1. Business Expansion
modes

2. Three modes mainly to expand
business:
Trade related
Contractual
Investment

3. Trade related modes
Trade
related
Exports
Indirect Direct
Piggy
backing
Counter
trade
E-
channels

4.  Exports: Manufacturing goods in one
country and selling in another
Exports
Indirect-
through an
intermediary
Direct-
Company itself

5.  Piggybacking: firm expands in foreign
country by using, its distribution
network
 E.g. Fiat, even after investing Rs 20
million
in Indian operations decided to use
nationwide network of Tata Motors

6.  Counter trade: Refers to various forms
of trade arrangements
 Where in payment is in the form of
reciprocal commitments
 In the form of simple barter
 Buy back
 Offset

7.  E- modes: trade through internet
directly
 E.g. Dell computers sells its products
directly through internet

8. Contractual modes
Contractual
International
leasing
International
franchising
International
strategic
alliance
International
contract
manufacturing
Turnkey
projects
International
licensing

9.  International leasing: In low income
countries, manufacturers do not
possess enough financial resources
 They expand by leasing equipments
 E.g. ILFC, largest aircraft
lessor, leases Airbus and Boeing
aircraft to Emirates, Lufthansa Air
France etc.

10.  International licensing: firm makes its
intangible assets like
patents, trademarks etc. & makes
available to a foreign company for a
fee
 E.g. ‘Arrow’ , leading cloth
maker, when entered India, Licensed
its shirt making division to Arvind
Clothing

11.  International franchising: Franchisor
provides intangible assets such as
trade marks, method of doing
business etc.
 Low risk
 Low cost

12.  International contract manufacturing:
firm sub-contracts manufacturing in
foreign country
 E.g. Nike, leading international shoe
brand, does not own a single
production facility & gets
manufacturing done through contract
manufacturing

13.  Turnkey projects: handing over a
project to the client when it is
complete in all respect and is ready to
use
 Includes: conceptualizing,
 Designing
 Contructing
 Installing etc.
 E.g. in construction and engineering
projects

14. Investment modes
Investment
modes
Overseas
assembly or
mixing
Joint
ventures
Wholly
owned
subsidiaries
Greenfield
operations
Mergers &
acquisitions

15.  Overseas assembly or mixing:
manufacturer exports components,
parts or machinery in
 Completely Knocked Down (CKD)
conditions
 & assembles these parts at a site in a
foreign country
 E.g. Japanese automobile
manufacturers had begin assembling
in Europe to deal with import barriers

16.  Joint Venture
 Wholly owned subsidiaries
 Mergers & Acquisitions
 Greenfield operations: Creating
production & marketing facilities on a
firm’s own from scratch