Answer to Question 1
Businesses become involved in international marketing activities in the following ways:
a. Importing and exporting: Importing and exporting require the least amount of effort and commitment of resources. Importing is the purchase of products from a foreign source. Exporting, the sale of products to foreign markets, enables firms of all sizes to participate in global business.
b. Licensing and franchising: When potential markets are found across national boundaries, and when production, technical assistance, or marketing know-how is required, licensing is an alternative to direct investment. Franchising is a form of licensing in which a company (the franchiser) grants a franchisee the right to market its product, using its name, logo, methods of operation, advertising, products, and other elements associated with the franchiser's business, in return for a financial commitment and an agreement to conduct business in accordance with the franchiser's standard of operations.
c. Contract manufacturing: Contract manufacturing occurs when a company hires a foreign firm to produce a designated volume of the firm's product (or a component of a product) to specification and the final product carries the domestic firm's name. Marketing may be handled by the contract manufacturer or by the contracting company. Three specific forms of contract manufacturing have become popular in the last decade: outsourcing, offshoring, and offshore outsourcing.
d. Joint ventures: In international marketing, a joint venture is a partnership between a domestic firm and a foreign firm or government. Joint ventures are especially popular in industries that require large investments, such as natural resources extraction or automobile manufacturing.
e. Direct ownership: Once a company makes a long-term commitment to marketing in a foreign country that has a promising market as well as a suitable political and economic environment, direct ownership of a foreign subsidiary or division is a possibility.
f. Trading companies: Marketers sometimes employ a trading company, which links buyers and sellers in different countries but is not involved in manufacturing and does not own assets related to manufacturing. Trading companies buy products in one country at the lowest price consistent with quality and sell them to buyers in another country. Trading companies reduce risk for firms that want to get involved in international marketing. A trading company provides producers with information about products that meet quality and price expectations in domestic and international markets. Additional services a trading company may provide include consulting, marketing research, advertising, insurance, product research and design, legal assistance, warehousing, and foreign exchange.
Answer to Question 2
D
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