CHAPTER

IV

MODES OF
ENTERING
INTERNATIONAL
BUSINESS
PRESENTED BY: GROUP V
Different Entry Modes
Difference Between Merger &
Acquisition
Factors Causing Conflict
Conflict Between Host and
Transnational Company
TABLE
OF CONTENT
INTERNATIONAL
International business refers to a broad variety of
activities such as, trade of goods and services,
capital, knowledge and technology made by
numerous organizations across borders on a global
scale.
TYPES OF ENTRY
MODE
MERGER AND
JOINT VENTURE
ACQUISITION

LICENSING FRANCHISING

CONTRACT
MANUFACTURING
MERGER
Is the combination of two or more
businesses to create a completely
new entity with a new name.
Merger helps businesses combine
their resources, strengths, and
weaknesses. Trade barriers and
competition are decreased as a
result of merger.
 TYPES OF MERGER
HORIZONTAL MERGER VERTICAL MERGER
- Two companies - A customer and
that are in direct company supplier
competition and or a supplier and
share the same company. Think of
product lines and a core supplier
markets. merging with an
ice cream maker.
MARKET-EXTENSION
MERGER
- Two companies
that sell the same
products in
different markets.
TYPES OF MERGER
CONGLOMERATION PRODUCT-EXTENSION
MERGER
- Two companies
selling different but - Two companies
related products in selling different but
the same market. related products in
the same market.
OTHER TYPES OF MERGER

Purchase Merger Consolidation Merger

- Occurs when one - A brand new company is
company purchases formed and both companies
another. The sale are are bought and combined
taxable. under the new entity. The
tax term are the same as
those of a purchase merger.
ACQUISITION
Are actions through which
companies seek economies of
scale, efficiencies and enhanced
market visibility. All acquisition
involve one firm purchasing
another – there is no exchange of
stock or consolidation as a new
company.
MERGER
the deals gets finalized on friendly
terms and both the companies
share equal profits on the newly MERGER VS.
created entity.
ACQUISITION
ACQUISITION
process of restructuring, one company
overpowers the other company and the
decision is mainly taken during
downturns in economy or during
declining profit margins.
JOINT VENTURE
Strategic alliance where two or more
parties, form a partnership to share
markets, intellectual property, assets,
knowledge, and profits.

Differ from merger in the sense of there is no

transfer of ownership in the deal.
LICENSING
A legal arrangement which a corporation
from one nation (the licensor) gives a
license to a business from another country
(the licensee) to utilize its brand, patent,
trademark, technology, copyright,
marketing expertise, etc. to help the other
company sell its products.
PROS & CONS OF LICENSING
PROS CONS
Obtain new extra income Lower income
Reach new markets Loss control of license
Quickly expand Risk of having trademark
Pave the way for future Foreign partner can be
investments competitor
Retain established markets
Politics risks is minimized
Product Franchise
Manufacturing Franchise
Business Venture Franchise
Business Format Franchise
Social Franchising
FRANCHISING
- A specialized form of licensing in
Event Franchising which the franchiser not only sells
intangible property to the franchise,
but also insists that the franchise
agree to abide by strict rules as how
it does business.
 TYPES OF FRANCHISING
PRODUCT MANUFACTURING BUSINESS VENTURE
FRANCHISE FRANCHISE FRANCHISE

manufacturer uses tye manufacturer uses tye the franchise

franchise agreement to franchise agreement to purchases and
determine how the determine how the distributes the
product is distributed product is distributed products for the
by the person buying by the person buying franchise owner. A
the franchise. the franchise. client base is provided
by the product owner
for the franchise to
maintain.
 TYPES OF FRANCHISING
BUSINESS FORMAT SOCIAL EVENT
FRANCHISE FRANCHISING FRANHISING

this opportunity is the idea of franchising the duplication of

popular, and involves has been picked up by public events in other
providing the franchise social enterprise geographical areas,
a proven business sector, which hopes to while retaining the
model using a simplify and expedite original brand ( logo ),
recognized product the process of setting mission, concept, and
and brand. up new businesses. format of the event.
BENIFITS LIMITATIONS
FRANC HISING
•Loss/Lack of Control
•Less Long-term Profit
•Hard to Sell
•Possibility of Parent
Company Going Out of
Business
•Possibility of getting a bad
name
CONTRACT
MANUFACTURING
- Also known as
OUTSOURCING, when one
company enters into an
agreement with another to
produce components or
products over a specific
timeframe.
TYPES OF CONTRACT MANUFACTURING
CONFLICT &
NEGOTIATION
CONFLICT
- A disagreement,
opposition or
struggle, between
two or more people
NEGOTIATION
or groups - Process by which at
least two parties try to
reach an agreement on
matters of mutual
interests. Then
negotiation proceeds.
FACTORS CAUSING
CONFLICT
 Factors causing conflict are
divergent. The factors differ for
organizational conflicts, project
conflicts and so on.

STRUCTURAL FACTORS

EMOTIONAL FACTORS
STRUCTURAL
FACTORS Specialization of
Functions
Normally impose rigidity while Interdependence
businesses need dynamic amongst organizational
Status inconsistencies
adjustment. Personnel who divisions/departments
Inconsistencies
could not tend or mend the Sharing Common
Jurisdictional
organization, but required to Resources
Ambiguities
show targeted results see Goal Differences
Personal Factors
conflict between Authority Relationships
Values and Ethics
responsibility and authority, Cultural Differences
called organizational
conflict.
EMOTIONAL
FACTORS
conflict involves
emotion because
something ' triggers ' it.
The events trigering
conflict are events that
elicit emotions.

" Conflict is emotionally defined and driven "

" Does not exist in the absence of emotion "
 COMPONENTS

BEHAVIORAL PHYSIOLOGICAL COGNITIVE

The way emotional The bodily The mental
experience gets experience of process of "
expressed which emotion. The way assessing " an
can be verbal or emotions make us event to reveal its
non-verbal and feel in comparison relevancy to
intentional or to our identity. oneself.
unintentioanl.
SCARCITY LEADS TO CONFLICT, ECONOMIST SAYS
Which are not acceptable for Psychologists. It can be said, scarcity
of emotional balance is the cause of conflict! Deprivation,
economic or emotional, leads to conflict.
MORAL STANCE LEADS TO CONFLICT
When an event occurs it can be interpreted as moral or immoral.

CONFLICT IS RELATIONAL
Conflict is relational in the sense that emotional communication
conveys relational definitions that impact conflict. Key relational
elements are power and social status
IDENTITY OR INDIVIDUALITY ISSUES MAY LEAD TO CONFLICT
When a person knows their values, beliefs, and morals they are
able to determine whether conflict is personal, relevant and moral.
SOCIETIES WITH WEAK INSTITUTIONS WITNESS MORE CONFLICT
Violent conflict is more common in societies with waek institutions and chronic
poverty.
CAUSES OF PROJECT
RELATED CONFLICTS
Large infrastructur e pr oj e ct s and
conflicts

Project loans/advising/pr omot ions for

controversial pr oj ect s and conflict s

Capital flight and mone y launde r ing and

conflicts

Financial advising and conflicts

 CAUSES OF PROJECT
RELATED CONFLICTS
Sovereign loans/bonds/book -r unne r s
and conflicts

Financing state-owned enter pr ises and

conflicts

Trade facilities indir ect ly used t o war -

purposes and conflict s

Export credits and suppor t of ar ms sale s

and conflicts
CONFLICT BETWEEN HOST
AND TRANSNATIONAL
COMPANY
Profits is the motivating force drives,
multinational corporations, which also
driven to occupy larger market shares and to
ensure long-competitiveness in the host
countries.

Conflict of inter e st bet ween t he se

corporations and host socie t ie s ar ise on a
range of issues including int ellect ual
property rights, operational de cisions that
may affect the env ir onme nt or human
rights, and the r epatriation of pr ofit s.
THANK YOU
Fedelis, Eden Jane T.
Diola, Dannah Grace L.
Alcones, Jica May C.
Se, Miriam L.
Alonsagay, Shygem F.
Alarma, Anna Marie
Rizo, Haizyn
Molina, Brydel Jan
Jumaway, Michael Jeffrey