It explains the forms by which the MNCcan enter into other nations.

1. FORMS & ADVANTAGES OF
INTERNATIONAL BUSINESS
By
M.Muthukumar

2. International Business
 conducts business transactions all over the world
 transactions include the transfer of goods, services,
technology, managerial knowledge, and capital to
other countries

3. FORMS OF MARKET ENTRY
 Exporting
 Licensing/franchising
 Contract manufacturing
 Management contract
 Assembly operations
 Fully owned manufacturing facilities
 JV
 Countertrade
 M&A
 Strategic alliance
 Third country location

4. EXPORTING
 Selling abroad, either directly to target customers or
indirectly by retaining foreign
sales agents and distributors
Why exporting?
 Not large enough to justify production
 No guarantee for longer period
 Infrastructure problem

5. Top ten exporting firm in India

6. Licensor permits licensee to use its IP
Requires neither capital or knowledge
It is used as tool to enter developing
market for the dead product
Walt disney entered India with Modis

7. Licensing/franchising
• Form of licensing in which a parent company grants
another entity the right to do business in the
prescribed manner
FORMS
• Manufacturer-retailer Automobile dealership
• Manufacturer-Wholesaler Soft drink companies
• Service firm-retailer Lodging & fast food outlet
Franchise firm KFC, audi

8. CONTRACT MANUFACTURING
• A company doing international marketing contracts
with firms in foreign countries to manufacture the
products while retaining the responsibility of
marketing the product
Park Davis, HUL, Ponds, etc.

9. MANAGEMENT CONTRACTING
• The supplier brings together a package of skills that
will provide an integrated service to the client
without incurring risk and benefits of ownership
MEANS - Know-how
Ex : Tata tea, Harrisons malayalam, and AVT have
contracts to manage no of plantation in srilanka.

10. TURNKEY CONTRACTS
• Agreement by the seller to supply a buyer with a
facility fully equipped & ready to be operated by a
buyer’s personnel .
• Project in oil refineries, steel mills, cement
• Mostly govt sector involves a buyer or seller
Ex : BHEL, TN ASSEMBLY

11. FULLY OWNED
MANUFACTURING FACILITIES
• Acts as a domestic player(producer)
• Full set up in domestic country
Ex : coco cola, HUL, etc.

12. ASSEMBLY OPERATIONS
• Establishment of assembly operation represent a
cross between exporting and overseas
manufacturing
• Mostly electric equipment
Ex : Hyundai, Nokia, etc.

13. JOINT VENTURES
• Any form of association which implies collaboration
for more than a transitory period is a joint venture
• May be period of the time
Ex : Tata AIG life insurance, Pepsi-agro industries
corporation

14. THIRD COUNTRY LOCATION
• A form in one of these nations which wants to enter
the other market will have to operate from a third
country base.
Ex : Taiwanese entrepreneurs found it easy to enter
people’s republic of china through bases in Hong
kong.

15. M&A
• Major part of FDIs have been driven by cross border
M & As.
• Provides instant access to market, distribution
• Major M&As--Automobile, pharmaceuticals,
banking, telecom etc.
Ex : UB acquired Wiltshire Brewery in UK.

16. OTHERS
• STRATEGIC ALLIANCES
• COUNTER TRADE

17. ADVANTAGES OF IB
• Maximum utilization of natural resource
• Economic growth
• Encouragement to industrialization
• Establishment of international cooperation
• Development of transport & communication
• Employment
• Greater competition
• Security from famine
• Stability in prices

18. Contd……
• Economies of scale
• Earning of FX
• Less cost due to the use of modern techniques
• High standard of living
• International brotherhood
• Up gradation of technology
• Escape from competition

19. ANY MORE CLARIFICATION?