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International Market Entry
and Expansions
Ajit Joshi

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Topics to Learn
● Market Selection
● Different Entry Strategies
● International Organisation
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Market Selection
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Internal Factors (Within Company)
● Export Objective is to sell surplus
● What is Business Strategy of the Company
● Orientation of company in market place
●
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General Factors:(Market Related) & Specific Factors
1. Economic factors
2. Business regulations
3. Currency stability/ exchange
rates
4. Political factors
5. Ethnic factors
6. Infrastructure
7.. Bureaucracy and procedures
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1.Domestic Production
Consumption
2. Import Export trends
3. Nature of Consumption
4. Govt Policy
5. Infrastructure
6. Trade Practices
6. Cultural Factors

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Other Considerations
Evaluation Matrix
Market Profile
Market Segment Selection
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International Market Entry Methods
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Foreign Market Entry Strategy
1. Exports
2. Joint Venture JV
3. Franchising
4. Licensing
5. Direct Equity / FDI
6. Strategic Alliances
7. Mergers & Acquisitions
8. Outsourcing
9. Contract Manufacturing
10. Turn Key Projects
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Direct Export
Export can be Direct or In direct : Role of Distributor / Resellers
1. The volume of foreign business is not large enough
2. Cost of production overseas is high
3. Production bottlenecks like infrastructural problems, problems with
materials supplies etc.
4. There are political or other risks of investment. Investment not
encouraged
5. The company has no permanent interest in the foreign market
6. Licensing or contract manufacturing is not a better alternative.
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Joint Venture JV
A joint venture (JV) is a business arrangement in which two or more parties
agree to pool their resources for the purpose of accomplishing a specific task.
This task can be a new project or any other business activity.
In a joint venture (JV), each of the participants is responsible for profits,
losses, and costs associated with it. However, the venture is its own entity,
separate from the participants' other business interests.
It is a very common strategy of entering the foreign market.Collaboration for
more than a transitory period is a joint venture.
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Franchising
Franchising is based on a marketing concept which can be adopted by an
organization as a strategy for business expansion.
A franchisor licenses its know-how, procedures, intellectual property, use of its
business model, brand, and rights to sell its branded products and services to a
franchisee.
In return the franchisee pays certain fees and agrees to comply with certain
obligations, typically set out in a Franchise Agreement.
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Licensing
Licensing is defined as a business arrangement, wherein a company authorizes
another company by issuing a license to temporarily access its intellectual
property rights, i.e. manufacturing process, brand name, copyright, trademark,
patent, technology, trade secret etc
Exclusive License (Sole), Non exclusive License
Perpetual vs Term license
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Direct Equity / FDI
A foreign direct investment (FDI) is an investment made by a firm or individual in
one country into business interests located in another country. Generally, FDI
takes place when an investor establishes foreign business operations or acquires
foreign business assets in a foreign company
Lot of resources, Ownership of manufacturing, distribution, Post Sales Services..
Horizontal FDI, Vertical FDI, Conglomerate FDI.
Third country Location Manufacturing
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Strategic Alliances
A strategic alliance is an arrangement between two companies to undertake a
mutually beneficial project while each retains its independence. The agreement is
less complex and less binding than a joint venture.
This strategy seeks to enhance the long term competitive advantage of the firm by
forming alliance with other companies in existing or potential in critical areas.
The goals are to leverage critical capabilities,increase the flow of innovations and
increase flexibility in responding to market and technological changes International
Marketing
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Mergers & Acquisitions
Mergers And Acquisitions provides instant access to markets and distribution
network.
Another important objective of M& A is to obtain access to new technology or a
patent right. Sometimes the cost of acquisition may be unrealistically high.
It may involve tax benefits, diversification, economics of scale
Difference between Mergers & Acquisition
Hostile, Friendly, Amiciable, Bail out
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Outsourcing, Contract Manufacturing, Turnkey
Outsourcing : The two main reasons that organizations decide to outsource are to
reduce costs and to have the ability to focus on core business goals and planing
Contract Manufacturing is the outsourcing of part of the manufacturing process of
a product to a third-party.
Turnkey Project : One of the special modes of carrying out international business
is a turnkey project. It 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 it is ready for operation for a remuneration
Countertrade
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Indian Scenario
Post 1991, Globalization started with Indian companies and many are expanding
their overseas business by different strategies.
Exports is most popular method
Software, Telecom, Autos, Petroleum, Garments
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International Expansion Strategy
supported by Organisation & Marketing
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Organisational Structure
Different Organisational Strategy defer from company to company
Built in export department with overall marketing
Separate Export Department , liaison offices, subsidiary
International Division or International Business
Global Org Structures
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Marketing Strategy
● 1. Concentrated marketing strategy : areas, products, Geos
○ Niche Marketing
● 2. Undifferentiated marketing strategy : treating a whole market
as a single unit
● 3. Differentiated marketing strategy : Segmentation
○ Following Parameters Geography, Demography, Nature of Customers
● Different Strategies are used to grow International Business
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@ajitjoshiin www.ajitjoshi.in
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