In contract manufacturing, the firm’s product is produced in the foreign market by local producer under contract with the firm. Because the contract covers only manufacturing, marketing is handled by a sales subsidiary of the firm which keeps the market control.
2. Prepared By
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Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com
3. Entry Strategies
• Market entry
strategy is
influenced by the
firm and product
characteristics and
the domestic and
international market
characteristics.
4. Foreign Market Entry and Operations Strategies
Exporting
• Direct Exporting.
• Indirect Exporting.
Contractual Agreement
• Licensing & Franchising.
• Strategic Alliance.
• Contract Manufacturing.
Production facility in foreign
market.
• Assembly Operations.
• Wholly owned
manufacturing facility.
• Joint Ventures.
Mergers and Acquisitions
5. Contract Manufacturing
In contract
manufacturing, the firm’s
product is produced in
the foreign market by
local producer under
contract with the firm.
Because the contract
covers only
manufacturing, marketing
is handled by a sales
subsidiary of the firm
which keeps the market
control.
6. Contract Manufacturing
Contract manufacturing
obviates the need for plant
investment, transportation
costs and custom tariffs and
the firm gets the advantage
of advertising its product as
locally made. Contract
manufacturing also enables
the firm to avoid labour and
other problems that may
arise from its lack of
familiarity with the local
economy and culture.
7. Example
Balsara’s private label
manufacturing activity is
focused on the supply of
children’s toothpaste
formulations. Balsara’s
empahsis on Private lable
products and contract
manufacturing has
resulted in increased
business from North
American and European
Markets.
