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    International Market Entry Strategies

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    Dhaval Bhatt
    The document discusses various international market entry strategies: indirect exporting, cooperative exporting, direct exporting, licensing, franchising, contract manufacturing, joint ventures, and wholly owned subsidiaries. For each strategy, it outlines the key participants, benefits, potential caveats, and considerations for ensuring success.

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    International Market Entry Strategies

    Uploaded by

    Dhaval Bhatt
    18 views13 pages
    The document discusses various international market entry strategies: indirect exporting, cooperative exporting, direct exporting, licensing, franchising, contract manufacturing, joint ventures, and wholly owned subsidiaries. For each strategy, it outlines the key participants, benefits, potential caveats, and considerations for ensuring success.

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    7. International Market Entry Strategies.pptx

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    The document discusses various international market entry strategies: indirect exporting, cooperative exporting, direct exporting, licensing, franchising, contract manufacturing, joint ventures, and wholly owned subsidiaries. For each strategy, it outlines the key participants, benefits, potential caveats, and considerations for ensuring success.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    18 views13 pages

    International Market Entry Strategies

    Uploaded by

    Dhaval Bhatt
    The document discusses various international market entry strategies: indirect exporting, cooperative exporting, direct exporting, licensing, franchising, contract manufacturing, joint ventures, and wholly owned subsidiaries. For each strategy, it outlines the key participants, benefits, potential caveats, and considerations for ensuring success.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 13

    INTERNATIONAL

    MARKET
    STRATEGIES
    PROF. DHAVAL BHATT
    SESSION NO. 07
    EXPORTING

    • Indirect Exporting
    • Export management companies

    • Cooperative Exporting
    • Piggyback Exporting

    • Direct Exporting
    • Firms set up their own exporting departments
    LICENSING
    • Licensor and the licensee
    • Benefits:
    • Appealing to small companies that lack resources
    • Faster access to the market
    • Rapid penetration of the global markets
    • Caveats:
    • Other entry mode choices may be affected
    • Licensee may not be committed
    • Lack of enthusiasm on the part of a licensee
    LICENSING (CONTD.)

    • Biggest danger is the risk of opportunism


    • Licensee may become a future competitor

    • How to seek a good licensing agreement:


    • Seek patent or trademark protection
    • Thorough profitability analysis
    • Careful selection of prospective licensees
    • Contract parameter (technology package, use conditions, compensation, and provisions for the
    settlement of disputes)
    FRANCHISING
    • Franchisor and the franchisee
    • Master franchising
    • Benefits:
    • Overseas expansion with a minimum investment
    • Franchisees’ profits tied to their efforts
    • Availability of local franchisees’ knowledge
    • Caveats:
    • Revenues may not be adequate
    • Availability of a master franchisee
    FRANCHISING (CONTD.)

    • Limited franchising opportunities overseas


    • Lack of control over the franchisees’ operations
    • Problem in performance standards
    • Cultural problems
    • Physical proximity
    CONTRACT MANUFACTURING

    • Benefits:
    • Labor cost advantages
    • Savings via taxation, lower energy costs, raw materials, and overheads
    • Lower political and economic risk
    • Quicker access to markets
    • Caveats:
    • Contract manufacturer may become a future competitor
    • Lower productivity standards
    CONTRACT MANUFACTURING (CONTD.)

    • Backlash from the company’s home-market employees regarding HR and labor issues
    • Issues of quality and production standards
    Qualities of an ideal subcontractor:
    • Flexible/geared toward just-in-time delivery
    • Able to meet quality standards
    • Solid financial footings
    • Able to integrate with company’s business
    • Must have contingency plans
    JOINT VENTURES

    • Cooperative joint venture


    • Equity joint venture
    • Benefits:
    • Higher rate of return and more control over the operations
    • Creation of synergy
    • Sharing of resources
    • Access to distribution network
    • Contact with local suppliers and government officials
    JOINT VENTURES (CONTD.)

    • Caveats:
    • Lack of control
    • Lack of trust
    • Conflicts arising over matters such as strategies, resource allocation, transfer pricing,
    ownership of critical assets like technologies and brand names
    • Drivers Behind Successful International Joint Ventures :
    • Pick the right partner
    JOINT VENTURES (CONTD.)

    • Establish clear objectives from the beginning


    • Bridge cultural gaps
    • Gain top managerial commitment and respect
    • Use incremental approach
    WHOLLY OWNED SUBSIDIARIES

    • Acquisitions
    • Greenfield Operations
    • Benefits:
    • Greater control and higher profits
    • Strong commitment to the local market on the part of companies
    • Allows the investor to manage and control marketing, production, and sourcing decisions
    • Caveats:
    • Risks of full ownership
    WHOLLY OWNED SUBSIDIARIES (CONTD.)

    • Developing a foreign presence without the support of a third part


    • Risk of nationalization
    • Issues of cultural and economic sovereignty of the host country

    • Acquisitions and Mergers


    • Quick access to the local market
    • Good way to get access to the local brands

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