Global market entry strategies

2. Global Market Entry Strategies

3. Presenting
 Franchising
 Foreign Direct Investment
 Licensing

4. Global Market Entry Strategy

5. Franchise
“A franchise operation is a contractual relationship
between the franchisor and franchisee in which the
franchisor offers or is obliged to maintain a
permanent interest in the business of the franchisee
in such areas as know-how and training; wherein the
franchisee operates under a common trade name,
format and/or procedure owned or controlled by the
franchisor, and in which the franchisee has or will
make a substantial capital investment in his business
from his own resources.”
- Definition by International Franchise Association

6. Types of Franchises
Product distribution franchise.
Business format franchise.
Management franchise.

7. Product distribution
franchises
 A product distribution franchise model is
very much like a supplier-dealer relationship.
 Typically, the franchisee merely sells the
franchisor’s products. However, this type of
franchise will also include some form of
integration of the business activities.

8. Product Distribution Franchises

9. Business format
franchising
 In a business format franchise, the integration of
the business is more complete.
 The franchisee not only distributes the
franchisor’s products and services under the
franchisor’s trade mark, but also implements the
franchisor’s format and procedure of conducting
the business.

10. Business Format Franchises

11. Business format franchising
outlet in
Sale, Australia
outlet in
Marseille, France

12. Management franchise
 A form of service agreement.
 The franchisee provides the management
expertise, format and/or procedure for
conducting the business.

13. Management Franchises

14. Benefits of Buying a Franchise
 Management training and support.
 Brand name appeal.
 Standardized quality.
 National advertising.
 Financial assistance.
 Proven products and business formats.
 Centralized buying power.
 Site selection and territorial protection.
 Greater chance of success.

15. Drawbacks of Buying a Franchise
 Franchise fees and ongoing royalties.
 Strict adherence to standardized operations.
 Restrictions on purchasing.
 Limited product line.
 Contract terms and renewal.
 Less freedom.

16. Global Market Entry Strategy

17. Foreign Direct Investment
 It refers to purchase or establishment of
production facilities in foreign countries
which represents a more direct involvement
in the local economy and a long term
relationship.

18. It can be :
Establishing a wholly owned subsidiary or
company.
Acquiring share in an associated company.
Though a merger or an acquisition of a
company.
Through an equity joint venture with a
company or investor.

19. Example

20. Types of FDI
Three types of FDI:
 Horizontal FDI: Doing the same business in abroad.
 Vertical FDI: Different stages of business are added in
abroad.
 Conglomerate FDI: Unrelated business is added in abroad.
Example:

21. Inflow of FDI in Bangladesh

22. % of FDI in 2013 (Bangladesh)

23. FDI Inflows from Major Countries to
Bangladesh

24. Advantages of FDI
 Economic growth
 Create employment
 Improved product standard
 Access to global market

25. Disadvantages of FDI
 Dominate the market
 Domestic uncompetitive firms may suffer
 Capital intensive technology
 Effect on environment

26. Global Market Entry Strategy

27. Licensing
 A license is a contract through which one party grants
another permission to use its patents, trademarks,
copyrights, designs or trade secrets.
 The organization receiving the license, or licensee,
compensates the licensor by paying a flat fee, royalties
or a combination of the two.
 The agreement does not transfer ownership of the
intellectual property.

28. Set-up, Control and Support
 By licensing to third parties, small business owners can
expand their businesses' reach and grow sales without
having to invest in new locations or distribution
networks, and risking failure.

29. Set-up, Control and Support
 A licensing agreement can be drafted and completed in
as little as a week.
 In a licensing agreement though, the licensor usually
does not retain much control over how the licensee may
operate.
 Unless otherwise specified, licensees can use the
licensed property in whichever way they choose.

30. World’s Largest Licensor

31. Examples
 Examples of licenses include a company using the
design of a popular character, e.g. Mickey Mouse, on
their products. Another example would be a clothing
manufacturer like Life is Good licensing its designs and
brand in a certain country to a local company. It can
also apply to the use of software, e.g. a company using
Microsoft Office on its computers.

32. Examples

33. Advantages
 A license allows the licensee to use, make and sell an
idea, design, name or logo for a fee. They are
advantageous for licensors because they allow them to
expand their business’ reach without having to invest in
new locations and distribution networks.

34. Advantages and Disadvantages
 Brand Recognition
 Revenue
 Competition
 Confidentiality

35. Things to consider
 Anyone selling a license should ensure that their
Intellectual Property is protected by law and specify
what rights it grants the licensee.

36. Exclusivity and Competition
 Licensors can sometimes license their intellectual
property to two or more organizations operating in the
same geographic region or market forcing licensees to
compete directly with one another.