Content

• Direct/Indirect Exporting
• Joint Venture
• Management Contract
• F Direct Investment
• Wholly owned subsidiary
• Franchising/Licensing/Merger/Acquisition
• Intra-corporate transfer
• Turnkey Project
 Forms of Exporting
• Exporting means shipping the goods and services
out of the port of a country.
– Seller is exporter
– Buyer is importer
• Direct exporting deals with foreign companies or
agencies to sell and build a relationship
• Indirect exporting means that the firms participate
in intl. Business through an intermediary and does
not deal with foreign customers or market
Direct vs Indirect
 Export/Import
• Advantage • Disadvantage
– Cost of manufacturing – Transport cost
– Consistent with scale – Exporting from home
economies and location base of the company
economies – Tariff Barriers
– Sony, Toyota
 Licensing
• International licensing is an arrangement
whereby a foreign licensee purchases the
rights to produce a company’s product in the
licensee’s country for a negotiated fee
(normally, royalty payments on the number of
units sold).
• Coca cola, Pepsico
The property licensed may include
• Patents (License)
• Trademarks
• Copyright
• Technology
• Technical know-how
• Business skills
• Brand names
 Licensing
• Advantage • Disadvantage
– Low development cost • Lack of control over
and risk technology
– Avoid tariffs
• Inability to engage in
global strategic
coordination
 Franchising
• Franchising is basically a specialized form of licensing
in which the franchiser not only sells intangible
property to the franchisee (normally a trademark),
but also insists that the franchisee agree to abide by
strict rules governing how it does business.
• MacDonald’s
– Cooking policies, staffing method, restaurant design,
management training and financial assistance.
Service companies
Four Seasons
 Franchising
• Advantage • Lack of control over
– Low development cost quality
and risk • Inability to engage in
– Quick global presence global strategic
coordination
 Joint Venture
• Each party takes a part of ownership and team
of managers from both or primary or third
party delegation
• Grameen-Danone: shakti doi
• Public Private Partnership (PPP)
 Joint Venture
• Advantage • Disadvantage
• Access to local partners • Incompatibility
knowledge • Loss of control
• Shared development • Access to information
and risk; Synergy • Distribution of Earning
• Political dependency
 Wholly owned subsidiary
• A wholly owned subsidiary is one in which the
parent company owns 100% of the
subsidiary’s stock. To establish a wholly
owned subsidiary in a foreign market, a
company can either set up a completely new
operation in that country or acquire an
established host country company and use it
to promote its products in the host market.
 Wholly owned subsidiary
• Advantage • Disadvantage
– Protection of technology – High cost and risk
– Ability to engage in
global strategic
coordination
– Ability to realize location
and scale-based
economies
 Merger/Acquisition
• Merger • Acquisition
– The combining of two or
more companies
generally by offering the
stockholders of one
company securities in
the acquiring company
in exchange for the
surrender of their stock.
– When one compnay
takes over another and
clearly establish itself as
the new owner the
purchase is called an
acquistion.
 Examples
• Merger • Acquision
– Pran-RFL – Google and Android
– Robi-Axiata – Microsoft and Linkedin
– Nitol-Tata – Sun pharma and
– Exon-Mobil Ranbaxy
– Facebook-Whatsup – Disney and 21° century
– Facebook-Instagram Fox
 Acquision
• Advantage • Disadvantage
– Obtains control over the – Assumes all the
firm such as factories liabilities; financial and
and brand names managerial
– Integrate the
management of the firm
into its overall
international strategy
 Strategic Alliance
• A strategic alliance is an agreement between
two or more parties to pursue a set of agreed
upon objectives needed while remaining
independent organizations. A strategic alliance
will usually fall short of a legal partnership
entity, agency, or corporate affiliate
relationship.
• Functional and Comprehensive
• Joint Venture
 Turnkey project

• One of the special modes of carrying out

international business is a turnkey project. It
is a contract under which a firm agrees to fully
design, construct and equip a manufacturing/
business/ service facility and turn
the project over to the purchaser when it is
ready for operation for a remuneration.
 Turnkey project
• Advantage • Disadvantage
– Focus firm’s resources – Financial risk; cost
on its area of expertise overruns
– Avoid all long term – Construction risk;
operational risk Delays, Problems with
suppliers.
 FDI
• A foreign direct investment (FDI) is an
investment made by a firm or individual in one
country into business interests located in
another country. Generally, FDI takes place
when an investor establishes foreign business
operations or acquires foreign business assets
in a foreign company.
• Wholly owned subsidiary
• Merger/Acquision
Investment Portfolio
• Thank you