Presented By:- Abhinav Singh

Modes of entry in International Business

International business comprises all commercial transactions (private and governmental, sales, investments and transportation ) that take place between two or more regions, countries and nations beyond theirs political boundaries. 

INTERNATIONAL BUSINESS

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Modes of entry in International Business

1)Export-import trade

2)Foreign direct investment

3)Licensing

4)Franchising

5) Joint venture

OTHER MODES ARE:

6) Turn key project7) Mergers and Acquisitions8) Management contract

• Meaning of Export the thing which we produce in access we can sell in market or international market to earn profit.

For E.g- Rice, tea etc.

• Import means the thing we don’t have or we are running with the storage of that particular thing we can import from different city's ,region , state or country is called Import.

For E.g Latest tech, weapons.

Methods of import and

export

Direct involvement

Indirect involvement

Firms can export and import using two methods:

• Indirect involvement: means that the firm participates in international business through an intermediary and does not deal with foreign customers or markets.

• Direct involvement :means that the firm works with foreign customers or markets with the opportunity to develop a relationship.

FDIFDI stands for Foreign Direct Investment, Foreign direct investment is investment of foreign assets into domestic structures, equipment, and organizations. It does not include foreign investment into the stock markets.

LicensingIn this mode of entry, the domestic

manufacturer leases the right to use its intellectual property, i.e.,

technology, work methods, patents, copy rights, brand names, trade

marks etc. to a manufacturer in a foreign country for a fee.

E.g- Microsoft Office

Franchising

Under franchising, an independent organisation called the franchisee operates the business under the name of another company called the franchisor. In such an arrangement the franchisee pays a fee to the franchisor.Franchising is a form of Licensing but the Franchisor can exercise more control over the Franchisee as compared to that in Licensing. E.g KFC. Kumar sweet shop d.dun

DIFFERENCE BETWEEN LICENSING AND FRANCHISING

Franchising

• Governed by: Securities law• Registration: Required• Territorial rights: Offered to

franchisee

• Royalty payments: Yes• Use of trademark/logo: Logo

and trademark retained by franchiser and used by franchisee.

• Examples: McDonalds, Subway, 7-11, Dunkin Donuts.

• control: Franchiser exercise control over franchisee.

LICENSING• Contract law• Not required• Not offered; licensee can

sell similar licenses and products in same area

• Yes• Can be licensed• Examples: Microsoft

Office• licensor does not have

control over licensee.

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Turnkey Project• A turnkey project is a

contract under which a firm agrees to fully design, construct and equip a manufacturing/business/service facility and turn the project over to the purchaser when its ready for operation, for a remuneration

A joint venture is an entity formed between two or more parties to undertake economic activity together. The parties agree to create a new entity by both contributing equity, and then they share in the revenues, expenses, and control of the enterprise

Sony-Ericsson is a joint venture by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to make mobile phones

Joint Ventures

Mergers and Acquisitions What Does Merger Mean?

The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

Pixar-Disney Merger

Acquisition

When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition.

HDFC Bank acquisition of Centurion Bank of Punjab for $2.4 billion

Microsoft acquisition of Nokia

Management contractA management contract is an agreement between two companies whereby one company provides managerial assistance, technical expertise and specialized services to the second company for a certain period of time in return for monetary compensation.

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