INSTRUCTIONS: Please RESPOND to this answer from the Point of view as a student. Use credible sources and respond as if you are a manager of a marketing agency. Tell this student what your marketing agency would think of each of these answers from a Management perspective in about 4-5 paragraphs:
Exporting
Exporting is a non-equity entry vehicle for a company to enter into a different country. It is a “form of selling production or service inputs or actual products and service aboard” (Carpenter & Sanders, 2008, p. 215). This entry vehicle has benefits of having low costs to enter a new market because the only thing that enters is the product, it may be parts of a final product or a final product but is used by other firms. Other benefits of using this vehicle are the distribution and marketing are handled by the firm receiving the product or service overseas so the only costs associated with the exporting firm is a cost of producing and transporting the product and making sure it meets packaging and other requirements to enter another country.
Ideas can also be exported as well, licensing and franchising is another branch of exporting as a developed brand is expanding and someone from the overseas market will take care of running the business and all the exporting firm will do is provide the resources and materials so the overseas firm can utilize it and build the business.
Alliances
Alliances is an entry vehicle for a firm and may be the first phase for a firm as it is a partnership with a firm in the overseas country you are trying to enter. Carpenter and Sanders (2008) mentioned three reasons why a firm might want to choose an alliance and it may be due to government regulations such as in China (in the past) where foreign firms cannot own companies there. A second reason is market familiarity, as a new firm entering a new market, having a partnership with a firm that is established can bring knowledge and possibly brand name and legitimacy to the new business. The third reason to choose alliances is operational complexity – where the operation is complex so your firm can focus on the product and service while the partnership firm focuses on the operation side of this new alliance.
Foreign Direct Investments
This entry vehicle to foreign markets is explained in its name; foreign direct investments. A firm makes financial investments in an overseas market to start a new firm. A firm can buy up an existing firm through acquisition or build one up from scratch, this can be combined with another firm and also one from the overseas country.
Importing
Importing is a way for a firm to have a taste of internationalization and similar to outsourcing because the products or services are being “importing” and sold domestically. The added advantage might be the costs as it may be cheaper to produce elsewhere rather than producing it in-house. When firms decide to import, they must understand customs, compliance, and regulations to make sure it is legal and to not cost more than producing it in-house.
Outsourcing
International outsourcing is taking a part of the business and having an external firm from another country to handle it. This is similar to importing as firms from overseas are taking care of a part of the business so your firm doesn’t have to handle it such as production, manufacturing, marketing, etc. The clear different between the two is exclusivity – as outsourcing, the foreign firm provides the service of handling the item being outsourced whereas importing is just buying a product that the overseas firm just happen to produce – they can have other buyers of that same product or service.
Business process outsourcing is “delegation of one or more IT-intensive business processes to an external nondomestic provider” (Carpenter & Sanders, 2008, p.221). Bank of America, as well as many other firms, outsources tech support overseas, development of software, etc. processing centers etc. A benefit of using outsourcing is that the firm only has to pay for that service and would consider delegating this to another firm if the operation costs are higher to do in-house than with another firm.
Off-shoring
Off-shoring is different than outsourcing because even though the operations takes place outside of the domestic market, the firm still owns that part of the business, this can be justified if the labor costs are cheaper, closer access to raw materials, high fees for importing, etc.
References
Carpenter, M., Sanders, W. (2008). Strategic Management: A Dynamic Perspective. Upper Saddle River, N.J: Prentice Hall.
