Entry mode and international factors Export readiness the organization s ability to conduct international trade including o Prior experience o Management commitment to international expansion o The firm s financial strength o International knowledge Foreign market knowledge Internationalization process knowledge Low readiness less intense entry modes e g indirect export or export without FDI High readiness more intense entry modes e g FDI Entry Mode and External Factors Competitive Position o Strong domestic market position and strong brand help foster international success Macro Industry Issues o Government policies such as product certifications and standards e g CE Mark or allowed foreign ownership Current and Future market potential o Greater market potential usually means more involved modes Indirect Exporting Exporting is manufacturing a product in one country and shipping it to another for final sale Indirect exporting is when a third party and not the manufacturer conducts the export Types of indirect exporting include piggybacking and export management companies EMCs Indirect exporting offers benefits of additional sales without risk and cost of direct involvement nor prior experience Indirect exporting provides the manufacturer with very little control or feedback and prevents the manufacturer from gaining important internationalization knowledge Major Modes of Market entry Indirect Exporting Direct exporting Direct exporting with FDI Foreign manufacturing sales and or distribution Licensing Joint ventures and strategic alliances FDI Foreign manufacturing Wholly Owned foreign production o Acquisition vs Greenfield Acquiring an existing local manufacturer is quicker eliminates a potential competitor and takes advantage of existing contacts with labor and government Greenfield building from the ground up takes longer but enables the use of the latest technology avoids organizational culture clashes and a fresh start on building brand o Wholly owned operations result in a greater percentage of the profits more control and increased experience and feedback o However wholly owned operations are costly in terms of capital and management resources e g time and energy and put the firm at greater economic and political risk Partner Selection Financial and pricing considerations o What margins or commissions are needed o Which currency will be used o What payment terms will be used Marketing support and considerations o What is the appropriate level of advertising and promotion o How much training of the partner in necessary Communication o What amount frequency and level email phone face to face of communication is necessary o Should regional and or global sales meetings be held Market Exclusivity o How to balance exclusivity with a partner s motivation and capabilities Finding Foreign Partners Step 1 Identify as many potential partners as possible o Primary and secondary research using online databases identifying distributors of complementary products and making use of trade associations trade shows and trade missions o Government resources such as the U S Commercial Service s Gold Key or state based resources Step 2 Visit the country and meet with potential partners o Meetings can be arranged at trade shows and trade missions o Meetings should include a visit to partner s facility Contract Negotiations Cultural considerations o Differences in cultures impact how individuals negotiate Exportations of each partner o What does each partner want Win win or Win lose o Win win is best for both parties Distributor agreements o Should spell out responsibilities and interest of each party Exclusive or nonexclusive o Exclusive allows for greater motivation in theory o Nonexclusive may be more common when more experienced Distribution Environment and Strategy Distribution strategy o Standardization or adaptation Which channels in each market are most profitable Economies of scale and market similarity favor standardized approaches Local differences in regulations and availability of channels favor adaptation The firm s preferred level of involvement also impacts distribution choices o Direct versus indirect channels Direct channels are more effective and make sense when the potential sales volume is high however direct channels are more resource intensive o Selective versus intensive distribution Intensive is selling through any retailer that wants the product Selective is selling through only limited retailers 4 15 14 Multiple dimensions of brand knowledge The reality that emerges from the varied research activity in branding through the years is that all different kinds of information may become linked to brand including the following Awareness category identification and needs satisfied by the brand Attributes descriptive features that characterize the brand name product either intrinsically e g related to product performance or extrinsically e g related to brand personality or heritage Benefits personal value and meaning that consumers attach to the brand s product attributes e g functional symbolic or experiential consequences from the brand s purchase or consumption Images visual information either concrete or abstract in nature Thoughts personal cognitive responses to any brand related information Feelings personal affective responses to any brand related information Attitudes summary judgments and overall evaluations to any brand related information Experiences purchase and consumption behaviors and any other brandrelated episodes