MODES OF ENTRY

Presented by:
Tushit Tolia
Siddharth Parekh
Ami Barchha
Sonali Bhatt
 INTERNATIONAL
ENTREPRENEURSHIP

• International entrepreneurship involves carrying out

business activities across national border to respond to
customer needs outside the country by availing
opportunities outside the country.
• Entering into international markets mainly involves
extending business internationally by adding customers,
distribution channels and production facilities
internationally.
 Challenges

• Language barrier
• Culture difference
• Managing global teams
• Currency exchange and inflation rates
• Nuances of Foreign Politics, Policy, and Relations
 NO POWE R ON E A RT H C A N S TOP A N I D E A W HOS E
T I M E HAS COM E

CHANGE IN
IMPORT AND EMPHASIS ON
EXPORT POLICY SEBI DIRECT TAX
1991
CRISIS 1 2 3 4 5

ACCEPTED FDI CAPTURE

OVERSEAS
SOFTWARE
MARKET
 DIFFERENT MODES OF ENTRY

• EXPORTING
• LICENSING
• FRANCHISING
• TURNKEY PROJECT
• WHOLLY OWNED SUBSIDIARY
• JOINT VENTURE
• MERGERS & ACQUISITIONS
 EXPORTING

• Exporting means shipping the goods and services out of

the port of a country.
• Seller is referred to as an “exporter”. Buyer is referred
to as an “importer”.
 INDIRECT EXPORTING
• Indirect exporting means that the firm participative in
international business through an intermediary and does not
deal with foreign customers or markets.

DIRECT EXPORTING
• Direct exporting means that the firm works with foreign
customers or markets with the opportunity to develop a
relationship.
 ADVANTAGES DISADVANTAGES

• Low investment • Unknown market

• Less risk • No control over foreign market

• Acquire knowledge about local • Lack of information about

market external environment
 LICENSING

• Licensing is a method in which firm gives permission to a

person to use its legally protected product or technology and
agreed period of time and within an agreed country. If is
very easy method to enter foreign market as less control and
communication are involved.
 ADVANTAGES DISADVANTAGES

• Limited market opportunities /

• Low cost of labor profit
• Less investment involved • Dependence on licensee
• Possibility of creating future
competitor
 FRANCHISING

• In this mode, an independent firm called the franchisee does

the business using the name of another company called
the franchisor.
• In franchising, the franchisee has to pay a royalty or a
fraction of profit to the franchisor.
• The franchisor provides the trademarks, operating process,
product reputation and marketing, HR and operational
support to the franchisee.
 ADVANTAGES DISADVANTAGES

• Low financial risks • Limited market opportunities / profit

• Low cost way to assess market potential • Dependence on franchisee

• Franchisee provides knowledge of local • Possibility of creating future
market competitor
 TURNKEY PROJECT

• It is a special mode of carrying out international business. It is a

contract under which a firm agrees – for a remuneration – to fully
carry out the design, create, and equip the production facility and shift
the project over to the purchaser when the facility is operational.
 WHOLLY OWNED SUBSIDIARY

• Wholly Owned Subsidiary is a company whose common stock is fully

owned by another company, known as the parent company. A wholly
owned subsidiary may arise through acquisition or by a spin-off from
the parent company.
 JOINT VENTURE

• When two or more firms join together to create a new business entity,
it is called a joint venture.

• The uniqueness in a joint venture is its shared ownership.

• Environmental factors like social, technological, economic and political

environments may encourage joint ventures.

• Joint ventures provide significant funds for major projects

• Sharing of risks between or among partners Conflicts may develop

 MERGERS & ACQUISITIONS

• In Mergers & Acquisitions, a home company may merge itself with a

foreign company to enter an international business.

• Alternatively, the home company may buy a foreign company and

acquire the foreign company’s ownership and control.

• M&A offers quick access to international manufacturing facilities and

marketing networks.
 ADVANTAGES DISADVANTAGES

• Immediate ownership and control over the • Complex process and requires experts from
acquired firm’s assets both countries

• Probability of earning more revenues • No addition of capacity to the industry

• Government restrictions on acquisition of

local companies may disrupt business