DIFFERENT MODES OF ENTRY INTO

INTERNATIONAL BUSINESS

By

Santosh Parab

MFM - 16

Different modes of entry

EXPORTING

-indirect exporting-direct exports-intra-corporate

transfers

LICENSING

FRANCHISING

FDI without alliances

FDI with alliances

3

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.

Forms of Exporting

16-4

Exporting of goods and services through various home-based exporters Manufacturers’ export agents Export commission agents Export merchants International firms

Indirect Exporting – Eg.

Exporting

Advantages

Relatively low financial exposure

Permit gradual market entry

Acquire knowledge about local market

Avoid restrictions on foreign investment

Licensing is when a firm, called the licensor, leases the right to use its intellectual property—technology, work methods, patents, copyrights, brand names, or trademarks—to another firm, called the licensee, in return for a fee.

The property licensed may include: Patents Trademarks Copyrights Technology Technical know-how Specific business skills

Licensing

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.

Franchising

FDI without alliances

Companies enter the international market through FDI , invest their money, establish manufacturing and marketing facilities through ownership and control.

Greenfield strategy- the term Greenfield refers to starting of the operations of a company from scratch in a foreign market.

FDI with strategic alliances

Strategic alliance is a cooperative and collaborative approach to achieve the larger goals.

Role of alliances Many complicated issues are solved through

alliances They provide the parties each other’s strengths Helps in developing new products with the

interaction of 2 or more industries Meet the challenges of technological revolution. Managing heavy outlay Become strong to compete with a multinational

company.

THANK YOU