Mode Of Entry

Topics: International trade, Franchising, Trade Pages: 3 (802 words) Published: April 14, 2015
Mode of entry
1. Export mode
The export mode refers to that the manufactures are produced in domestic, and then by the transportation of products enter into the target country. The export model including indirect and direct export. Indirect export means the enterprise through the middlemen of the domestic to engage the export of products. Under this mode, the Nufarm Company can make use of the existing sales channels that intermediaries have to handle export documents, insurance and transportation. At the same time, Nufarm Company can maintain flexibility to advance and retreat the international market as well as change the international sales channels. Thus, Nufarm Company can avoid the market risks effectively. Direct export refers to that the enterprise has its own foreign trade department, or using the middlemen who existing in the target country to engage the export of products. Direct export is beneficial for enterprises to get rid of the dependence on intermediaries, and cultivating their own international business talents as well as enhance international marketing experience to improve the product's popularity in the international market. However, the risk that company need to assume will be more serious. 2. Contract mode

The mode of contract refers to the enterprise and enterprise in target country sign an equity contract, which can make formers’ patent, technology, experience, management, human and other intangible assets are used for the latter, and obtain the economic benefits from the latter. The contract is a way that through the output of knowledge and technology to enter the foreign markets. Contract mode mainly includes license model and franchise model. License model refers to the enterprise transfers its industrial property to foreign legal person within a certain period. Thus, the company can obtain commissions or other compensation. The most obvious benefits of license is to bypass the import barriers. Also, there has a smaller...
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