Foreign Entry Modes and Export Challenges - chapter 10

These flashcards cover the key concepts related to foreign entry modes, export challenges, and payment processes.

What are some examples of entry barriers in foreign markets?

Tariff barriers, artificial barriers, natural barriers.

What are the components of tariff barriers?

Customs duties enforced on imported products, with different rates for different countries and products.

What is included in the challenges of export?

Entry barriers, export payment issues, export price escalation, and control over marketing.

What significant impact do tariffs have on domestic firms?

Tariffs can significantly increase costs for domestic firms that buy components overseas or sell to overseas customers.

What are some types of artificial entry barriers?

Intense competition, pro-domestic sentiment favoring local brands, quotas, and restrictive regulations.

What are common methods of export payment?

Letter of credit (L/C), cash in advance, sales on open account.

What is a Letter of Credit (L/C)?

A document from a bank that guarantees payment to the seller upon meeting the terms of the sale.

What are the steps involved in the process of a Letter of Credit?

The buyer applies for a L/C, which is processed through various banks, leading to the seller getting paid upon shipping the goods and providing documents.

What is export price escalation?

The increase in export prices due to transportation costs, tariffs, special taxes, and exchange rate fluctuations.

What are the two pricing options for exports mentioned?

CIF (Cost, Insurance, Freight) and FOB (Free on Board).

What are the advantages of direct market representation?

Offers control and enables feedback and information from the target market.

What are the disadvantages of representation by independent intermediaries?

Lack of control and feedback from the target market.

What are the key export participants in foreign markets?

Export management companies, foreign distributors and agents, and company-owned distribution agencies.

What questions are included in the review for the exam?

Entry barriers, key export participants, advantages of direct ownership vs. independent intermediaries, issues with export pricing and payment.