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Summary Basics of Foreign Trade and Global Marketing
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Summary of the Basics of Foreign Trade and Global Marketing
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Exposure = aufdecken, responsiveness = „entgegenkommen“BWL
Why do companies engage in foreign trade?
They internationalise because of a mix of push and pull factors
o Push factors:
Bad trends in their own markets so they decide to explore opportunities
beyond national borders
E.g.: declining demand, falling profit margins, growing of competitors
o Pull factors:
Good conditions in foreign markets that make internationalization attractive
E.g.: faster growth, good conditions (taxes, Ireland), lower environmental
standards, resources, customers, cheap labour, know how
Product satisfies an unmet need
3 basic decisions:
o Which markets to enter?
Depends on their long run profit potential
A good market is: political stable, has a free market system (low trade
barriers across borders), has low inflation risk and currency risk and stable
exchange rates (€ is good at this point)
Low private sector debt (if people have high debts, they can’t spend money,
same with low income)
o When to enter on what scale?
If attractive markets are identified, companies must consider time of entry
Either early or late:
Early (before other firms) Late (after firms established
themselves)
+ Might be faster growth + learn from mistakes from the
others
- risk (what works what doesn’t) + you know what customers want
(minimum requirements)
- Lack of qualified labour - high barriers set from the
competitors
+ qualified labour
o Which mode of market entry?
Depends on: does the company want to have higher market
share/profitability
Are there financial, organizational, and technological resources and
capabilities available?
Unique conditions in the target country (environmental laws, distribution,
transport)
Other factors:
Competition from existing rivals
Characteristics of product/service which you are about to offer to
the customer (e.g. baby food China)
Optimal mode is individually different for each situation and company!
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