Concentration of resources towards production Little or no financial commitment as the clients' exports usually covers most expenses associated with international sales.
Background Modes of entry into an international market are the channels which your organization employs to gain entry to a new international market. This lesson considers a number of key alternatives, but recognizes that alternatives are many and diverse. Finally we consider the Stages of Internationalization.
Licensing Licensing includes franchising, Turnkey contracts and contract manufacturing. Franchising involves the organization franchiser providing branding, concepts, expertise, and in fact most facets that are needed to operate in an overseas market, to the franchisee. Management tends to be controlled by the franchiser.
Turnkey contracts are major strategies to build large plants. You would not own the plant once it is handed over. International Agents and International Distributors Agents are often an early step into international marketing.
Put simply, agents are individuals or organizations that are contracted to your business, and market on your behalf in a particular country. They rarely take ownership of products, and more commonly take a commission on goods sold.
Agents usually represent more than one organization. Agents are a low-cost, but low-control option. If you intend to globalize, make sure that your contract allows you to regain direct control of product. Of course you need to set targets since you never know the level of commitment of your agent.
Agents might also represent your competitors — so beware conflicts of interest. They tend to be expensive to recruit, retain and train. Distributors are similar to agents, with the main difference that distributors take ownership of the goods.
Therefore they have an incentive to market products and to make a profit from them. Otherwise pros and cons are similar to those of international agents. Strategic Alliances SA Strategic alliances is a term that describes a whole series of different relationships between companies that market internationally.
Sometimes the relationships are between competitors. There are many examples including: Toyota Ayago is also marketed as a Citroen and a Peugeot. Essentially, Strategic Alliances are non-equity based agreements i.
Find A+ essays, research papers, book notes, course notes and writing tips. Millions of students use StudyMode to jumpstart their assignments. Equity based modes of entry options. Advantages. Disadvantages. Wholly Owned Subsidiary. If Foley were to buy a going concern or even make a move to purchase its local distributor in Brazil, the company can build up its presence using the ‘know-how’ expertise of the partners they already had on the ground. Different modes of entry may be more appropriate under different circumstances, and the mode of entry is an important factor in the success of the project. Walt Disney Co. faced the challenge of building a theme park in Europe.
There are many reasons why companies set up Joint Ventures to assist them to enter a new international market: Access to technology, core competences or management skills.
To gain entry to a foreign market. For example, any business wishing to enter China needs to source local Chinese partners. Overseas Manufacture or International Sales Subsidiary A business may decide that none of the other options are as viable as actually owning an overseas manufacturing plant i.
This can be a new-build, or the company might acquire a current business that has suitable plant etc. Of course you could assemble products in the new plant, and simply export components from the home market or another country. The key benefit is that your business becomes localized — you manufacture for customers in the market in which you are trading.
You also will gain local market knowledge and be able to adapt products and services to the needs of local consumers.
The downside is that you take on the risk associated with the local domestic market. An International Sales Subsidiary would be similar, reducing the element of risk, and have the same key benefit of course.
However, it acts more like a distributor that is owned by your own company. Internationalization Stages, and modes of entry So having considered the key modes of entry into international markets, we conclude by considering the Stages of Internationalization. Some companies will never trade overseas and so do not go through a single stage.
Others will start at a later or even final stage. Of course some will go through each stage as summarized now: Indirect exporting or licensing Direct exporting via a local distributor Your own foreign presences Home manufacture, and foreign assembly Foreign manufacture It is worth noting that not all authorities on international marketing agree as to which mode of entry sits where.
For example, some see franchising as a stand alone mode, whilst others see franchising as part of licensing. In reality, the most important point is that you consider all useful modes of entry into international markets — over and above which pigeon-hole it fits into.Find A+ essays, research papers, book notes, course notes and writing tips.
Millions of students use StudyMode to jumpstart their assignments. Different modes of entry may be more appropriate under different circumstances, and the mode of entry is an important factor in the success of the project.
Walt Disney Co. faced the challenge of building a theme park in Europe. Equity based modes of entry options. Advantages.
Disadvantages. Wholly Owned Subsidiary. If Foley were to buy a going concern or even make a move to purchase its local distributor in Brazil, the company can build up its presence using the ‘know-how’ expertise of the partners they already had on the ground.
Define example, if an option, which is generally considered performance-based compensation under Options Section mis cancelled in exchange for a time-based restricted stock grant, which is work from home data entry jobs bristol considered performance-based compensation under Code Section stockthe company options ultimately forego a tax.
Essentially, Strategic Alliances are non-equity based agreements i.e. companies remain independent and separate. Joint Ventures (JV) and modes of entry Joint Ventures tend to be equity-based i.e. a new company is set up with parties owning a proportion of the new business.
Foreign market entry modes or participation strategies differ in the degree of risk they present, the control and commitment of resources they require, and the return on investment they promise.
 There are two major types of market entry modes: equity and non-equity modes.