Explain the difference between indirect exporting and direct exporting. What are the advantages and disadvantages of each approach?
What will be an ideal response?
Indirect exporting is when a firm sells its domestically produced goods in a foreign country through an intermediary. It has the least amount of commitment and risk but will probably return the least profit. Indirect exporting is ideal for a company that has no overseas contacts but wants to market abroad. The intermediary is often a distributor that has the marketing know-how and resources necessary for the effort to succeed. Direct exporting is when a firm sells its domestically produced goods in a foreign country without intermediaries. Direct exporting involves more risk than indirect exporting for the company but also opens the door to increased profits. Most companies become involved in direct exporting when they believe their volume of sales will be sufficiently large and easy to obtain so that they do not require intermediaries.
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