pardeep kumar

1. FOREIGN MARKET ENTRYFOREIGN MARKET ENTRY
STRATEGIESSTRATEGIES
BY: PARDEEP KUMAR
(8417)

2. Basic foreign expansion entry decisions
• A firm contemplating foreign expansion must make
decisions
- Which markets to enter ??
- When to enter these markets ??
- What is the scale of entry ??
- What is the best mode of entry ??

4. EXPORTINGEXPORTING
Products/Services Are Sent To International Destinations.

5. CONTRACTUAL AGREEMENTS
• Contractual agreements are long-term, non-
equity associations between a company and
another in a foreign market
• Approaches:
- Licensing
- Franchising
- Contract manufacturing
- Turnkey projects

6. LICENSINGLICENSINGLICENSINGLICENSING
Licensing is a contractual agreement between two
companies of different countries, by means of which a
international company concedes to other company abroad
the right to use:-
• A productive process.
• A patent, a registered brand.
• A trade secret or other intangible assets in exchange
for an initial fixed payment.
• A royalty or both.

7. • Is a form of licensing.
• Transfer of technology, business system, brand name,
trademark and other property rights.
• Franchisor: developed the business, lends the names and
brands.
• Franchisee: buys the rights (fees or royalties) to operate
the business under the name of the franchisor.
FRANCHISINGFRANCHISINGFRANCHISINGFRANCHISING

8. Contractual agreement between a company and a foreign
producer under which the foreign producer manufactures
the company’s product.
– The company controls promotion and distribution.
– Pharmaceutical industry.
CONTRACT MANUFACTURINGCONTRACT MANUFACTURINGCONTRACT MANUFACTURINGCONTRACT MANUFACTURING

9. The international company engages in the design &
construction of the entire operation, once it is finished, the
management goes to local personnel in exchange of a
substantial fee.
FOR EX: Airports, dams, electric power stations, roads, steel
mills, refineries, chemical plants and automobile plants.
TURNKEY PROJECTSTURNKEY PROJECTS

10. STRATEGIC ALLIANCE
• Cooperative agreements between potential and
actual competitors
• A strategic international alliance(SIA) is a business
relationship established by two or more companies to
cooperate out of mutual need and to share risk in
achieving a common objective
• Licensing, joint venture, consortia etc

11. MERGERMERGER
A merger is a combination of two companies to form a new
company.
Some examples of mergers are as follows:
•Times Bank with HDFC Bank
•Idea and Vodafone.
•Bank of Rajasthan operating in India merged with ICICI Bank
(India).

12. An acquisition is the purchase of one company by another in
which no new company is formed.
ACQUISITIONACQUISITION

13.  Collaboration is working with others to do a task and to
achieve shared goals.
 It is a recursive.
process where two or more organizations
work together to realize shared goals.
FOR EXAMPLE : An endeavourthat is creative in natureby
sharing knowledge, learning & building consensus.
COLLABORATIONCOLLABORATION

14. Arrangements in which the flow of goods and services in both
directions is the core of the transaction.
– Pure barter: acceptance of goods or services as
payment. (sugar for oil)
– Swith trading: three or more countries.
COUNTERTRADECOUNTERTRADECOUNTERTRADECOUNTERTRADE

15. ContCont……
– Counterpurchase: Country A exports to Country B in
return promises to spend some or all of the receipts on
imports from B.
– Buyback: requires a company to provide machinery,
factories, or technology and to buy products made from
this machinery over an agreed period.
– Offset: a foreign supplier is required to manufacture/
assemble the product locally and/or purchase local
components as an exchange for the right to sell its
products locally.

16. FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENT
A Foreign direct investment (FDI) is a controlling
ownership in a business enterprise in one country by an
entity based in another country.
Foreign direct investment is distinguished from
Portfolio Foreign Investment.
Foreign direct investment includes :-
• Mergers and acquisitions,
• Building new facilities,
• Intra company loans.