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Five Modes of Entry into Foreign Markets

Indirect exporting

Direct exporting

Licensing

Joint ventures

Direct investment

Commitment, Risk, Control, Profit Potential

Indirect Exporting
y Domestic based export Merchants y Domestic based export Agents y Cooperative Organizations y Export Management Companies y ADVANTAGES: y Less investments y Seller will make fewer mistakes.

Direct Exporting
y Domestic-based export department y Overseas sales branch or subsidiary y Traveling export sales representatives y Foreign-based distributors or agents

Reva Electric car generates 70% of its revenue from exports

Licensing
License issued on Manufacturing process, trademark, Patent, trade secret or others of a fee or royalty Advantage: Low risk, Easy and fast entry Disadvantages: Low control, developing competitors Types: Management Contracts Contract Manufacturing Franchising

Joint ventures
Joint ventures share ownership & control Objectives: Market entry, risk/reward sharing, technology sharing and Joint product development, and conforming to government regulations Advantages: Financial, Physical & Management Support Conflicts: Investments on new Assets Cultural clashes Termination of relationship

Direct investment
Direct ownership of foreign based assembly and manufacturing f Advantages: Cost economies Brand image Develop relationships Full control Disadvantages Huge investment & efforts