Friday, 20 December 2019

Unit 5: Modes of Entering International Business

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Unit 5: Modes of Entering International Business


Notes   The three basic strategic decisions that make a firm contemplating foreign expansion are: (a) which markets to enter, (b) when to enter those markets, and (c) on what scale.

A joint venture is a strategic alliance where two or more parties, usually businesses, form a partnership to share markets, intellectual property, assets, knowledge, and, of course, profits.

A strategic alliance is when two or more businesses join together for a set period of time.

The businesses in strategic alliance, usually, are not in direct competition, but have similar products or services that are directed toward the same target audience.

Franchising is basically a specialized form of licensing in which the franchiser not only sells intangible property normally a trademark to the franchisee, but also insists that the franchisee agree to abide by strict rules as how it does business.

The franchiser will also often assist the franchisee to run the business on an ongoing basis.

Through Foreign Direct Investment a firm invests directly in facilities to produce and/or market a product in a foreign country.

FDI takes on two main forms; the first is a green field investment, which involves the establishment of a wholly new operation in a foreign country.

Contract manufacturing is a process that established a working agreement between two companies.

As part of the agreement, one company will custom produce parts or other materials on behalf of their client.

In most cases, the manufacturer will also handle the ordering and shipment processes for the client.

The term “export” is derived from the conceptual meaning as to ship the goods and services out of the port of a country.

The seller of such goods and services is referred to as an “exporter” who is based in the country of export whereas the overseas based buyer is referred to as an “importer”.

5.

Contract manufacturing: It is a process that established a working agreement between two companies.

Direct investment: In this a firm invests directly in facilities to produce and/or market a product in a foreign country.

Direct marketing: The business of selling products or services directly to the public, e.g, by mail order or telephone selling, rather than through retailers.

Exports: It refers to selling goods and services produced in home country to other markets.

Export agent: An intermediary who acts on behalf of a company to open up or develop a market in a foreign country.

Franchising: A specialized form of licensing in which the franchiser not only sells intangible property normally to the franchisee, but also insists that the franchisee agree to abide by strict rules as how it does business.

Joint ventures: A contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking.

International Business Notes Strategic alliances: An arrangement between two companies who have decided to share resources in a specific project.

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