1.
Modes of Global Market entry
Sub: International Marketing
By-
Lovekshitij Suryavanshi

2.
3 Rules
• A company aims to enter in foreign Market must
have a concrete strategy
• Naïve Rule – Company uses same entry mode for
all foreign markets
• Pragmatic rule - Company uses a workable entry
mode for each market.
These kinds of companies start with low risk entry
modes.
• Strategy Rule – Alternative decision modes are
compared and evaluated before decision is made.

3.
Types of Entry Mode - Export Mode
• Products of company are manufactured in the
domestic market or a third country and then
transferred directly or indirectly to the host
market.
• While establishing export channels company
decides role and functions.
• Major Export Types
- Indirect Export
- Direct Export
- Co-operativite Export

4.
Indirect Export
• Product Manufacturing company do not
export products directly.
• Domestic Export House or Trading Company
export products manufactured by company.
INDIA
Company AManufacturer
Export House / TC
USA
Host Company

5.
Direct Export
• Product Manufacturing company export
products directly without any third party.
• Involved in documentation, delivery, pricing etc.
• Manages agents and distributers.

6.
Co-operative Export
• Two or more companies involve in collaborative
agreements to produce products to export.
• Small firms do not achieve sufficient scale
economies in manufacturing because of size of
local market or inadequacy of management.
• E.g: Bulk export, research, joint manufacturing
etc

7.
Types of entry mode - Intermediate
Entry Mode
• No full ownership involved
• Ownership shared between parent company
and local partner
• Types of Intermediate entry mode
- Licensing
- Franchising
- Contract Manufacturing
- Joint Ventures

8.
Licensing
• It is an arrangement wherein the licensor gives
something of value to the licensee in exchange
for certain performance and payments from the
licensee.
• A formal permission or right offered to a firm or
agent located in host country to use a home
firm’s proprietary technology resource in return
for payment.
• Another way for firm to establish local production
in foreign markets without capital investment.

9.
• Licensing may include
- Patent for product or process
- Technical advice and assistance
- Marketing advice and assistance
- Use of Trademark and name
• E.g: GSK, biocon, Quick Heal

10.
Franchising
• An independent organization operates the
business under the name of another company
• Franchisee pays fee to the franchisor
• Franchisee owns right to use trade marks,
systems, operating function, employee
training etc .

11.
Types of Franchising
• Product & Trade Name Franchising
- Dealer use Trade Name & Trade Mark
e.g: Dominos (Jubilant Food Works )
• Business Format Franchising
- Franchisor transfer package
- Package contains Trade marks/name,
copyright, designs, patents, trade secret etc.
e.g: Who Wants to be Millionaire -> KBC

12.
• Advantages
- low risk, low entry cost
- Quick development in International Market
- Precursor to FDI in foreign market
• Disadvantages
- High cost of creating international brand
-Problem with local legislation
- Risk of International reputation

13.
Contract Manufacturing
• Company do business in foreign market with
responsibility for production to local firm
• e.g: IKEA, Danone
• Advantages:
- low risk
- no huge investment in foreign market
- avoids transfer-pricing problems
• Disadvantages
- hard to find reliable manufacturer
- contractor could become competitor
- Quality control become difficult

14.
Joint Venture
• Two or more firms join together
• Legally separate new business entity
• Shared ownership
e.g: Sistema Shyam TeleServices (MTS)
Alcatel – Lucent
Bharati Walmart
• Advantages:
- less costly than acquisitions
- shared risk of failure
• Disadvantages:
- Large investments of resources
- cultural differences may result in management
differences

15.
Types of Entry Mode - Hierarchical
• Company completely owns & control foreign
entry
• Investment mode
• New set-up in host country is fully own
subsidiary by parent company.
• 2 Types
- Merger or Acquisition
- Green Field

16.
Merger or Acquisition
• Domestic company merge with foreign company to
enter in Int’l market
• Domestic company may acquire/purchase foreign
company
• e.g: Nokia (Fin)- Siemens (Ger)
data n/w & telecommunication division
• Advantages:
- Immediate grab of market share
- Less time & quick to execute
• Disadvantages:
- tedious task (bankers, lawyers from both countries)

17.
Green Field Strategy
• Set-up operations in foreign market from zero
• Purchase local property & man power
• e.g.: Mercedes – Benz production in Pune
Volkswagen India
• Advantages:
- Control of operations
- No risk of loosing technical competence to
competitor
• Disadvantages:
- Lengthy process from scratch
- Pre research is time consuming

18.
Thank You!!
Email: lovesuryavanshi@gmail.com