Most appropriate for firms with limited international expansion objectives
Appropriate for firms using international sales as a means of disposing of surplus production
Export buying agent: a representative of foreign buyers who is located in the exporter ’s home country and provides services such as identifying potential sellers and negotiating prices
Broker: an agent, based in the home country, who is a specialist in performing contractual functions but does not actually handle the products sold or bought?
Piggyback: an indirect mode of export which entails an inexperienced SME ‘riding’ on the capabilities of a larger company already experienced in foreign markets
Figure 10.1 Export modes 10-
Contracting with intermediaries located in the foreign market to perform export functions.
The foreign intermediaries serve as an extension of the exporter, negotiating on behalf of the exporter and assuming such responsibilities as local supply-chain management, pricing, and customer service.
It gives the exporter greater control over the export process and potential for higher profits, as well as allowing a closer relationship with foreign buyers.
However, exporter must dedicate more time, personnel, and corporate resources in developing and managing export operations.
International Business: Strategy, Management, and the New Realities
Direct entry modes 10- Export via distributors Export via agents
Distributor: An independent company that stocks the manufacturer ’s product, but has substantial freedom to choose its own customers and price
Agent: An independent company that sells on to customers on behalf of the manufacturer, does not stock the product, and earns profits from commission paid by the manufacturer
Hierarchical modes: The entry modes by which the firm completely owns and controls the foreign entry mode
Hierarchical modes 12- Domestic-based representatives Resident sales representatives Foreign sales subsidiary Sales and production subsidiary Region centres
Figure 12.1 Domestic-based sales representatives/ manufacturer’s own sales force 12-