This document discusses various entry modes for global business markets: Exporting allows companies to sell goods and services produced in one country to other countries, but the exporter has little control over foreign distribution. Joint ventures share ownership and management between companies to achieve common objectives like market entry. Outsourcing transfers work to outside suppliers to reduce costs. Franchising provides semi-independent franchisees the right to use a company's brand in exchange for fees. Foreign direct investment involves direct investment in foreign markets. Mergers and acquisitions combine companies' assets and liabilities. Licensing gives permission to use a company's products or technologies in a particular territory. The best entry mode depends on a company's desired levels of commitment, flexibility,

2. Entry modes for Global
Business Market
By : Qazafie Mehrzad

3. What is Global Business
Market? Global business refers to international
trade whereas a global business is a
company doing business across the
world.
 The exchange of goods over great
distances goes back a very long time.

4. Enter to Global Market !

5. Entry modes…
 A market entry strategy is the planned
method of delivering goods or services
to a new target market and distributing
them there. When importing or
exporting services, it refers to
establishing and managing contracts
in a foreign country.

6. 1.Exporting :
 – It is the process of selling goods and
services produced in one country to
other country. Exporting may be direct
or indirect.

7. Exporting
Pros Cons
1. It helps in distribution
of surplus
2. It is less costly
3. It is less risky
4. Under direct export
the exporter has control
over selection of market
5. It helps in fast market
access Low investment;
Less risks
1. High start-up cost in case
of direct exports
2. The exporter has little or no
control over distribution of
products
3. Exporting through export
intermediaries increase the
cost of product
4.Unknown market; No control
over foreign market; Lack of
information about external
environment

8. 2. Joint Venture :
 It is a strategy used by companies to enter a
foreign market by joining hands and sharing
ownership and management with another
company. It is used when two or more companies
want to achieve some common objectives and
expand international operations. The common
objectives are – Foreign market entry Risk/reward
sharing Technology sharing, Joint product
development
and Conforming to government regulations .

9. Joint Venture
Pros Cons
1. Technological competence
2. Optimum use of resources
3. Partners are able to learn
from each other
4.Joint ventures provide
significant funds for major
projects; Sharing of risks
between or among partners;
Provides skills, technology,
expertise, marketing to both
parties.
1. Conflicts over
asymmetric investments
2. It may be costly
3 .cultural and political
stability may pose a
threat to the successful
operations
4.conoicts in
management

10. 3. Outsourcing :
 It is a cost effective strategy used by
companies to reduce costs by transferring
portions of work to outside suppliers rather
than completing it internally. It includes both
domestic and foreign contracting and also off
shoring (relocating a business function to
another country).

11. Outsourcing:
Pros Cons
1. Swiftness and
expertise in
operations
2. Concentration on
core process rather
than supporting
ones
3. Risk sharing
4. Reduced costs
1. Risk of
exposing
confidential data
2. Hidden costs
3. Lack of
customer focus

12. 4. Franchising:
 It is a system in which semi-independent
business owners (franchisees) pay fees and
royalty to a parent company (franchiser) in
return for the right to be identified by its
trademark, to sell its product or services, and
often to use its business format or system.

13. Franchising
Pros Cons
1. It is less risky
2. Advantage of
expertise of
franchiser
3. Highly
motivated
employees
1. Difficulty in
keeping trade
secrets
2. Franchisee may
become a future
competitor
3. A wrong
franchisee may ruin
company’s name
and goodwill

14. 5. Foreign Direct Investment :
 It is a mode of entering foreign market
through investment. Investment may be
direct or indirectly through Financial
Institutions. FDI influences the investment
pattern of the economy and helps to increase
overall development.

15. Foreign Direct Investment
Pros Cons
1. Modifications can
be made at any point
of time
2. It is an easy mode
of entry
1. The government
policies may not be
helpful
2. The return on
Investment may be
low

16. 6. Mergers & Acquisitions :
 A merger is a combination of two or more district
entities into one, the desired effect being accumulation
of assets and liabilities of distinct entities and several
other benefit such as, economies of scale, tax benefits,
fast growth, synergy and diversification etc. The
merging entities cease to be in existence and merge
into a single servicing entity.

17. Mergers & Acquisitions
Pros Cons
Immediate ownership and
control over the acquired
firm’s assets; Probability of
earning more revenues; The
host country may benefit by
escaping optimum capacity
level or overcapacity level
Complex process and
requires experts from both
countries; No addition of
capacity to the industry;
Government restrictions on
acquisition of local
companies may disrupt
business; Transfer of
problems of the host
countries to the acquired
company. may be low

18. 7. Licensing:
 Licensing is a method in which gives permission
to a person to use its legally protected product or
technology (trademarked or copyrighted) and to
do business in a particular manner, for an agreed
period of time and within an agreed territory. It is
a very easy method to enter foreign market as
less control and communication is involved. The
financial risk is transferred to the licensee and
there is better utilization of resources.

19. Licensing
Pros Cons
1. Easy appointment
2. Less investment is involved
3. Low cost of labor
4. Low investment of licensor;
Low financial risk of licensor;
Licensor can investigate the
foreign market; Licensee’s
investment in R&D is low;
Licensee does not bear the risk of
product failure; Any international
location can be chosen to enjoy
the advantages; No obligations of
ownership, managerial decisions,
investment etc.
1.Limited opportunities for both
parties involved; Both parties
have to manage product quality
and promotion; One party’s
dishonesty can affect the other;
Chances of misunderstanding;
Chances of trade secrets leakage
of the licensor.
2. This method is time consuming
3. Decline in product quality may
harm the reputation of licensor

20. Conclusion:
No one entry mode is considered to be
superior to one another. When an
organization is choosing to internationalize
their operations, they will first need to
decide what its optimal levels of:
commitment, flexibility, control, presence
and risk are in order to select the most
appropriate entry mode.

21. "If opportunity doesn't knock,
build a door."
- Milton Berle’’
Thank you ,