Modes of global entry

50 %
50 %
Information about Modes of global entry
Business & Mgmt

Published on March 15, 2014

Author: lsuryavanshi



This presentation describes modes of entry in International Market for businesses. Various types of modes has been explained from International business expansion point of view.

Modes of Global Market entry Sub: International Marketing By- Lovekshitij Suryavanshi

3 Rules • A company aims to enter in foreign Market must have a concrete strategy • Naïve Rule – Company uses same entry mode for all foreign markets • Pragmatic rule - Company uses a workable entry mode for each market. These kinds of companies start with low risk entry modes. • Strategy Rule – Alternative decision modes are compared and evaluated before decision is made.

Types of Entry Mode - Export Mode • Products of company are manufactured in the domestic market or a third country and then transferred directly or indirectly to the host market. • While establishing export channels company decides role and functions. • Major Export Types - Indirect Export - Direct Export - Co-operativite Export

Indirect Export • Product Manufacturing company do not export products directly. • Domestic Export House or Trading Company export products manufactured by company. INDIA Company AManufacturer Export House / TC USA Host Company

Direct Export • Product Manufacturing company export products directly without any third party. • Involved in documentation, delivery, pricing etc. • Manages agents and distributers.

Co-operative Export • Two or more companies involve in collaborative agreements to produce products to export. • Small firms do not achieve sufficient scale economies in manufacturing because of size of local market or inadequacy of management. • E.g: Bulk export, research, joint manufacturing etc

Types of entry mode - Intermediate Entry Mode • No full ownership involved • Ownership shared between parent company and local partner • Types of Intermediate entry mode - Licensing - Franchising - Contract Manufacturing - Joint Ventures

Licensing • It is an arrangement wherein the licensor gives something of value to the licensee in exchange for certain performance and payments from the licensee. • A formal permission or right offered to a firm or agent located in host country to use a home firm’s proprietary technology resource in return for payment. • Another way for firm to establish local production in foreign markets without capital investment.

• Licensing may include - Patent for product or process - Technical advice and assistance - Marketing advice and assistance - Use of Trademark and name • E.g: GSK, biocon, Quick Heal

Franchising • An independent organization operates the business under the name of another company • Franchisee pays fee to the franchisor • Franchisee owns right to use trade marks, systems, operating function, employee training etc .

Types of Franchising • Product & Trade Name Franchising - Dealer use Trade Name & Trade Mark e.g: Dominos (Jubilant Food Works ) • Business Format Franchising - Franchisor transfer package - Package contains Trade marks/name, copyright, designs, patents, trade secret etc. e.g: Who Wants to be Millionaire -> KBC

• Advantages - low risk, low entry cost - Quick development in International Market - Precursor to FDI in foreign market • Disadvantages - High cost of creating international brand -Problem with local legislation - Risk of International reputation

Contract Manufacturing • Company do business in foreign market with responsibility for production to local firm • e.g: IKEA, Danone • Advantages: - low risk - no huge investment in foreign market - avoids transfer-pricing problems • Disadvantages - hard to find reliable manufacturer - contractor could become competitor - Quality control become difficult

Joint Venture • Two or more firms join together • Legally separate new business entity • Shared ownership e.g: Sistema Shyam TeleServices (MTS) Alcatel – Lucent Bharati Walmart • Advantages: - less costly than acquisitions - shared risk of failure • Disadvantages: - Large investments of resources - cultural differences may result in management differences

Types of Entry Mode - Hierarchical • Company completely owns & control foreign entry • Investment mode • New set-up in host country is fully own subsidiary by parent company. • 2 Types - Merger or Acquisition - Green Field

Merger or Acquisition • Domestic company merge with foreign company to enter in Int’l market • Domestic company may acquire/purchase foreign company • e.g: Nokia (Fin)- Siemens (Ger) data n/w & telecommunication division • Advantages: - Immediate grab of market share - Less time & quick to execute • Disadvantages: - tedious task (bankers, lawyers from both countries)

Green Field Strategy • Set-up operations in foreign market from zero • Purchase local property & man power • e.g.: Mercedes – Benz production in Pune Volkswagen India • Advantages: - Control of operations - No risk of loosing technical competence to competitor • Disadvantages: - Lengthy process from scratch - Pre research is time consuming

Thank You!! Email:

Add a comment

Related presentations

Canvas Prints at Affordable Prices make you smile.Visit http://www.shopcanvasprint...

30 Días en Bici en Gijón organiza un recorrido por los comercios históricos de la ...

Con el fin de conocer mejor el rol que juega internet en el proceso de compra en E...

With three established projects across the country and seven more in the pipeline,...

Retailing is not a rocket science, neither it's walk-in-the-park. In this presenta...

What is research??

What is research??

April 2, 2014

Explanatory definitions of research in depth...

Related pages

Foreign Market Entry Modes - QuickMBA

Foreign Market Entry Modes. The decision of how to enter a foreign market can have a significant impact on the results. Expansion into foreign markets can ...
Read more

Foreign market entry modes - Wikipedia

Foreign market entry modes (Participation strategy) differ in degree of risk they present, the control and commitment of resources they require and the ...
Read more

Modes of Global Market Entry -

GLOBAL ENTRY. STRATEGIES DIFFERENT MODES OF MARKET ENTRY Different modes of entry EXPORTING -indirect exporting -direct exports -intra-corporate
Read more

Five Modes of Entry Into Foreign Markets - Budgeting Money

Five Modes of Entry Into Foreign Markets. ... in markets around the world and a global brand at ... pain-free entry into a new market and a ...
Read more

Modes of Entry into International Markets (Place ...

Modes of entry into an international market are the channels which your organization employs to gain entry to a new international market. This lesson is
Read more

Entry Modes of Starbucks - DiVA portal

School of Sustainable Development of Society and Technology Master Thesis Course - International Business and Entrepreneurship EFO 705/ MIMA Entry Modes of ...
Read more

Starbucks International Entry Methods and its Global Marketing

Starbucks International Entry Methods and its Global Marketing. Published: 23, March 2015. Introduction . In 1971, in Seattle’s Pike Place Market two ...
Read more

Market Entry Strategies | Tradestart

Canada Business: Market Entry Strategies; Trade Commissioner: Guide to Exporting; Recommended Trade Links; How TRADESTART Can Help; Next: Intellectual ...
Read more