Question

Case assignments must be completed with a written 1-page study on the assigned case questions in the textbook. The format requested for these assignments is based on elaborating and including two basic parts in the essay: 1) in a bullet presentation style (one phrase each bullet), list a summary of the key issues, situations, problems, opportunities and threats you may identify as relevant; 2) answer all the questions listed in each case in two or three sound paragraphs. Use the APA style for these assignments.

Case: The Borderfree Option: Going Global—simplified

E-commerce, by changing the way companies around the

world do business, makes international trade easier and

cheaper. Before the Internet, tracking down a product to

import, or finding foreign customers to export to, overwhelmed

the typical SME. Some relied on occasional trade

shows and expensive, time-consuming foreign travel to

identify possible products or assess potential suppliers.

Certainly, traders could tap local embassies or consulates

to support the export promotion or provide import assistance.

Although sounding straightforward, in practice these sorts

of options typically proved expensive and cumbersome.

Consequently, international trade was largely limited to big

companies that could afford to attend trade shows, translate

marketing materials, travel internationally, hire intermediaries,

and supervise the many activities that make up international trade.

Today, the Internet gives SMEs a cost-effective means

to manage these demands. It makes information on any

conceivable product from virtually any market readily and

inexpensively accessible. Falling trade barriers (due to

expanding cross-national trade agreements) along with

improving logistics options (courtesy of enterprising freight

forwarders and 3PLs) offer an array of trade possibilities.

The Internet, simply put, transforms whatever it

touches. It’s already the most powerful force for globalization,

democratization, economic growth, and education in

history. The same, we see, applies to the game of international

trade. As such, e-commerce is now inherently

global—just as the Internet knows no physical boundaries,

so too with Internet sales. Consumers’ growing disposable

income and interest in global brands, especially in a

screen-saturated world, highlights the potential of global

e-commerce.

Still, national markets differ in different sorts of ways—

ranging from market structure and growth dynamics to

consumer preferences and media consumption practices.

Staying ahead of trends, both national and global is no small

task. It calls for companies to study the demographics, psychographics,

preferences, and behaviors of the global consumer

landscape, identify how to manage payments and

collections, and organize supply chains that reflect when,

where what, and how consumers buy. Tough in just one

market, the task can grow stunningly complex when looking

at the 200-plus national markets or territories that compose

the global business environment.

Launch a Website, Go Global

Capturing those sales, along with riding expanding technologies,

has led many retailers to open websites with an

eye to opening export markets far and wide. Now, opening

a website, whether you like it or not, means you are global.

Consumers from anywhere and everywhere can go to your

website and, when there, do business. Done well, enterprising

companies can leverage cross-border e-commerce into

powerful international expansion. Done poorly, a retailer

wastes energy, effort, and equity. Despite best intentions, the challenges of international inexperience, currency ills,

payment problems, logistics challenges, and cultural contingencies

can prove daunting.

E-commerce’s growing potential spurs vendors to make

going global as simple as linking your current website

with their behind-the-scenes, back-office expertise. They

develop end-to-end solutions that break down barriers and

borders, thereby enabling a company to sell its products

worldwide with reduced effort.

These companies are not your typical e-commerce,

business-to-consumer model retailer, like Amazon, eBay, or

Alibaba. Moreover, they are unlike traditional logistics companies,

such as FedEx, DHL, UPS, and their core business

of delivering packages. Rather, these companies, such as

BorderJump, Venda, International Checkout, and Borderfree,

provide proprietary technology that enables retailers to

transact with customers in virtually every country and territory

worldwide.

Borderfree: Fine-Tuning the Global Game

Founded in 1999, Borderfree is headquartered in New York

City. It has offices in Dublin, London, Tel Aviv, Toronto, and

Shanghai. From these, Borderfree helps more than 200 retailers—

such as Neiman Marcus, Lands’ End, and Harrods—

conduct cross-border online sales in more than 220 countries

that are transacted in 74 currencies.

Borderfree manages retailers’ international shopping

experience, suggesting real-time merchandising insights and

marketing strategies to help it target international consumers,

whether through the web, mobile, or in-store channels. Then,

Borderfree’s systems seal the deal, administering multicurrency

pricing and payment processing, tending to fraud and

tax management, calculating landed costs, arranging customs

clearance and brokerage, and supervising logistics.

Borderfree’s mission declared its CEO, “is to make it

as simple as possible for online retailers to reach new consumers

and sell their products around the world globally.”

Added to its chief technology officer, the rise in global consumerism

means that “There’s a lot of growth still out there

for companies in the industry. Growth from a revenue perspective,

growth from a coverage perspective.”

Capturing that growth requires companies, both large

and small, overcome the barriers to buying and selling

internationally. Borderfree, by linking customers and companies

through tap-web and mobile platforms, helps consumers

worldwide shop across geographies and devices

while enabling companies to leverage their brand, inventory,

and expertise.

Arranging the Pieces

Borderfree’s turnkey installation system integrates with the

retailer’s e-commerce infrastructure. Moreover, it's plug-in

modules connect a retailer’s existing e-commerce infrastructure

and international operations. The end result is that

customers enter international markets quickly after a system

rollout. Moreover, Borderfree’s software helps its clients localize

the website experience, supporting country-specific

marketing messages, pricing strategies, international

checkouts with translation, local payment options, and fully

landed delivery quotes.

Operationally, a retailer can add plug-ins that track what

people are buying, where and when they are buying it, and

adjust promotions in real-time. On the service side, Borderfree

also manages international fraud, customs clearance,

and all global logistics. Collectively, Borderfree enables the

internationally ambitious retailer to quickly move from domestic

today to global tomorrow.

Borderfree works with retailers to optimize international

site experience based on local preferences, best practices,

and marketing customization. It provides targeted marketing

campaigns, data analysis and insight into prospective markets,

website localization, duty and tax compliance, pricing in different currencies, customs clearance, and customer

care. Harrods’ e-commerce director, for instance, explained,

“We were drawn to Borderfree’s ability to further enhance

our capacity to serve our customers seamlessly across geographies.

We also were particularly interested in partnering

with Borderfree to extend our reach into China and Russia,

two markets that hold great consumer promise for us.”

The director of e-commerce at The Dune Group, a fashion

footwear and accessories company that has over 300

stores and concessions in 24 countries, said that Borderfree

provides “potential growth opportunities in markets such as

South America, Africa, and Asia.” Likewise, the head of digital

at Trunci planned to use Borderfree’s platform to further its

growth in India, Japan, Ireland, Mexico, Pakistan, South

America, and South Korea.

Promising Solutions

In 2014, Borderfree generated more than $125 million in revenue.

It is paid by its clients based on a percentage of sales,

generally up to 12 percent, that takes place on Borderfree’s

platform. It generates additional revenue from fulfillment

services, foreign exchange, and other transaction-related

fees. Looking to the future, as more countries champion

international trade, as more executives target international

sales, as more consumers develop global brand awareness,

and as more technologies improve connectivity, shoppers

worldwide will make more purchases on the Internet.

Capturing these opportunities pushes some companies

to go alone in the world of import and export. Others, managing

a differing mix of ownership, location, and internalization

advantages, see that the growing competencies of

companies such as Borderfree make going global with the help of an intermediary the superior choice.

Questions

14-4. What mix of ownership, location, and internalization advantages would encourage a company to hire Borderfree?

14-5. Borderfree’s clients expect it to be knowledgeable about the key markets in which they operate and to be able to advise on how to prioritize, budget, and compete. How does Borderfree make that happen?

14-7. Do you think most international trade might eventually take place through intermediaries like Borderfree.com? Does that influence your interest in importing and exporting?

Answer 1

*****Please please please LIKE THIS ANSWER, so that I can get a small benefit, Please*****

14-4. What mix of ownership, location, and internalization advantages would encourage a company to hire Borderfree?

A company can be encouraged to hire Borderfree if it is offered the following mix of ownership,location and internalization advantages: Ownership advantage: comparatively lower cost ofoperating business in the international market, efficient transportation systems, and bettercoordination of assets Location advantage:proximity to geography and culture, larger size ofmarket, and low operational cost in terms of land and manpower. Internalization advantage:Borderfree provides the ability of operating wholly ownedsubsidiary to the company. Besides, the firm can internalize its trade secrets to get protectionfrom market failures.

The ownership-location-internalization (OLI) model is a simple “big picture” framework for organizingour thoughts about the benefits of multinational production. We discuss each component of theframework below. Ownership. The ownership condition says that the firm must own some asset thatgenerates enough value to make it worth the extra costs of multinational production. This asset might bea blueprint, a patent, or copyright. A pharmaceutical company, for example, may own a patent on acholesterol drug. This patent gives the firm market power (since other firms cannot produce this drug)which increases the firm’s profits. Other kinds of assets include things such as managerial talent, abrand’s reputation, or some other intangible capital owned by the firm. Note that some of these assetsare explicit and legally protected (e.g., Pfizer’s patent on Lipitor) while others are not (e.g., Google’s workculture). Location. A multinational firm, by definition, operates in more than one country. To make thisworthwhile, there must be some advantage from operating in that location. One type of locationadvantage is a saving in transportation and tariff costs. This kind of advantage is most important forgoods that are expensive to ship abroad (i.e., to export). It would be very expensive, for example, forMcDonald’s to ship hot Big Macs to Canada for sale, so McDonald’s produces Big Macs in Canada to sellto the Canadian market.

14-5. Borderfree’s clients expect it to be knowledgeable about the key markets in which they operate and to be able to advise on how to prioritize, budget, and compete. How does Borderfree make that happen?

Borderfree manages a retailers’ international shopping experience, suggesting real-time merchandising insights and marketing strategies to help it target international consumers, whether through web,mobile, or in store channels. Then, borderfree’s systems seals the deal, administering multiculturency,pricing and payment processing, tending to fraud and tax management, calculating landed costs,arranging customs clearance and brokerage, and supervising logistics. Moreover, a retailer can add plug-ins that track what people are buying, where and when they arebuying it, and adjust promotions in real time. On the service side, Borderfree also manages internationalfraud, customs clearance, and all global logistics. Collectively, Borderfree enables the internationallyambitious retailer to quickly, move from domestic today to global tomorrow.

14-7. Do you think most international trade might eventually take place through intermediaries like Borderfree.com? Does that influence your interest in importing and exporting?

With the rapid growth of the use of these sites and the corresponding increase in trade among SMEs, it is very reasonable to speculate that eventually most trade between SMEs might take place in this context. Importing and exporting rises dramatically with powerful tools such as these at a company’s disposal. Or in other terms simply we may also conclude that, Given their rapid growth and the resulting increase in trade among small and medium-sized enterprises, the fact that, in the end, more trade will occur between small and medium-sized enterprises is fair to guess. With powerful resources like these available to a company, importing and exporting rises drastically.

*****Please please please LIKE THIS ANSWER, so that I can get a small benefit, Please*****