Management service contracts are a way for one firm to provide management expertise in areas like operations, personnel, accounting, or marketing to another firm in a foreign country in exchange for regular fees and commissions. This allows for simple market entry while utilizing existing business experience. However, it provides limited profits and insight into the expert firm's operations, and could make the foreign firm a future competitor. Examples include Hilton Hotels and Delta Airlines providing management services abroad.

1. Modes of entry into foreign market
Ximena Rodríguez C.
Andrés Felipe Tovar F.

2. Management service
contracts

 When one firm provides management in all or
specific areas for another firm, in exchange for a fee
(The Firm gets regular payments as well as
commissions.)
Areas
Technical Operation of Production
management of Personal
Accounting
Marketing Service
Training

3. PROS:

 Entry to the market is rather simple.
 Using business experience to help similar companies
in other countries is easy to set up, operate, and
collect on.
 It also allows the experienced company an
opportunity to research the market for other modes
of entry.

4. CONS:

 Lack of profit; a percentage of sales are not typically
the largest margin possible when operating a
business.
 The foreign company will gain much insight into the
business procedures of the expert company.
 Detrimental to the expert company in the long run if
the foreign firm ever becomes a competitor.

5. Example

Hilton Hotels Delta Airlines

6. Bio
•

http://www.partnersinternational.co
m/articles/foreign-market-entry.html
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