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    Foreign Market Entry Strategies

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    Navlika Dutta
    The document discusses various strategies for entering foreign markets, including exporting, licensing, franchising, joint ventures, wholly owned subsidiaries, and contract manufacturing. It notes that the selection of an entry strategy depends on strategic variables like control requirements, environmental variables like required resource commitment, and transaction variables like risk of knowledge dissemination and needed level of control. Choosing a target market also considers factors such as geography, economics, demographics, and market characteristics. Each strategy involves different levels of investment, risk, and potential return.

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    Foreign Market Entry Strategies

    Uploaded by

    Navlika Dutta
    307 views16 pages
    The document discusses various strategies for entering foreign markets, including exporting, licensing, franchising, joint ventures, wholly owned subsidiaries, and contract manufacturing. It notes that the selection of an entry strategy depends on strategic variables like control requirements, environmental variables like required resource commitment, and transaction variables like risk of knowledge dissemination and needed level of control. Choosing a target market also considers factors such as geography, economics, demographics, and market characteristics. Each strategy involves different levels of investment, risk, and potential return.

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    PPT of foriegn market entry modes

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    The document discusses various strategies for entering foreign markets, including exporting, licensing, franchising, joint ventures, wholly owned subsidiaries, and contract manufacturing. It notes that the selection of an entry strategy depends on strategic variables like control requirements, environmental variables like required resource commitment, and transaction variables like risk of knowledge dissemination and needed level of control. Choosing a target market also considers factors such as geography, economics, demographics, and market characteristics. Each strategy involves different levels of investment, risk, and potential return.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    307 views16 pages

    Foreign Market Entry Strategies

    Uploaded by

    Navlika Dutta
    The document discusses various strategies for entering foreign markets, including exporting, licensing, franchising, joint ventures, wholly owned subsidiaries, and contract manufacturing. It notes that the selection of an entry strategy depends on strategic variables like control requirements, environmental variables like required resource commitment, and transaction variables like risk of knowledge dissemination and needed level of control. Choosing a target market also considers factors such as geography, economics, demographics, and market characteristics. Each strategy involves different levels of investment, risk, and potential return.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    The document discusses different strategies for entering foreign markets such as exporting, licensing, franchising, joint ventures, wholly owned subsidiaries, and contract manufacturing. It also talks about factors to consider when choosing a target market and constraints that influence the selection of an entry mode.

    The different strategies discussed for entering a foreign market are exporting, licensing, franchising, joint ventures, wholly owned subsidiaries, and contract manufacturing.

    Factors that should be considered when choosing a target market include geographical factors, economic/political/legal environmental factors, demographic factors, and market characteristics.

    Foreign Market Entry Strategies

    Made by: Harshmeet Pal Singh (14013) Hemant Chopra (14014)

    Reasons To Enter Foreign Market


    To expand sales To acquire resources To minimize risk

    Choosing the Target Market


    Geographical Factors Country, state, region, Urban/rural location logistical considerations e.g. freight and distribution channels

    Economic, Political, and Legal Environmental Factors Regulations including quarantine, Labeling standards, Standards and consumer protection rules, Duties and taxes
    .

    Choosing the Target Market


    Demographic Factors Age and gender, Income and family structure, Occupation, Cultural beliefs, Similar products, Market Characteristics Market size, Availability of domestic manufacturers, Agents, distributors and suppliers

    Foreign Entry Strategies


    Exporting Licensing Franchising Joint Venture Wholly owned Subsidiaries Contract Manufacturing

    Exporting
    Exporting is the marketing and direct sale of domestically-produced goods in another country. Exporting is a traditional and wellestablished method of reaching foreign markets. Since exporting does not require that the goods be produced in the target country, no investment in foreign production facilities is required. Most of the costs associated with exporting take the form of marketing expenses.

    Licensing
    Licensing essentially permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance. Because little investment on the part of the licensor is required, licensing has the potential to provide a very large ROI. However, because the licensee produces and markets the product, potential returns from manufacturing and marketing activities may be lost.

    Franchising
    Franchising is a business model in which many different owners share a single brand name. A parent company allows entrepreneurs to use the company's strategies and trademarks; in exchange, the franchisee pays an initial fee and royalties based on revenues. The parent company also provides the franchisee with support, including advertising and training, as part of the franchising agreement.

    Joint Venture
    A joint venture (JV) is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets. The two parties feel that it will be beneficial for them to join togather and carry our efficient operations.

    Wholly owned subsidiaries


    A company can set up a wholly owned subsidiary abroad if they want complete control over the operations. They are of two main types: 1. Greenfield Site: The firm sets a new operation 2. The firm may acquire an exisiting business abroad. This strategy require maximum commitment of resources and involves greater risk.

    Contract manufacturing
    This strategy implies that the company might outsource the production function to foreign countries. This is generally done to take advantages of cheap and abundant labour, land availability or low taxation policies.

    Entry Mode Selection


    The selection of entry to be applied for entering into foreign markets rely on three main constraints: 1. STRATEGIC VARIABLES 2. ENVIRONMENTAL VARIABLES 3. TRANSACTION VARIABLES

    STRATEGIC VARIABLES
    influence the choice of entry mode through the control requirements that they entail. Control is the ability and willingness of a firm to influence decisions, systems, and methods in a foreign market. Different strategies require different degrees of control over the operating of foreign affiliates, and thus lead to different entry modes.

    ENVIRONMENTAL VARIABLES
    influence the entry mode decision primarily through their influence on the appropriate level of resource commitment. Resource commitments are dedicated assets that cannot be employed for other uses without incurring costs. Resources may be intangible, such as managerial skills, or tangible, such as machines and money.

    TRANSACTION VARIABLES
    influence the entry mode decision through their influence on dissemination risks and on the appropriate level of control. Risk comes from the chance that a firm's applied knowledge (tangible and/or intangible) can be unintentionally transferred to a local firm creating a new competitor.

    Thank You !!

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