Business expansion modes- By: Heena Purohit


Published on

Published in: Education, Business
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

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