International-Business-Dr-R-Chandran-E-book

16
International Business- Dr. R. Chandran
DIFFERENT MODES OF ENTRY IN INTERNATIONAL
BUSINESS
1. EXPORTS
Export deals with physical movement of goods and services from one
place to another through a customs port followings the rules of both
the country of origin and country of destination. Depending upon the
involvement of the exporter, exports can be classified as direct or
indirect. Direct exporters export their goods and services in their own
name and the buyer directly remits proceeds, in a proper manner and
through a proper channel. The proper channel means that the
remittance is made through the banking channel in the currency,
which is quoted in the invoice, and the proper channel means that the
goods are legally exported through a customs port.
Indirect exporters supply goods to direct exporters. Lack of expertise,
international contacts and manpower cause them to depend upon
direct exporters. Farmers rarely export grains on their own. Artisans
cannot develop international contacts to clinch business deals.
Therefore, they become indirect exporters. Their products are to other
countries but not in their names.
Exporters can be classified in several ways:
1. Depending upon the size of business, they are classified as small
and large exporters. Current national trade policy provides
incentives and facilities to promote both small & large exporters in
different ways that are status holders due to their performance in
earning foreign exchange.
2. Depending upon the product lines exported, they are classified as
single product and multiple product line
3. Depending upon their legal status, they are classified as
proprietary, partnership, private limited and public limited
companies
4. Depending upon the destination of their exports, they are classified
as single destinations or multi destination exporters. Nowadays, the
majority of the companies adopt the philosophy of multi product,
multi location, multi strategic, and multi dimensional operations.
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