SlideShare ist ein Scribd-Unternehmen logo
1 von 25
Harsh Bansal
JIMS-Rohoni,
Sector-5
Delhi-85
Different Modes of entry into
international business
1
Different modes of entry
 Exporting
 Licensing
 Franchising
 Contract manufacturing
 Management Contracts
 FDI without alliances
 FDI with alliances
2
Forms of Exporting
1
• Indirect Exporting
2
• Direct Exporting
3
• Intra-corporate Transfers
3
Forms of Exporting
4
 Exporting means shipping the goods and services
out of the port of a country.
Seller is referred to as an "exporter" .
Buyer is referred to as an "importer“.
 Indirect Exporting means that the firm participates
in international business through an intermediary
and does not deal with foreign customers or
markets.
 Direct exporting means that the firm works with
foreign customers or markets with the opportunity
to develop a relationship.
Indirect Exporting
5
Indirect Exporting – Eg.
 Exporting of goods and services through
various home-based exporters
Manufacturers’ export agents
Export commission agents
Export merchants
International firms
6
Direct Exporting
7
Differences
8
Intra-corporate Transfer
9
Exporting
Advantages
Relatively low
financial exposure
Permit gradual
market entry
Acquire
knowledge about
local market
Avoid restrictions
on foreign
investment
Disadvantages
Vulnerability to
tariffs and NTBs
Logistical
complexities
Potential conflicts
with distributors
10
Licensing
 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 skills11
The Licensing Process
12
Basic Issues in
International Licensing
 Specifying the boundaries of the agreement
 Determining compensation
 Establishing rights, privileges, and constraints
 Specifying the duration of the contract
 Differences in laws and culture.
Eg. Pepsico, Coke Bottling Plant
13
Licensing –Adv. & Disadv.
Advantages
• Low financial risks
• Low-cost way to assess
market potential
• Avoid tariffs, NTBs,
restrictions on foreign
investment
• Licensee provides
knowledge of local
markets
Disadvantages
• Limited market
opportunities/profits
• Dependence on licensee
• Potential conflicts with
licensee
• Possibility of creating
future competitor
14
 Under franchising, an independent organization 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
15
Franchising Agreements
 Franchisee has to pay a fixed amount and royalty
based on sales.
 Franchisee should agree to adhere to follow the
franchisor’s requirements
 Franchisor helps the franchisee in establishing the
manufacturing facilities
 Franchisor allows the franchisee some degree of
flexibility.
 Eg. McDonalds, Subway, KFC
16
Franchising- Adv. & Disadvantages
Advantages Disadvantages
17
 Low financial risks
 Low-cost way to assess
market potential
 Avoid tariffs, NTBs,
restrictions on foreign
investment
 Maintain more control
than with licensing
 Franchisee provides
knowledge of local market
 Limited market
opportunities/profits
 Dependence on
franchisee
 Potential conflicts with
franchisee
 Possibility of creating
future competitor
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.
18
Greenfield Strategy
• Best site
• Modern facilities
• Economic development incentives
• Clean slate
Advantages
• Huge time and patience needed
• Expensive
• Comply with local and national
regulation
• Local workforce needed
• Strongly perceived as a foreign
worker
Disadvantages
19
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.
20
FDI with strategic alliances
Modes of FDI through alliances are:
 Merger : The combining of two or more companies,
generally by offering the stockholders of one
company securities in the acquiring company in
exchange for the surrender of their stock.
 Acquisition : When one company takes over
another and clearly established itself as the new
owner, the purchase is called an acquisition.
 Joint ventures is an entity formed between two or
more parties to undertake economic activity together.
The parties agree to create a new entity by both
contributing equity, and then they share in the
revenues, expenses, and control of the enterprise.21
Examples
Merger Acquisition
22
 ING Vysya merged into
Kotak Mahindra
 Ranbaxy into Sun
Pharma
 Tata Chemicals took
over British salt based
in UK
 Flipkart acquired
Myntra
 Yahoo acquired
Bookpad
 Asian paints acquired
front end sales of Ess
Ess bathroom Products
 ICICI Bank's acquisition
of Bank of Rajas
Acquisition
Advantages Disadvantages
23
 Obtains control over the
acquired firm such as
factories and brand
names
 Integrate the mgt of the
firm into its overall
international strategy
 Assumes all the
liabilities such as
financial and
managerial
Joint Ventures
Advantages Disadvantages
24
 Benefit from local
partner’s knowledge.
 Shared costs/risks
with partner.
 Reduced political risk.
 Risk giving control of
technology to partner.
 May not realize
experience curve or
location economies.
 Shared ownership can
lead to conflict
25

Weitere ähnliche Inhalte

Was ist angesagt?

Foreign market entry strategies
Foreign market entry strategiesForeign market entry strategies
Foreign market entry strategies
Geeta Shiromani
 

Was ist angesagt? (20)

Entry strategies in international marketing
Entry strategies in international marketingEntry strategies in international marketing
Entry strategies in international marketing
 
Foreign market entry strategies
Foreign market entry strategiesForeign market entry strategies
Foreign market entry strategies
 
Global business environment
Global business environmentGlobal business environment
Global business environment
 
International Business Introduction, Nature and Scope
International Business   Introduction, Nature and ScopeInternational Business   Introduction, Nature and Scope
International Business Introduction, Nature and Scope
 
Domestic and international business
Domestic and international businessDomestic and international business
Domestic and international business
 
Trade theories in International Business
Trade theories in International BusinessTrade theories in International Business
Trade theories in International Business
 
Types of international business
Types of international businessTypes of international business
Types of international business
 
Internationalization
InternationalizationInternationalization
Internationalization
 
INTERNATIONAL BUSINESS MANAGEMENT
INTERNATIONAL BUSINESS MANAGEMENTINTERNATIONAL BUSINESS MANAGEMENT
INTERNATIONAL BUSINESS MANAGEMENT
 
Theories of international trade
Theories of international tradeTheories of international trade
Theories of international trade
 
Issues in international business
Issues in international businessIssues in international business
Issues in international business
 
Tariff and non tariff barriers
Tariff and non tariff barriersTariff and non tariff barriers
Tariff and non tariff barriers
 
Advantages and disadvantages of INTERNATIONAL BUSINESS
Advantages and disadvantages of INTERNATIONAL BUSINESSAdvantages and disadvantages of INTERNATIONAL BUSINESS
Advantages and disadvantages of INTERNATIONAL BUSINESS
 
International Business Modes
International Business ModesInternational Business Modes
International Business Modes
 
Nature, importance & scope of International Marketing
Nature, importance & scope of International Marketing Nature, importance & scope of International Marketing
Nature, importance & scope of International Marketing
 
International market entry modes
International market entry modesInternational market entry modes
International market entry modes
 
Forms of international business
Forms of international businessForms of international business
Forms of international business
 
International busines approaches
International  busines  approaches International  busines  approaches
International busines approaches
 
Framework For Analysing International Business Environment
Framework For Analysing International Business EnvironmentFramework For Analysing International Business Environment
Framework For Analysing International Business Environment
 
Ibm unit – iii
Ibm   unit – iiiIbm   unit – iii
Ibm unit – iii
 

Andere mochten auch

Modes of entering international business
Modes of entering international businessModes of entering international business
Modes of entering international business
SHuv Debnath
 
Modes of entry into foreign markets
Modes of entry into foreign marketsModes of entry into foreign markets
Modes of entry into foreign markets
luispachon
 
International Entrepreneurship - Entry Mode Strategies
International Entrepreneurship - Entry Mode StrategiesInternational Entrepreneurship - Entry Mode Strategies
International Entrepreneurship - Entry Mode Strategies
SenthilKumar Mukund
 
Modes Of International Business
Modes Of International BusinessModes Of International Business
Modes Of International Business
itsvineeth209
 
MODES OF ENTRY INTO IB
MODES OF ENTRY INTO IBMODES OF ENTRY INTO IB
MODES OF ENTRY INTO IB
AMIRAH AMMARAH
 
Regional Integration
Regional IntegrationRegional Integration
Regional Integration
Shahzad Khan
 
Lecture 7 regional economic integration
Lecture 7 regional economic integrationLecture 7 regional economic integration
Lecture 7 regional economic integration
themanp
 
Modes of entering international business
Modes of entering international businessModes of entering international business
Modes of entering international business
SHuv Debnath
 
Starbucks - Modes of international business
Starbucks - Modes of international businessStarbucks - Modes of international business
Starbucks - Modes of international business
143
 

Andere mochten auch (20)

Modes of entering international business
Modes of entering international businessModes of entering international business
Modes of entering international business
 
Modes of entry into foreign markets
Modes of entry into foreign marketsModes of entry into foreign markets
Modes of entry into foreign markets
 
International Entrepreneurship - Entry Mode Strategies
International Entrepreneurship - Entry Mode StrategiesInternational Entrepreneurship - Entry Mode Strategies
International Entrepreneurship - Entry Mode Strategies
 
Omassmann hr employment
Omassmann hr employmentOmassmann hr employment
Omassmann hr employment
 
4th unit
4th unit4th unit
4th unit
 
Strategies for entering foreign markets
Strategies for entering foreign marketsStrategies for entering foreign markets
Strategies for entering foreign markets
 
MGF2351 Tutorial 10 Week 10
MGF2351 Tutorial 10 Week 10MGF2351 Tutorial 10 Week 10
MGF2351 Tutorial 10 Week 10
 
Modes of global entry
Modes of global entryModes of global entry
Modes of global entry
 
foreign direct investment (FDI) INDIA
foreign direct investment (FDI) INDIAforeign direct investment (FDI) INDIA
foreign direct investment (FDI) INDIA
 
FDI
FDIFDI
FDI
 
Novertur | Market Entry Mode Strategies
Novertur | Market Entry Mode StrategiesNovertur | Market Entry Mode Strategies
Novertur | Market Entry Mode Strategies
 
Modes Of International Business
Modes Of International BusinessModes Of International Business
Modes Of International Business
 
MODES OF ENTRY INTO IB
MODES OF ENTRY INTO IBMODES OF ENTRY INTO IB
MODES OF ENTRY INTO IB
 
Foreign direct investment , FDI in India by abhishek tripathi
Foreign direct investment , FDI in India by abhishek tripathiForeign direct investment , FDI in India by abhishek tripathi
Foreign direct investment , FDI in India by abhishek tripathi
 
Regional Integration
Regional IntegrationRegional Integration
Regional Integration
 
Ppt On Sm
Ppt On SmPpt On Sm
Ppt On Sm
 
Lecture 7 regional economic integration
Lecture 7 regional economic integrationLecture 7 regional economic integration
Lecture 7 regional economic integration
 
Modes of entering international business
Modes of entering international businessModes of entering international business
Modes of entering international business
 
Starbucks - Modes of international business
Starbucks - Modes of international businessStarbucks - Modes of international business
Starbucks - Modes of international business
 
foreign direct investment in India (n) economy
foreign direct investment in India (n) economyforeign direct investment in India (n) economy
foreign direct investment in India (n) economy
 

Ähnlich wie Modes of entry to international business

1Chapter 4Marketing 4220 International Sourcing, Logisti.docx
1Chapter 4Marketing 4220 International Sourcing, Logisti.docx1Chapter 4Marketing 4220 International Sourcing, Logisti.docx
1Chapter 4Marketing 4220 International Sourcing, Logisti.docx
felicidaddinwoodie
 
Market Entry Startegies of market ,How to improve your Brand awareness
Market Entry Startegies of market ,How to improve  your Brand awarenessMarket Entry Startegies of market ,How to improve  your Brand awareness
Market Entry Startegies of market ,How to improve your Brand awareness
goluu3028
 
Modes Of International Business
Modes Of International BusinessModes Of International Business
Modes Of International Business
itsvineeth209
 

Ähnlich wie Modes of entry to international business (20)

modes of entry.pptx
modes of entry.pptxmodes of entry.pptx
modes of entry.pptx
 
Modes of entry
Modes of entryModes of entry
Modes of entry
 
Foreign-Market Entry
Foreign-Market EntryForeign-Market Entry
Foreign-Market Entry
 
How to enter International Market
How to enter International MarketHow to enter International Market
How to enter International Market
 
International business management
International business management International business management
International business management
 
Foreign market entry ppt notes.ppt
Foreign market entry ppt notes.pptForeign market entry ppt notes.ppt
Foreign market entry ppt notes.ppt
 
International business entry mode
International business entry modeInternational business entry mode
International business entry mode
 
International Business CH # 9
International Business CH # 9International Business CH # 9
International Business CH # 9
 
Modes of Entry-GBM-2.pptx
Modes of Entry-GBM-2.pptxModes of Entry-GBM-2.pptx
Modes of Entry-GBM-2.pptx
 
1Chapter 4Marketing 4220 International Sourcing, Logisti.docx
1Chapter 4Marketing 4220 International Sourcing, Logisti.docx1Chapter 4Marketing 4220 International Sourcing, Logisti.docx
1Chapter 4Marketing 4220 International Sourcing, Logisti.docx
 
Market Entry Startegies of market ,How to improve your Brand awareness
Market Entry Startegies of market ,How to improve  your Brand awarenessMarket Entry Startegies of market ,How to improve  your Brand awareness
Market Entry Startegies of market ,How to improve your Brand awareness
 
Ibm module
Ibm moduleIbm module
Ibm module
 
modes of foreign enrty international business
modes of foreign enrty international businessmodes of foreign enrty international business
modes of foreign enrty international business
 
Entrepreneurial entry strategies
Entrepreneurial entry strategiesEntrepreneurial entry strategies
Entrepreneurial entry strategies
 
market entry methods
market entry methodsmarket entry methods
market entry methods
 
International Business Chapter 11
International Business Chapter 11International Business Chapter 11
International Business Chapter 11
 
International Business Chapter 11
International Business Chapter 11International Business Chapter 11
International Business Chapter 11
 
Modes Of International Business
Modes Of International BusinessModes Of International Business
Modes Of International Business
 
Entry strategy and strategic alliances
Entry strategy and strategic alliancesEntry strategy and strategic alliances
Entry strategy and strategic alliances
 
International Business
International BusinessInternational Business
International Business
 

Kürzlich hochgeladen

Affiliate Marketing Basic Guide For Beginners _20240521_091615_0000.pdf
Affiliate Marketing Basic Guide For Beginners _20240521_091615_0000.pdfAffiliate Marketing Basic Guide For Beginners _20240521_091615_0000.pdf
Affiliate Marketing Basic Guide For Beginners _20240521_091615_0000.pdf
atinukehassan87
 

Kürzlich hochgeladen (20)

Beyond the Basics: Enhanced Strategies for Next-Level Advertising
Beyond the Basics: Enhanced Strategies for Next-Level AdvertisingBeyond the Basics: Enhanced Strategies for Next-Level Advertising
Beyond the Basics: Enhanced Strategies for Next-Level Advertising
 
BrightonSEO - Search Engine Omnipresence_ Why SEOs need to look beyond Google
BrightonSEO - Search Engine Omnipresence_ Why SEOs need to look beyond GoogleBrightonSEO - Search Engine Omnipresence_ Why SEOs need to look beyond Google
BrightonSEO - Search Engine Omnipresence_ Why SEOs need to look beyond Google
 
Content Segmentation for Organic Visibility
Content Segmentation for Organic VisibilityContent Segmentation for Organic Visibility
Content Segmentation for Organic Visibility
 
Tea Gobec, Kako pluti po morju tehnoloških sprememb, Innovatif.pdf
Tea Gobec, Kako pluti po morju tehnoloških sprememb, Innovatif.pdfTea Gobec, Kako pluti po morju tehnoloških sprememb, Innovatif.pdf
Tea Gobec, Kako pluti po morju tehnoloških sprememb, Innovatif.pdf
 
Building Your Customer Base with MailPoet.pdf
Building Your Customer Base with MailPoet.pdfBuilding Your Customer Base with MailPoet.pdf
Building Your Customer Base with MailPoet.pdf
 
Leading Customer Retention Strategies for 2024
Leading Customer Retention Strategies for 2024Leading Customer Retention Strategies for 2024
Leading Customer Retention Strategies for 2024
 
The Future Normal - DIGGIT - Henry Coutinho-Mason.pdf
The Future Normal - DIGGIT - Henry Coutinho-Mason.pdfThe Future Normal - DIGGIT - Henry Coutinho-Mason.pdf
The Future Normal - DIGGIT - Henry Coutinho-Mason.pdf
 
Ultimate Guide to Personal Branding on LinkedIn.pdf
Ultimate Guide to Personal Branding on LinkedIn.pdfUltimate Guide to Personal Branding on LinkedIn.pdf
Ultimate Guide to Personal Branding on LinkedIn.pdf
 
The Wide-Format Experience | PrintAction
The Wide-Format Experience | PrintActionThe Wide-Format Experience | PrintAction
The Wide-Format Experience | PrintAction
 
Sicom a full cycle advertising agency ( Company profile )
Sicom a full cycle advertising agency ( Company profile )Sicom a full cycle advertising agency ( Company profile )
Sicom a full cycle advertising agency ( Company profile )
 
The Vital Role of Keyword Density in Crafting SEO-Optimized Content
The Vital Role of Keyword Density in Crafting SEO-Optimized ContentThe Vital Role of Keyword Density in Crafting SEO-Optimized Content
The Vital Role of Keyword Density in Crafting SEO-Optimized Content
 
Snapshot of Consumer Behaviors of April 2024-EOLiSurvey (EN).pdf
Snapshot of Consumer Behaviors of April 2024-EOLiSurvey (EN).pdfSnapshot of Consumer Behaviors of April 2024-EOLiSurvey (EN).pdf
Snapshot of Consumer Behaviors of April 2024-EOLiSurvey (EN).pdf
 
Beyond Silos: How Holistic B2B Digital Strategy Drives Pipeline
Beyond Silos: How Holistic B2B Digital Strategy Drives PipelineBeyond Silos: How Holistic B2B Digital Strategy Drives Pipeline
Beyond Silos: How Holistic B2B Digital Strategy Drives Pipeline
 
Japanese Sauna Hat Trends - Totonoete Inc.
Japanese Sauna Hat Trends - Totonoete Inc.Japanese Sauna Hat Trends - Totonoete Inc.
Japanese Sauna Hat Trends - Totonoete Inc.
 
buy best digital marketing course in india
buy best digital marketing course in indiabuy best digital marketing course in india
buy best digital marketing course in india
 
Fantasy Cricket Apps: A New Viewpoint for Online Cricket Betting Apps
Fantasy Cricket Apps: A New Viewpoint for Online Cricket Betting AppsFantasy Cricket Apps: A New Viewpoint for Online Cricket Betting Apps
Fantasy Cricket Apps: A New Viewpoint for Online Cricket Betting Apps
 
ATRIUM GAMING : SLOT GACOR MUDAH MENANG TERBARU
ATRIUM GAMING : SLOT GACOR MUDAH MENANG TERBARUATRIUM GAMING : SLOT GACOR MUDAH MENANG TERBARU
ATRIUM GAMING : SLOT GACOR MUDAH MENANG TERBARU
 
Digital marketing guide complete guide for beginners
Digital marketing guide complete guide for beginnersDigital marketing guide complete guide for beginners
Digital marketing guide complete guide for beginners
 
Affiliate Marketing Basic Guide For Beginners _20240521_091615_0000.pdf
Affiliate Marketing Basic Guide For Beginners _20240521_091615_0000.pdfAffiliate Marketing Basic Guide For Beginners _20240521_091615_0000.pdf
Affiliate Marketing Basic Guide For Beginners _20240521_091615_0000.pdf
 
5 Benefits Of Using Digital Marketing.pptx
5 Benefits Of Using Digital Marketing.pptx5 Benefits Of Using Digital Marketing.pptx
5 Benefits Of Using Digital Marketing.pptx
 

Modes of entry to international business

  • 1. Harsh Bansal JIMS-Rohoni, Sector-5 Delhi-85 Different Modes of entry into international business 1
  • 2. Different modes of entry  Exporting  Licensing  Franchising  Contract manufacturing  Management Contracts  FDI without alliances  FDI with alliances 2
  • 3. Forms of Exporting 1 • Indirect Exporting 2 • Direct Exporting 3 • Intra-corporate Transfers 3
  • 4. Forms of Exporting 4  Exporting means shipping the goods and services out of the port of a country. Seller is referred to as an "exporter" . Buyer is referred to as an "importer“.  Indirect Exporting means that the firm participates in international business through an intermediary and does not deal with foreign customers or markets.  Direct exporting means that the firm works with foreign customers or markets with the opportunity to develop a relationship.
  • 6. Indirect Exporting – Eg.  Exporting of goods and services through various home-based exporters Manufacturers’ export agents Export commission agents Export merchants International firms 6
  • 10. Exporting Advantages Relatively low financial exposure Permit gradual market entry Acquire knowledge about local market Avoid restrictions on foreign investment Disadvantages Vulnerability to tariffs and NTBs Logistical complexities Potential conflicts with distributors 10
  • 11. Licensing  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 skills11
  • 13. Basic Issues in International Licensing  Specifying the boundaries of the agreement  Determining compensation  Establishing rights, privileges, and constraints  Specifying the duration of the contract  Differences in laws and culture. Eg. Pepsico, Coke Bottling Plant 13
  • 14. Licensing –Adv. & Disadv. Advantages • Low financial risks • Low-cost way to assess market potential • Avoid tariffs, NTBs, restrictions on foreign investment • Licensee provides knowledge of local markets Disadvantages • Limited market opportunities/profits • Dependence on licensee • Potential conflicts with licensee • Possibility of creating future competitor 14
  • 15.  Under franchising, an independent organization 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 15
  • 16. Franchising Agreements  Franchisee has to pay a fixed amount and royalty based on sales.  Franchisee should agree to adhere to follow the franchisor’s requirements  Franchisor helps the franchisee in establishing the manufacturing facilities  Franchisor allows the franchisee some degree of flexibility.  Eg. McDonalds, Subway, KFC 16
  • 17. Franchising- Adv. & Disadvantages Advantages Disadvantages 17  Low financial risks  Low-cost way to assess market potential  Avoid tariffs, NTBs, restrictions on foreign investment  Maintain more control than with licensing  Franchisee provides knowledge of local market  Limited market opportunities/profits  Dependence on franchisee  Potential conflicts with franchisee  Possibility of creating future competitor
  • 18. 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. 18
  • 19. Greenfield Strategy • Best site • Modern facilities • Economic development incentives • Clean slate Advantages • Huge time and patience needed • Expensive • Comply with local and national regulation • Local workforce needed • Strongly perceived as a foreign worker Disadvantages 19
  • 20. 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. 20
  • 21. FDI with strategic alliances Modes of FDI through alliances are:  Merger : The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.  Acquisition : When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition.  Joint ventures is an entity formed between two or more parties to undertake economic activity together. The parties agree to create a new entity by both contributing equity, and then they share in the revenues, expenses, and control of the enterprise.21
  • 22. Examples Merger Acquisition 22  ING Vysya merged into Kotak Mahindra  Ranbaxy into Sun Pharma  Tata Chemicals took over British salt based in UK  Flipkart acquired Myntra  Yahoo acquired Bookpad  Asian paints acquired front end sales of Ess Ess bathroom Products  ICICI Bank's acquisition of Bank of Rajas
  • 23. Acquisition Advantages Disadvantages 23  Obtains control over the acquired firm such as factories and brand names  Integrate the mgt of the firm into its overall international strategy  Assumes all the liabilities such as financial and managerial
  • 24. Joint Ventures Advantages Disadvantages 24  Benefit from local partner’s knowledge.  Shared costs/risks with partner.  Reduced political risk.  Risk giving control of technology to partner.  May not realize experience curve or location economies.  Shared ownership can lead to conflict
  • 25. 25