Specialists can cut through red tape

Task 1. Complete the text with the words in the box.

LESSON 3

1. confusing formalities	5. key management people	9. a small mistake	13. production costs	17. Joint venturing
2. Contract manufacturing	6. take the market	10. To be able to grow	14. Management contracting	18. for years
3. really promising	7. red tape	11.wholly-owned subsidiary	15. local needs	19. to enter foreign markets
4. a joint venture	8. In some situations	12. market opportunities	16. data processing services	20. to handle it

Exporting does involve some government (1), but firms can learn (2) fairly quickly. Or that job can be turned over to middleman specialists. Export agents can handle the paperwork as the products are shipped outside the country. Then agents or merchant wholesalers can handle the importing details. Even large producers with many foreign operations use international middlemen for some products or markets. Such middlemen know how to handle the sometimes (3) and specialized functions. Even

(4) can tie products up at national borders for days or even months.

Exporting doesn’t have to involve permanent relationships. Of course, channel relationships take time to build and shouldn’t be treated lightly—sales reps’ contacts in foreign countries are «investments.» But it’s relatively easy to cut back on these relationships or even drop them. Some firms, on the other hand, develop more formal and permanent relationships with nationals in foreign countries, including licensing, contract manufacturing, management contracting, and joint venturing.

Licensing is a relatively easy way (5). Licens­ing means selling the right to use some process, trademark, patent, or other right for a fee or royalty. The licensee takes most of the risk because it must invest some capital to use the right.

This can be an effective way of entering a market if good partners are available. Gerber entered the Japanese baby food market this way but still exports to other countries.

(6) means turning over production to others while retaining the marketing process. Sears used this approach as it opened stores in Latin America and Spain.

This approach can be especially desirable where labor relations are difficult or where there are problems obtaining supplies and «buying» government cooperation. Growing nationalistic feelings may make this approach more attractive in the future.

(7) means the seller provides only management skills; others own the production facilities. Some mines and oil refineries are operated this way—and Hilton operates hotels all over the world for local owners. This is a relatively low-risk approach to international marketing. The company makes no commitment to fixed facilities, which can be taken over or damaged in riots or wars.

If conditions get too bad, (8) can fly off on the next plane and leave the nationals to manage the operation.

(9) means a domestic firm entering into a partnership with a foreign firm. As with any partnership, there can be honest disagreements over objectives (for example, about how much profit is desired and how fast it should be paid out) as well as operating policies. Where a close working relationship can be developed—perhaps based on a Canadian firm’s technical and marketing know-how and the foreign partner’s knowledge of the market and political connections — this approach can be very attractive to both parties.

(10), a joint venture is the only type of involvement that’s possible. For example, IBM wanted to increase its 2 percent share of the $ 1 billion a year that industrial customers in Brazil spend on (11). But Brazilian law severely limited expansion by foreign computer companies. (12), IBM had to develop (13) with a Brazilian firm. Because of Brazilian laws, IBM could own only a 30 percent interest in the joint venture. But IBM decided it was better to have a 30 percent share of a business and be able to pursue new (14) than to stand by and watch competitors (15).

A joint venture usually requires a big commitment from both parties. When the relationship doesn’t work out well, it can be a nightmare that causes the Canadian firm to want to go into a wholly-owned operation. But the terms of the joint venture may block this (16).

When a firm feels that a foreign market looks (17), it may want to take the final step. A (18) is a separate firm owned by a parent company. This gives complete control and helps a foreign branch work more easily with the rest of the company.

Some multinational companies have gone this way. It gives them a great deal of freedom to move products from one country to another. If a firm has too much capacity in a country with low (19), for example, it can move some production there from other plants and then export to countries with higher production costs. This is the same way that large Canadian firms ship products from one area to another, depending on costs and (20).

Дата добавления: 2015-08-31