There are number of ways for internationalization / globalization of business. these are referred as foreign market entry strategies. Each of these ways has certain advantages and disadvantages. One strategy for a particular business may not be very suitable for another business with different environment. Therefore it is quite common that a company employs different strategies for different markets.
The different strategies are :
- Imports : Imports is defined as goods and services produced by host country and purchased by parent country. it is reverse process of Exports.
- Exports : Exports is defined as goods and services produced in one country then get marketed to other country.
- Foreign Direct Investment (FDI) : Here funds are invested in equity from parent country to a host country. Rich countries invest funds in growth industries and geographic areas of economic development.
- Licensing : Licensing which involve minimal commitment of resources and effort on the part of the international marketer, are easy ways of entering the foreign markets. Under international licensing, a firm in one country (the licensor) permits a firm in one country permits the firm in another country to use the intellectual property (such as patents, trademarks, copyrights, technology, technical know – how, marketing skill or some other specific skill). The monetary benefits to the licensor is the royalty fees, which the licensee pays.
- Franchising : Franchising is giving right at a parent company (Franchiser) to another company (Franchisee) using his name selling his products, do business in a prescribed manner and get advantage of brands of parent company.
- Joint Venture : It is a mutual agreement of two or more partners across globe to collectively own the company to produce goods and services. This will be pooling the resources to mutual advantages.
- Manufacturing in Foreign Country : When a company finds better economy in manufacturing in host country due to lower costs of materials labour or duties the manufacturing is undertaken in host country. The local conditions in host country should support manufacturing and marketing activities.
- Management Contracts : The foreign country needs management expertise in managing existing or a sick company this method is used. Under management contract the service provided gets fees or shares in the company. The contracts is for a specific period.
- Consultancy Services
- Strategic Partnerships : The positive aspect of two companies in different countries are joined together. The resources are pooled together to produce new marketable products. This will put both companies in win-win situations .
- Mergers : A Corporate Merger is a combining of corporations in which one of two or more corporations survives and works for common objectives. These are several types of mergers with a variety of filing requirements based on number of corporations merging and the type of merger.
- Counter Trades : Counter trade is a form of international trade in which certain exports and import transactions are directly linked with each other and in which imports of goods are paid for by exports of goods, instead of money payments.
Category: International Business