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GMS 522 Final exam Questions & answers | A Graded
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GMS 522 Final exam Questions &answers | A Graded
Exporting - ✔✔involves the manufacture of a product in one country and its sale in one or
more foreign countries
Two forms of exporting - ✔✔-direct
-indirect
Direct Exporting - ✔✔exporters transact with an intermediary based in the foreign market
Indirect Exporting - ✔✔exporter transacts with an intermediary based in its home country.
This intermediary takes responsibility for getting the exporter's product into foreign country.
Domestic transaction from standpoint of the exporter
Advantages to exporting - ✔✔-requires little by way of managerial skills or knowledge of the
foreign market
-carries with it minimal risk for the firm
-does not involve significant costs for the firm
Disadvantages to exporting - ✔✔-lower returns relative to other entry modes
,-little control over how the product is positioned and sold in the foreign market
-little opportunity to develop a deep understanding of the foreign market
Types of Intermediaries - ✔✔-export buying agents
-export import broker
-export management company
-trading firms
-distributors
-agents
Export buying agents - ✔✔these agents are resident in the country of the manufacturer but work
on behalf of a foreign buyer
Export-import broker - ✔✔brokers bring buyer and seller together. They are specialist firms and
have deep expertise in a relatively narrow range of product categories
Export management company - ✔✔These are domestic firms which act on behalf of a # of non-
competing exporters .Take title to the production they handle and market them internationally for their
own account or they may act as agents
Trading firms - ✔✔find buyers in foreign markets and negotiate distribution arrangements for
other companies. Trade financing and foreign exchange transaction are also within their scope of
activities
Distributors - ✔✔independent firms based in the foreign country and are not affiliated with the
manufacturer. They purchase products from the manufacturer and take responsibility for
marketing them in the target foreign country
Agents - ✔✔independent companies based in the foreign target country and provide
representation for the manufacturing firm. These intermediaries do not take title to the products they
handle
, Licensing - ✔✔one firm (the licensor) grants the right to use its intellectual property to another
firm (the licensee) in exchange for financial compensation referred to as a royalty
Advantages for the licensor - ✔✔-no capital requirements
-does not require a deep understanding of the foreign market
-an effective strategy for circumventing the protectionist policies of host-country governments
Disadvantages for the Licensor - ✔✔-lack of opportunity to learn about and to understand the
foreign market
-creation of major competitor as a result of info sharing
Advantages for the Licensee - ✔✔-access to proven
technology -speed to market and the ability to leapfrog the local
competition -ongoing technical support from the licensor
Disadvantage for the licensee - ✔✔licensor may not provide its latest or most innovative
technical solutions
Costs in negotiating licensing agreements - ✔✔-
transfer -R&D
-Opporunity
Transfer costs - ✔✔the costs transferring the technology to a company to a company in a
foreign jurisdiction
R&Dcosts - ✔✔incurred in the development of the inovation
Opportunity costs - ✔✔relate to the opportunities lost to work the technology in some other
manner.
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