Expanding business to foreign market
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There are several modes of entry into foreign markets: exporting, licensing, contract manufacturing, joint ventures, turnkey projects, and directly establishing operations. Exporting involves selling goods abroad without foreign production facilities. Licensing permits foreign companies to use a company's intellectual property in exchange for fees. Contract manufacturing has one firm produce goods under another firm's brand. Joint ventures share direction and profits between multiple participating companies. Turnkey projects involve a contractor handling all aspects of a project for a foreign client. Directly establishing operations requires finding a local partner and managing high risks.
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1) The document discusses various forms of market entry including exporting, contractual agreements like licensing and franchising, international alliances like joint ventures and consortiums, and foreign direct investment through acquisitions or greenfield investments.
2) Exporting involves selling goods produced in the home country in foreign markets either directly or indirectly through intermediaries. Contractual agreements transfer technology, skills or intellectual property through non-equity means.
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Session 6 Internationalisation and international market entry strategies.pptx
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Different modes of entry into international market
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Expanding business to foreign market
- 2. MODES OF ENTRY INTO FOREIGN MARKET • Exporting • Licensing • Contract Manufacturing • Turnkey Projects • Joint Ventures • Directly go there
- 3. Exporting • Selling of domestically-produced goods and services in another country. • Traditional method of reaching foreign markets. • No investment in foreign production facilities is required.
- 4. Licensing • Licensing essentially permits a company (licensee) in the target country to use the property of the licensor. • Such property usually is intangible, such as trademarks, patents, and production techniques. • The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance.
- 5. Contract Manufacturing • Production of goods by one firm, under the label or brand of another firm. • Contract manufacturers provide such service to several firms based on their own or the customers’ design, formulas, and/or specification. • This program can be used either to acquire a lower-cost source of components or for a production base for final assembly of products
- 6. Joint Ventures • A Joint Venture (JV) is a project or enterprise in which multiple companies or individuals invest. • Participants share project's direction and profits according to their investment. • Beneficial to all parties.
- 7. Turnkey Projects • In a turnkey project, the contractor agrees to handle every detail of the project for a foreign client. • This is a means of exporting process technology to other countries. • Money is paid such services.
- 8. Directly Go There • A company or firm can directly establish or find a partner for business in foreign market. • Selection of right country is mandatory. • Company should have perfect knowledge about that market. • It involves high degree of risk.