Entering Global Market : Entering Global Market Kalpita Chakrabortty
Modes of entry into IB : Modes of entry into IB Exporting
Selling out side the border of the nation
Passive (Non - Strategic)
Active (Strategic)
Direct (Ownership)
Indirect (Agency)
Merits of export : Merits of export Less expensive
Easy to administer
Selling control
Own contacts
Limitations : Limitations Foreign market inspection
Foreign relations
Uncertain forecast of sales
Long term credit
Employee relation
Franchising : Franchising Where one party allows other party to use trademark, brand and customer base.
Franchiser
Franchisee
Advantages of franchisers : Advantages of franchisers Self employment
Full control over distribution
Bulk buy
Recognition of intellectual assets
Large profit from limited capital base
Limitations : Limitations No control over franchisee
Franchisee own outlets
Disguise ownership
Account transparency
Management contracts : Management contracts A firm of one country provides a team of expert to an enterprise in another country for a fix period under contract.
Advantage : Advantage Quick technology transfer
Fewer overheads for supplier
Assured results
Predetermined specification
Risk factors
Limitations : Limitations Management confusion or barriers
Limited opportunity for future investment
Contract manufacturing or global subcontracting : Contract manufacturing or global subcontracting It is a portfolio investment with local producer
HK, singapore, Malyasia, Taiwan hosts
Japanese, American etc firms
Advantages : Advantages Large investment on capital equipment
Easy withdrawal
Better resources in host nation
IR relaxation
Facilitation of Govt. by improving BOP
Limitations : Limitations Difficulty to find subcontractors
Limited supervisory control over manufacturing process
Disputed supply of merchandise
Competitive structure of industries : Competitive structure of industries Michael porter’s 5 competitive forces
Rivalry among existing firms
Threat of new entrants
Threat of substitutes
Bargaining power of suppliers
Bargaining power of buyers
Porters five forces model : Porters five forces model