Export-Import Management (520135)

Chapter – 02
(Finding Export Market & Foreign Suppliers for Import)
Lecture- 07

Conducted By :
Lata Akter
Lecturer
Department Of Business Administration
Dhaka City College
 Topics to be discussed……..

 Way/ Mode of Entry to Export Market / International Business

 Selecting Distribution Channel

 Direct Distribution Channel

 Indirect Distribution Channel

 Factors that Affect Selecting Distribution Channel

 Way/ Mode of Entry to Export Market / International Business
1. Joint venture:
An arrangement in which two or more businesses agree to combine their resources for
some definable undertaking is a joint venture. One of the owners will be a local business
(local to the foreign market). The two companies would then provide the new business
with a management team and share control of the joint venture.
2. Licensing:
A licensing is a contractual agreement between two parties (the licensor and licensee) in
which the licensor grants the licensee the right to use the brand name, trademark,
patented technology, or ability to produce and sell goods owned by the licensor.
3.Franchising:
A contractual agreement takes place between Franchisor and Franchisee. Franchisor
authorizes franchisee to sell their products, goods, services and give rights to use their
trademark and brand name. And these franchisee acts like a dealer. However, the rules for
how the franchisee carries out business are usually very strict – for example, any
processes must be followed, or specific components must be used in manufacturing.
 Way/ Mode of Entry to Export Market / International Business
[Cont…………]

4. Foreign Direct Investment:

Foreign direct investment (FDI) is when you directly invest in facilities in
a foreign market. It requires a lot of capital to cover costs such as premises,
technology and staff. FDI can be done either by establishing a new venture
or acquiring an existing company.
5. Countertrade :
Countertrade means exchanging goods or services which are paid for, in
whole or part, with other goods or services rather than with money. In
developing countries, whose currency may be weak or devalued relative to
another country’s currency, bartering may be the only way to trade.
 Way/ Mode of Entry to Export Market / International Business
[Cont…………]
6. Exporting Directly:
Exporting is the direct sale of goods and / or services in another country. It
is possibly the best-known method of entering a foreign market, as well as
the lowest risk. It may also be cost-effective as you will not need to invest
in production facilities in your chosen country – all goods are still produced
in your home country then sent to foreign countries for sale.
7. Turnkey Operations:
Turnkey operation is a project constructed by foreign authority / company
and it is handed over to the local government. In turnkey operations a
product or service concept that is complete, installed and ready to be used
upon delivery or installation.
 Selecting Distribution Channel

 Distribution of goods is as important as production. Existence of an organization largely

depends upon a proper and well organized system of distribution. It is therefore, necessary than
utmost attention should be paid in selecting a channel of distribution.
 Distribution channel is that path which includes all individuals and institutions which work to
make goods reach the consumers from producers without interruption. Thus distribution channel
helps in the transfer of goods in original form from producers to consumers.
 The channels of distribution may differ from country to country, market to market and product
to product. So, the first task of the producer is to find out the possible distribution channel
through which he wants to reach the consumers on the foreign market, keeping in view the
characteristics of his product and the marketing strategy he wants to follow in the market.
 Types of Distribution Channel

The export distribution channel can be categorized into two types.

 1. Direct Distribution Channel

 Direct distribution channel is the system of distribution channel in which exporter sells the
goods to consumers without the help of intermediaries.
 The exporter may have full information on marketing opportunities and trends, competitors,
product acceptance in the market and other information regarding the market.
 The exporting company will have direct control over the marketing operations and,
therefore, can devise and implement the proper marketing strategy
 2. Indirect Distribution Channel

 In indirect exporting, the firm delegates the task of selling products in a foreign country
to an agent or export house.
 An indirect distribution channel relies on intermediaries to perform most or all
distribution functions.
 The manufactures incurs no start up cost. This method provides small firms with little
experience in foreign trade access to overseas markets without their direct involvement.
Factors that Affect Selecting Distribution Channel

1. International Marketing objectives of the firm

2. Manufacture's Resources and Experiences

3. Availability and Capability of intermediary

4. Customers and Product Characteristics

5. Marketing Environment

6. Control and Coverage

Thank You