Unit 3 - Modes of Entry Flashcards
(25 cards)
what is a Mode of Entry?
it is a planned strategy to deliver a business’s products/services into a new market
what does a Entry require or need to fund the expansion?
- costly entry costs
- partnerships
- investors
- loans
what are the three market entries?
- exporting
- importing
- trade
what contractual agreement is needed to facilitate exportation?
- licensing
- franchising
what contractual agreement is needed to facilitate importing?
- international agents
- distributors
what contractual agreement is needed to facilitate trade?
- strategic alliances
- joint ventures
what are the benefits of importing?
- access to a wider range of goods
- lower prices (depends on importing countries labour/production costs)
- access to new technology
- diversification
what are the benefits of exporting?
- increased sales
- diversification
- improved economies of sale
- access to new technology
- improved reputation
what is importing?
bringing products/services into a country from another country
what is exporting?
sending a product/service to another country
what is licensing?
it is a contractual agreement that allows a business to use the brands, designs ect, of another business
what are the key features of licensing?
- entering a new market with less risk
- exclusive licensing and non exclusive licensing
- restrictions on branding and modifications
- licensee and licensor
what are international agents and distributors?
these are international partnerships that help with the business’s expansion
what do international agents and distributors help with (specifically)?
- sales into the market
- understanding the local market
- access to local grants
- navigation of local regulatins
what is a strategic alliance?
it is an agreement among businesses where each business will help other businesses while still remaining as individual businesses
what are the benefits of a strategic alliance?
- businesses can improve upon their competitive positioning
- gain entry to new markets
- supplement critical skills
- sharing the risk/costs of major development projects
what is a joint venture?
an agreement between two or more businesses who work together for a specific purpose or project that is seperate from those businesses allowing it become its own entity
what are the benefits of a joint venture?
- owners share the profits and losses
- any business can join a joint venture
- allows for a business to grow
- combined resources
- saves money
why might a joint venture be agreed upon?
- for research and development
- to create a new product/service
- to expand into a new market
- for distribution purposes
what is offshoring?
its the ability of getting work done in another country
what is outsourcing?
its the ability to contract work with an external organisation
what are the benefits of offshoring?
- lower costs
- closer relationship with customers
- access to different suppliers
what are the benefits of outsourcing?
- access to specialised skills
- cost efficient
- the ability to focus on the quality of the core of the business
what is a subsidiary?
it is a business that is owned and controlled by a larger company
