Foreign market entry modes Wikipedia. Foreign market entry modes or participation strategies differ in the degree of risk they present, the control and commitment of resources they require, and the return on investment they promise. 1There are two major types of market entry modes equity and non equity modes. The non equity modes category includes export and contractual agreements. 2 The equity modes category includes joint venture and wholly owned subsidiaries. 3ExportingeditExporting is the process of selling of goods and services produced in one country to other countries. 4There are two types of exporting direct and indirect. Get information, facts, and pictures about United Arab Emirates at Encyclopedia. com. Make research projects and school reports about United Arab Emirates easy with. Direct ExportseditDirect exports represent the most basic mode of exporting made by a holding company, capitalizing on economies of scale in production concentrated in the home country and affording better control over distribution. Direct export works the best if the volumes are small. Large volumes of export may trigger protectionism. The main characteristic of direct exports entry model is that there are no intermediaries. Passive exports represent the treating and filling overseas orders like domestic orders. 5Sales representatives. Sales representatives represent foreign suppliersmanufacturers in their local markets for an established commission on sales. Provide support services to a manufacturer regarding local advertising, local sales presentations, customs clearance formalities, legal requirements. Manufacturers of highly technical services or products such as production machinery, benefit the most from sales representation. Importing distributors. Importing distributors purchase product in their own right and resell it in their local markets to wholesalers, retailers, or both. Importing distributors are a good market entry strategy for products that are carried in inventory, such as toys, appliances, prepared food. 6AdvantageseditControl over selection of foreign markets and choice of foreign representative companies. Good information feedback from target market, developing better relationships with the buyers. Better protection of trademarks, patents, goodwill, and other intangible property. Potentially greater sales, and therefore greater profit, than with indirect exporting. 7DisadvantageseditHigher start up costs and higher risks as opposed to indirect exporting. Requires higher investments of time, resources and personnel and also organizational changes. Greater information requirements. Longer time to market as opposed to indirect exporting. 8Indirect exportseditIndirect export is the process of exporting through domestically based export intermediaries. Issuu is a digital publishing platform that makes it simple to publish magazines, catalogs, newspapers, books, and more online. Easily share your publications and get. Through the Direct Aid Program, the Australian Embassy in Beirut has worked over recent years with the Safadi Foundation to support smallscale farmers in Lebanons. Search for the best recommended Corporate and commercial Law firms, Lawyers, Attorneys in London. What is the difference between the Criminal and the Civil Law Criminal Law. The criminal law ensures every citizen knows the boundaries of acceptable conduct in the UK. Advantages Disadvantages of Licensing the Rights to the Companys Production Process by Phil M. Fowler. Search for the best recommended Dispute resolution International arbitration Law firms, Lawyers, Attorneys in London. It is a collection of the technical key words and phrases for international finance and multinational trade modeling and decisionmaking. The exporter has no control over its products in the foreign market. Export trading companies ETCsThese provide support services of the entire export process for one or more suppliers. Attractive to suppliers that are not familiar with exporting as ETCs usually perform all the necessary work locate overseas trading partners, present the product, quote on specific enquiries, etc. Export management companies EMCsThese are similar to ETCs in the way that they usually export for producers. Unlike ETCs, they rarely take on export credit risks and carry one type of product, not representing competing ones. Usually, EMCs trade on behalf of their suppliers as their export departments. 9Export merchants. Export merchants are wholesale companies that buy unpackaged products from suppliersmanufacturers for resale overseas under their own brand names. The advantage of export merchants is promotion. One of the disadvantages for using export merchants result in presence of identical products under different brand names and pricing on the market, meaning that export merchants activities may hinder manufacturers exporting efforts. Confirming houses. These are intermediate sellers that work for foreign buyers. They receive the product requirements from their clients, negotiate purchases, make delivery, and pay the suppliersmanufacturers. An opportunity here arises in the fact that if the client likes the product it may become a trade representative. A potential disadvantage includes suppliers unawareness and lack of control over what a confirming house does with their product. Nonconforming purchasing agents. These are similar to confirming houses with the exception that they do not pay the suppliers directly payments take place between a suppliermanufacturer and a foreign buyer. 1. AdvantageseditFast market access. Concentration of resources towards production. Little or no financial commitment as the clients exports usually covers most expenses associated with international sales. Low risk exists for companies who consider their domestic market to be more important and for companies that are still developing their R D, marketing, and sales strategies. Export management is outsourced, alleviating pressure from management team. No direct handle of export processes. 1. DisadvantageseditLittle or no control over distribution, sales, marketing, etc. Wrong choice of distributor, and by effect, market, may lead to inadequate market feedback affecting the international success of the company. Potentially lower sales as compared to direct exporting although low volume can be a key aspect of successfully exporting directly. Export partners that incorrectly select a specific distributormarket may hinder a firms functional ability. 1. Companies that seriously consider international markets as a crucial part of their success would likely consider direct exporting as the market entry tool. Indirect exporting is preferred by companies who would want to avoid financial risk as a threat to their other goals. LicensingeditAn international licensing agreement allows foreign firms, either exclusively or non exclusively to manufacture a proprietors product for a fixed term in a specific market. In this foreign market entry mode, a licensor in the home country makes limited rights or resources available to the licensee in the host country. The rights or resources may include patents, trademarks, managerial skills, technology, and others that can make it possible for the licensee to manufacture and sell in the host country a similar product to the one the licensor has already been producing and selling in the home country without requiring the licensor to open a new operation overseas. The licensor earnings usually take forms of one time payments, technical fees and royalty payments usually calculated as a percentage of sales. As in this mode of entry the transference of knowledge between the parental company and the licensee is strongly present, the decision of making an international license agreement depend on the respect the host government show for intellectual property and on the ability of the licensor to choose the right partners and avoid them to compete in each other market. Licensing is a relatively flexible work agreement that can be customized to fit the needs and interests of both, licensor and licensee. Following are the main advantages and reasons to use an international licensing for expanding internationally Obtain extra income for technical know how and services. Reach new markets not accessible by export from existing facilities. Quickly expand without much risk and large capital investment. Pave the way for future investments in the market. Retain established markets closed by trade restrictions. Political risk is minimized as the licensee is usually 1.