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What are the
major ways
entering in a
foreign markets?
Direct
Investment
Joint
Ventures
Licensing
Direct
Exporting
Indirect
Exporting
Commitment,Risk,control,andProfitpotential
5 Modes of entry into
foreign Markets
1.Indirect Exporting
Companies work through independent intermediaries:
Domestic-based export merchants,
Domestic-based export agents,
Cooperative organizations,
Export management.
Advantages of Indirect
exporting
First, there is less investment
Second, there is less risk.
2.Direct investment
The investment and risk are
somewhat greater, but so is
potential return.
Ways of direct investment
Domestic based export department or
division
Overseas sales branch or subsidiary
Traveling export sales representatives
Foreign-based distributors or agents
3.Licensing
The licensor issues a license to a
foreign company to use a
manufacturing process, trademark
,patent, trade secret or other item
of value for fee or royalty.
Licensor has less control over the licensee than its own
production and sales facilities.
At the end of the license successful licensee may
emerge as a competitor.
4.Join Ventures
A joint venture may be necessary or
desirable for economic or political
reasons.
The foreign company may lack the
financial, physical, or managerial
resources to undertake the venture
alone.
5.Direct Investment
The ultimate form of foreign involvement is direct
ownership.
 Foreign company can buy part or full interest in a
local company
 Build its own manufacturing or service facilities.
If the market is large enough then direct investment
have distinct advantage-
 The firm secures cost economy through cheaper
labor or raw materials, government incentives, and
freight savings,
 The firm strengthen its image in host country,
 The firms deepens its relationship with government
customers,local suppliers and distributors,
 The firm retain full control over its investment.

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20q4 what are the major ways entering in a