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Business Expansion
modes
Three modes mainly to expand
business:
Trade related
Contractual
Investment
Trade related modes
Trade
related
Exports
Indirect Direct
Piggy
backing
Counter
trade
E-
channels
 Exports: Manufacturing goods in one
country and selling in another
Exports
Indirect-
through an
intermediary
Direct-
Com...
 Piggybacking: firm expands in foreign
country by using, its distribution
network
 E.g. Fiat, even after investing Rs 20...
 Counter trade: Refers to various forms
of trade arrangements
 Where in payment is in the form of
reciprocal commitments...
 E- modes: trade through internet
directly
 E.g. Dell computers sells its products
directly through internet
Contractual modes
Contractual
International
leasing
International
franchising
International
strategic
alliance
Internation...
 International leasing: In low income
countries, manufacturers do not
possess enough financial resources
 They expand by...
 International licensing: firm makes its
intangible assets like
patents, trademarks etc. & makes
available to a foreign c...
 International franchising: Franchisor
provides intangible assets such as
trade marks, method of doing
business etc.
 Lo...
 International contract manufacturing:
firm sub-contracts manufacturing in
foreign country
 E.g. Nike, leading internati...
 Turnkey projects: handing over a
project to the client when it is
complete in all respect and is ready to
use
 Includes...
Investment modes
Investment
modes
Overseas
assembly or
mixing
Joint
ventures
Wholly
owned
subsidiaries
Greenfield
operatio...
 Overseas assembly or mixing:
manufacturer exports components,
parts or machinery in
 Completely Knocked Down (CKD)
cond...
 Joint Venture
 Wholly owned subsidiaries
 Mergers & Acquisitions
 Greenfield operations: Creating
production & market...
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Business expansion modes- By: Heena Purohit

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Transcript of "Business expansion modes- By: Heena Purohit"

  1. 1. Business Expansion modes
  2. 2. Three modes mainly to expand business: Trade related Contractual Investment
  3. 3. Trade related modes Trade related Exports Indirect Direct Piggy backing Counter trade E- channels
  4. 4.  Exports: Manufacturing goods in one country and selling in another Exports Indirect- through an intermediary Direct- Company itself
  5. 5.  Piggybacking: firm expands in foreign country by using, its distribution network  E.g. Fiat, even after investing Rs 20 million in Indian operations decided to use nationwide network of Tata Motors
  6. 6.  Counter trade: Refers to various forms of trade arrangements  Where in payment is in the form of reciprocal commitments  In the form of simple barter  Buy back  Offset
  7. 7.  E- modes: trade through internet directly  E.g. Dell computers sells its products directly through internet
  8. 8. Contractual modes Contractual International leasing International franchising International strategic alliance International contract manufacturing Turnkey projects International licensing
  9. 9.  International leasing: In low income countries, manufacturers do not possess enough financial resources  They expand by leasing equipments  E.g. ILFC, largest aircraft lessor, leases Airbus and Boeing aircraft to Emirates, Lufthansa Air France etc.
  10. 10.  International licensing: firm makes its intangible assets like patents, trademarks etc. & makes available to a foreign company for a fee  E.g. ‘Arrow’ , leading cloth maker, when entered India, Licensed its shirt making division to Arvind Clothing
  11. 11.  International franchising: Franchisor provides intangible assets such as trade marks, method of doing business etc.  Low risk  Low cost
  12. 12.  International contract manufacturing: firm sub-contracts manufacturing in foreign country  E.g. Nike, leading international shoe brand, does not own a single production facility & gets manufacturing done through contract manufacturing
  13. 13.  Turnkey projects: handing over a project to the client when it is complete in all respect and is ready to use  Includes: conceptualizing,  Designing  Contructing  Installing etc.  E.g. in construction and engineering projects
  14. 14. Investment modes Investment modes Overseas assembly or mixing Joint ventures Wholly owned subsidiaries Greenfield operations Mergers & acquisitions
  15. 15.  Overseas assembly or mixing: manufacturer exports components, parts or machinery in  Completely Knocked Down (CKD) conditions  & assembles these parts at a site in a foreign country  E.g. Japanese automobile manufacturers had begin assembling in Europe to deal with import barriers
  16. 16.  Joint Venture  Wholly owned subsidiaries  Mergers & Acquisitions  Greenfield operations: Creating production & marketing facilities on a firm’s own from scratch
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