What are the major ways of entering a foreign market? Texts from Marketing management: A South Asian Perspective. By Rahul Nk NIT Trichy

2. Direct exports
Indirect and

3. Five modes of entry into foreign
markets

4. Indirect Export
• Domestic based export merchants
• Domestic based export agents
• Cooperative Organizations
• Export management companies

5. Indirect Export advantages
Less
investment
Less
risk

6. Direct
Export
• Domestic based export
departments or divisions
• Overseas sales branch or
subsidiary
• Traveling export sales
representative
• Foreign-based distributors or
agents

7. “Test the waters”
before building a
plant

8. Licensing

9. Licensing
• Licensor issues a license to a foreign
company to use manufacturing
process,TM, patent etc for a fee or
royalty
• License gains production expertise or
brand name
• Licensor has less control over the
licensee than over its production and
sales
• Risk of creating a competition

10. Licensing
• Management contracts
Manage businesses for free
• Contract manufacturing:
Hires local manufacturers to
produce the product
• Franchising :
Offers complete brand concept
and operating system

11. Joint ventures

12. Share ownership and
control
License
The foreign firms might lack the
financial, physical, or managerial
resources to undertake the venture
alone
Partners may disagree over investment,
marketing, or other policies.
Can prevent international company from
carrying out specific manufacturing and
marketing policies

13. Direct Investment

14. A foreign company can:
License
buy part or full interest in a local
company
build its own manufacturing or service
facilities

15. Advantage
s
• The firm secures cost economics
• The firm strengthens its image in the
host country
• The firm deepens its relationship
• The firm retains its full control over its
investment
• The firm assures itself of access to the
market

16. Image Credits
flickr users
Ken Applebaum
Vetal 888