What are the major ways entering in a

foreign markets?

Direct Investment

Joint Ventures

Licensing

Direct Exporting

Indirect Exporting C

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5 Modes of entry into foreign Markets

1.Indirect Exporting Companies work through independent intermediaries:

Domestic-based export merchants,

Domestic-based export agents,

Cooperative organizations,

Export management.

Advantages of Indirect exporting

First, there is less investment

Second, there is less risk.

2.Direct investment The investment and risk are

somewhat greater, but so is

potential return.

Ways of direct investment Domestic based export department or

division

Overseas sales branch or subsidiary

Traveling export sales representatives

Foreign-based distributors or agents

3.Licensing The licensor issues a license to a

foreign company to use a

manufacturing process, trademark

,patent, trade secret or other item

of value for fee or royalty.

Licensor has less control over the licensee than its own

production and sales facilities.

At the end of the license successful licensee may

emerge as a competitor.

4.Join Ventures

A joint venture may be necessary or

desirable for economic or political

reasons.

The foreign company may lack the

financial, physical, or managerial

resources to undertake the venture

alone.

5.Direct Investment The ultimate form of foreign involvement is direct

ownership.

Foreign company can buy part or full interest in a

local company

Build its own manufacturing or service facilities.

If the market is large enough then direct investment

have distinct advantage-

The firm secures cost economy through cheaper

labor or raw materials, government incentives, and

freight savings,

The firm strengthen its image in host country,

The firms deepens its relationship with government

customers,local suppliers and distributors,

The firm retain full control over its investment.