Copyright © 2011Pearson Education CHAPTER 15. Copyright © 2011 Pearson Education Offset sales declines in the domestic market Increase sales and profits

Copyright © 2011Pearson Education

CHAPTER CHAPTER 1515

Copyright © 2011 Pearson Education

Offset sales declines in the domestic market

Increase sales and profits Extend products’ life cycles Lower manufacturing costs Lower product cost Improve competitive position Raise quality levels Become more customer-oriented

Ch. 15: The Global Aspects of Entrepreneurship

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In addition to the text



Creating a Web Site

Relying on Trade Intermediaries

Creating Joint Ventures

Foreign Licensing

International Franchising

Countertrading & Bartering

Exporting

Establishing International Locations

Importing &Outsourcing

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FIGURE 15.1



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Establish a presence on the WebEstablish a presence on the Web Rely on trade intermediariesRely on trade intermediaries Form joint venturesForm joint ventures Engage in foreign licensingEngage in foreign licensing Consider international franchisingConsider international franchising Use countertrading and barteringUse countertrading and bartering Export Export Establish international locations Establish international locations Use importing and outsourcingUse importing and outsourcing



Asia41.2%

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Available 24 hours a day to anyone anywhere in the world.

1.60 billion Web users worldwide◦ 220 million in U.S.◦ Nearly 1.4 billion in other countries

Customers who live outside the U.S. account for more than 50% of all online sales by U.S. companies

54% of eBay transactions take place outside the U.S.


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Domestic agencies that serve as distributors in foreign countries for companies of all sizes.

Types of intermediaries:◦ Export Management Companies (EMCs)◦ Export Trading Companies (ETCs)◦ Manufacturer’s Export Agents (MEAs)◦ Export merchants◦ Resident buying offices◦ Foreign distributors


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Domestic joint venture – two or more U.S. companies form an alliance for the purpose of exporting their goods and services abroad.

Foreign joint venture – a domestic firm forms an alliance with a company in the target nation.

Most important ingredient: Choosing the right partner.

Use the joint venture as a learning process.


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To expand internationally, franchisers should:1. Identify the country or countries that are

best suited to the franchiser’s business concept.

2. Generate leads for potential franchisees.3. Select quality candidates.4. Structure the franchise deal.

Direct franchising Area development Master franchising


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Ch. 6: Franchising and the Entrepreneur

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Small business accounts for 90.7% of all companies involved in exporting, but they generate just 21% of the dollar value of the nation’s exports.

Significant impact: Small companies generate $1.1 billion each day in export sales!


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1. Recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export.

2. Analyze your product or service.

3. Analyze your commitment to developing export markets.

4. Research potential markets and pick your target.


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Steps to Successful Steps to Successful ExportingExporting



FIGURE 15.4 Small Business Exports: Number of Countries to Which Small Companies Export

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5. Develop a distribution strategy.

6. Find your customer.◦ U.S. Department of Commerce

◦ International Trade Administration

7. Find financing for export sales.

8. Ship your goods.

9. Collect your money.


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(continued)(continued)


FIGURE 15.5 How a Letter of Credit Works


Make sure that importing or outsourcing is right for your business.

Establish a target cost for your product.

Do your research before you leave home.

Be sensitive to cultural differences. Do your groundwork.


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Protect your company’s intellectual property.

Select a manufacturer. Provide an exact model of the

product you want manufactured. Stay in constant contact with

the manufacturer and try to build a long-term relationship.


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(continued)(continued)


Domestic Barriers

Government imposed barriers. Attitude: “My company is too

small to export.” Lack of information about

how to get started.


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International Barriers Tariff – A tax a government imposes

on goods and services imported into that country.

Nontariff barriers – Governments that protect domestic industries

Quotas - Limits on the amount of a product imported into a country.


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Barriers To International Barriers To International TradeTrade


International Barriers Embargo - Total ban on imports of

certain products. Dumping - Selling large quantities of a

product in a foreign country below cost to gain market share.


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(continued)


International Barriers Political barriers - Rules, regulations and

political risks. Business barriers – Different cost

structures and business practices. Cultural barriers - Differing languages,

philosophies, traditions, and accepted practices.


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(continued)


Major Agreements:

World Trade Organization (WTO) North American Free Trade

Agreement (NAFTA) Dominican Republic - Central

America Free Trade Agreement (CAFTA-DR)


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Take time to learn before jumping in.

Seek out assistance from professionals.

Make yourself at home in all three of the world’s key markets - North America, Europe, and Asia.

Appeal to the similarities in the various regions and recognize the differences in local cultures.

Develop new products for the world market.

Learn foreign customs and languages.


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“Glocalize” - make global decisions about products, markets, and management and allow local employees to make tactical decisions.

Recruit and retain multicultural workers. Train employees to think globally. Hire local managers to staff foreign offices and

branches. Do whatever seems best wherever it seems best. Consider using partners and joint ventures to

break into foreign markets.


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(continued)

Copyright © 2011 Pearson Education 15 - 25Ch. 15: The Global Aspects of Entrepreneurship

Global effectiveness requires entrepreneurs to: ◦Learn about the global market◦Seek the assistance of professionals◦Recruit and train employees to think globally

◦Consider using partners and joint ventures

◦Determine which opportunities best fit your company

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Copyright © 2011Pearson Education CHAPTER 15. Copyright © 2011 Pearson Education Offset sales declines in the domestic market Increase sales and profits