TYPES OF INTERNATIONAL OF BUSINESS
There are number of ways for internationalization / globalization of business. These are referred as
foreign market entry strategies. Each of these ways has certain advantages and disadvantages. One
strategy for a particular business may not be very suitable for another business with different
environment. Therefore it is quite common that a company employs different strategies for different
The different strategies of internationalization are:
1. Importation: Imports is defined as goods and services produced by host country and purchased
by parent country. It is reverse process of Exports.
2. Exportation: Exports is defined as goods and services produced in one country then get
marketed to other country.
3. Foreign Direct Investment (FDI): FDI are funds invested in equity from parent country to a host
country. Rich countries invest funds in growth industries and geographic areas of economic
4. Licensing: Licensing involve minimal commitment of resources and effort on the part of the
international marketer, are easy ways of entering the foreign markets. Under international licensing,
a firm in one country (the licensor) permits a firm in another country to use the intellectual property
(patents, trademarks, copyrights, technology, technical know – how, or specific skills). The monetary
benefits to the licensor are the royalties, which the licensee pays.
5. Franchising : Franchising is when a parent company (Franchiser) giving right to another
company (Franchisee) to use her name, sell her products and do business in a prescribed manner.
Franchisee gives the Franchiser royalties in return.
6. Joint Venture: It is a mutual agreement of two or more partners across the globe to collectively
own a company.
7. Manufacturing in a Foreign Country: A company manufactures in host country due to lower
costs of materials and labor or to be closer to the raw material sources (among other reasons).
8. Management Contracts: The country calls for an international management expertise for a
national firm. Under a management contract, the service provided is paid through fees or shares of
the company. The contract is for a specific period.
9. Consultancy Services
10. Strategic Partnerships: Two companies in different countries join their resources to complete a
given project. The resources are pooled together to produce new marketable products.
11. Mergers: A Corporate Merger is a combining of corporations in which one of two or more
corporations survives and works for common objectives.
12. Counter Trades: Counter trade is a form of international trade in which imports of goods are
paid for by exports of goods, instead of money payments.