GMS 200 Lecture Notes - Lecture 3: Free Trade Area Of The Americas, Brownfield Land, Profit Margin

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 200
• Professor: Emad Samwel

Document Summary

To establish connections with foreign suppliers of raw materials. To take advantage of relatively abundant low-wage unskilled labor. Direct exporting selling directly to foreign customers. Advantages: establish and maintain relationship with foreign customers; control pricing decisions. Disadvantages: may demand managerial time and significant financial commitment. Indirect exporting selling to foreign customers through an agent or distributor. Advantages: require limited financial commitment and knowledge of foreign market. Disadvantages: no contact with foreign customers; smaller profit margin; lose opportunity to lea(cid:396)(cid:374) a(cid:271)out fo(cid:396)eig(cid:374) (cid:373)a(cid:396)kets . Licensing agreement: an international market (i. e. licensor) may permit another company to use intellectual capital (ip) such as trademarks in exchange for compensation in royalty fees. Royalty fees (i. e. 10% of sales) may reduce the profit margin of the licensee, but yield several benefits: Global trademark allows the company to quickly become international without having to spend considerable time and money in developing its own brand.