PSYC 290 Lecture Notes - Lecture 13: Intangible Property, Complete Control, Franchising
15 Oct 2018
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Chapter 13 selecting and managing entry modes: explain why and how companies use exporting, importing, and countertrade. (textbook, pp. Most large companies use exporting as a means of expanding total sales when the domestic market has become saturated. Greater sales volume allows them to spread the fixed costs of production over a greater number of manufactured products, thereby lowering the cost of producing each unit of output. In short, going international is one way to achieve economies of scale: diversify sales. In other words, they can offset slow sales in one national market (perhaps due to a recession) with increased sales in another. Diversified sales can le(cid:448)el off a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s (cid:272)ash flo(cid:449), (cid:373)aki(cid:374)g it easie(cid:396) to coordinate payments to creditors with receipts from customers: gain experience. Companies often use exporting as a low-cost, low-risk way of getting started in international business.
