This document summarizes a tutorial on international business management that covers chapters on entering foreign markets and exporting. It discusses various foreign market entry modes such as exporting, turnkey projects, licensing, franchising, joint ventures, and wholly owned subsidiaries. It then focuses on the pitfalls of exporting, including problems securing financing, foreign exchange risks, poorly executed promotions, extensive paperwork, failure to customize products, poor market analysis, lack of understanding competition, and lack of distribution programs. Sources and examples are provided to illustrate key points.

1. IBUS2301:
International Business Management
Tutorial #8, May 5 and 6
Chapters 13 and 14: Entering Foreign Markets, Exporting
Tutor: Preston Teeter, p.teeter@business.uq.edu.au

2. IBUS2301:
Int’l Business Mgmt
Feedback on
presentations
Good
• Some eye contact!
• Clear slides with
visuals
• Clear diagrams,
explained well
• Up-to-date news and
data
Improve
• Look at entire audience
• Practice giving (not
reading) your speech +
time mgmt
• More specific business
examples

3. IBUS2301:
Int’l Business Mgmt
Outline
• Foreign market entry modes
• The pitfalls of exporting

4. IBUS2301:
Int’l Business Mgmt
FOREIGN MARKET ENTRY MODES

5. IBUS2301:
Int’l Business Mgmt
Entry Modes
• Exporting
– Produce in one country,
sell in another
• Turnkey Projects
– Firm sets up operating
plant, hands over “key”
• Licensing
– Grant rights to intangible
property for royalty fee
• Franchising
– Licensing with strict rules
of operation
• Joint Ventures
– Jointly owned firm
• Wholly Owned
Subsidiaries
– Firm owns 100%
(Greenfield and
Acquisition)

6. What are the Advantages
and Disadvantages of
each Entry Mode?

7. Source: spectrum.ieee.org

8. Source: Wikipedia
The Nipper Building, Camden, N.J.

9. Source: CQ Press' City Crime Rankings 2014

10. Source: hbr.org

11. Source: au.burberry.com

12. Sources: www.dog-clothes-world.com, www.brickfields.org.uk

13. Source: hbr.org

14. Source: www.thisdaylive.com

16. IBUS2301:
Int’l Business Mgmt
THE PITFALLS OF EXPORTING

17. Source: Mercopress.com

18. Preference of Exporter
Preference of Importer

19. IBUS2301:
Int’l Business Mgmt
Export and
Import Financing
• Letter of Credit (L/C)
– The promise that a foreign importer obtains from its
bank to pay on its behalf
• Draft (Bill of Exchange)
– Order written by exporter instructing importer, or
agent, of payment
• Bill of Lading
– Issued to the exporter by carrier transporting the
merchandise (document of title)

20. IBUS2301:
Int’l Business Mgmt
How it Works
1. Importer obtains letter of credit from bank
2. Bank presents L/C to exporter
3. Exporter ships product, bill of lading given to
bank
4. Exporter presents draft, bank pays exporter
5. Bank gives product title to importer
6. Importer pays bank

21. The Use of a Third Party

22. A Typical International Trade Transaction

23. Source: The Wall Street Journal

24. IBUS2301:
Int’l Business Mgmt
Pitfalls of
Exporting
• Problems securing
financing
• Foreign exchange risks
• Poorly executed
promotional campaign
• Extensive paperwork
and complex
procedures
• Failure to customize
product offerings
• Poor market analysis
• Poor understanding of
foreign competition
• Lack of distribution
program

25. Questions?