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Entry Barriers Protect Domestic Turf ARTIFICIAL ENTRY BARRIERS NATURAL ENTRY BARRIERS Tariffs Pro-domestic Markets Competition among differentiated brands, all companies compete on equal footing. Government regulations, limited distribution access, tariff barriers 5-* Barriers and Mode of Entry When barriers are low, the firm will be likely to enter via exporting. When barriers are high, alternative modes of entry have to be chosen: License a local producer Create a joint venture Engage in a distribution alliance Invest in a wholly owned subsidiary 5-* C. The Exporting Option Indirect Exporting Export management companies perform all the transactions relating to foreign trade for the firm and are independent agents working for the firm in overseas markets, going to fairs, and contacting distributors The advantage is that the firm avoids the overhead costs and administrative burden involved in managing their own export affairs The disadvantage is that the skills and know-how developed through experiences abroad are accumulated outside the firm, not in it Direct Exporting The firm is able to more directly influence the marketing effort in the foreign market Advantage over indirect exporting is the control of operations 5-* Exporting Functions Product Shipment Transportation The shipment of the product to the border of the country is usually handled by an independent freight forwarder Clearing through Customs Unloaded at the national border, the product will go from the ship or airline to a customs-free depot before being processed through customs Warehousing After entering the country, the goods will often require storage 5-* Export Pricing Price Quotes Prices quoted CIF (cost-insurance-freight –the seller accepts the responsibility for product cost, insurance, and freight) is the recommended alternative for an export marketer. Trade Credit A high price can often be counterbalanced by beneficial trade credit terms Price Escalation Due to transportation costs, ta
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