Ch.13)

Advantages: - Increases overall sales volume and market share, and generates profit margins that are often more favorable than in the domestic market. - Increases economies of scale, reducing per-unit costs of manufacturing. - Diversified customer base, reducing dependence on home markets. - Stabilizes fluctuations in sales associated with economic cycles or seasonality of demand. - Minimizes the cost of foreign market entry; the firm can use exporting to test new markets before committing greater resources through FDI. - Minimizes risk and maximizes flexibility compared to other entry strategies. - Leverages the capabilities of foreign distributors and other business partners located abroad. Disadvantages: - Offers fewer opportunities to learn about customers, competitors, and other unique aspects of the foreign market because the firm does not establish a physical presence there (in contrast to FDI). - The firm must acquire and dedicate capabilities to conduct complex transactions, which can strain organizational resources. Exporters must become proficient in international sales contracts and transactions, new financing methods, and logistics and documentation. - Exposes the firm to tariffs and other trade barriers as well as fluctuations in exchange rates. Exporters can be priced out of foreign markets if shifting exchange rates make their products too costly to foreign buyers. For example, the U.S. dollar lost 10 percent in value against the European euro in 2017-2018. As the euro became more expensive in dollar terms, U.S. buyers reduced their imports of goods from Europe.

When talking about retailers and foreign markets, what are the challenges of international retailing? And how do retailers succeed in international markets?

Challenges of international retailing: 1. Culture and language are a significant obstacle. 2. Consumers tend to develop strong loyalty to indigenous retailers 3. Managers must address legal and regulatory barriers that can be idiosyncratic. 4. When entering a new market, retailers must develop local sources for thousands of products, including some that local suppliers may be unwilling or unable to provide. How retailers succeed in international markets: - Advanced research and planning - Efficient logistics and purchasing networks - An entrepreneurial, creative approach to foreign markets - Business model to suit local conditions

A global problem is the infringement of intellectual property, what is that about?

Infringement of intellectual property = Unauthorized use, publication, or reproduction of products or services protected by a patent, copyright, trademark, or other intellectual property right.

When talking about outsourcing, you can talk about "business process outsourcing", what is that? As well, when you consider to outsource, you have two decisions to make. Which are those?

Outsourcing = The procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers. Firms outsource because they are not superior at performing all value-chain activities, and it is more cost effective to outsource these activities. Business process outsourcing (BPO) = The outsourcing to independent suppliers of business service functions such as accounting, payroll, human resource functions, travel services, IT services, customer service, or technical support. 2 decisions to make: 1. Outsource or not? - Managers must decide between internalization and externalization—whether each value-adding activity should be conducted in house or by an external, independent supplier. In business, this is traditionally known as the make or buy decision: - "Should we make a product or perform a value-chain activity ourselves, or should we obtain it from an outside contractor?" 2. Where in the world should value-adding activities be located? - Instead of concentrating value-adding activities in their home country, many firms configure them across the world to save money, reduce delivery time, access factors of production, or extract maximum advantages relative to competitors.

What are reshoring and nearshoring?

Reshoring = The return of a business process or entire manufacturing facility to the home country. - Historically, many advanced economy firms located their manufacturing operations in emerging markets or developing economies to access lower-cost labor. - After offshoring production, many firms in Europe and the United States have found such conditions lacking. Dissatisfaction with global sourcing has led such companies to return production operations to the home country. Nearshoring = The offshoring or relocation of business processes or manufacturing facilities to a nearby country, often sharing a border with the home country.

What are the stages, functions and activities of suppliers, focal firms and intermediaries and/or retailers in the global supply chain?

Stage in supply chain: 1. Suppliers - sourcing, from home country and abroad. 2. Focal firm - inbound materials; outbound goods and services. 3. Intermediaries and/or retailers - distribution to domestic customers or foreign customers (exports). Major functions: 1. Suppliers: - Provide raw materials, parts, components, supplies, as well as business processes and other services to focal firm. 2. Focal firm: - Manufacture or assemble components or finished products or produce services. 3. Intermediaries and/or retailers: - Distribute and sell products and services. Typical activities: 1. Suppliers: - Maintain inventory, process orders, transport goods, deliver services. 2. Focal firm: - Manage inventory, process orders, manufacture or assemble products, produce and deliver services, distribute products to customers, retailers, or intermediaries. 3. Intermediaries and/or retailers: - Manage inventory, place or process orders, produce services, manage physical distribution, provide after-sales service.

What are the four steps in the approach of exporting?

Step 1: Asses global market opportunity - Managers assess the firm's readiness to internationalize and choose the most appropriate country market and partners. Step 2: Organize the exporting: - Managers make decisions about the degree of the firm's involvement, resources to be committed, and the type of domestic and foreign intermediaries to hire. Step 3: Acquire needed skills and competencies: - The firm acquires skills and competencies to handle export operations, trains staff, and engages appropriate facilitating firms (such as freight forwarders, bankers, and international trade attorneys). Step 4: Implement exporting strategy: - Managers make decisions about product adaptation, marketing communications adaption, pricing and support to foreign intermediaries or subsidiaries.