t time can result in the loss ofsubstantial long-range business prospects and profits. A firm can also manufacture its products in its homecountry and export them for sale in foreign markets. Likelicensing, exporting can be a relatively low-risk method ofentering foreign markets. Unlike licensing, it is not an easytask. Exporting opens up several levels of involvement tothe exporting firm. On the basic level, the exporting firmmay sill its products to an export/import merchant. Thismerchant assumes all the risks of product ownership,distribution, and sale. It may purchase the good’s in theproducer’s home country and assume responsibility forexporting the product. The exporting firm may also ship itsproducts to an export/import agent. The export/importagent arranges the sale of the products of foreignintermediaries for a commission or fee. The agent is anindependent firm that sells and may perform othermarketing functions for the exporter. The exporter retainstitle to the products during shipment and until they are sold.An exporting firm may also establish its own sales offices inforeign countries. These installations are internationalextensions of the firm’s distribution system. The exportingfirm maintains control over sales, and it gains bothexperience and knowledge of foreign markets. Eventually,the firm may develop its own sales force to operate inconjunction with foreign sales offices or branches. Pricing is a very important factor in international business.The pricing system more common in international marketingis cost-based pricing. Cost-based pricing is not as popularin domestic marketing as it is in international marketing.Using this simple method of pricing, the seller firstdetermines the total cost of producing or purchasing oneunit of the product. The seller then adds the amount tocover additional cost and profit. The cost added is calledthe markup. The total cost of the markup is the selling priceof the pr...
