Professional Documents
Culture Documents
products or services
of fashion)
Entering new markets (consumer or geographical)
capabilities
implications
The Benefit of Licensing for Licensees
The key benefit for a licensee (especially manufacturer or
retailer) is the ability to significantly increase consumer
interest in and sales of its products or services
To qualify as a foreign direct investment, the investor must
have control.
This can be established with a small percentage of the
holdings if ownership is widely dispersed. The more
ownership a company has, the greater its control over
the management decisions of the operation.
There are three primary reasons for companies to
want a controlling interest —
Internalization theory
Appropriability theory
Freedom to pursue global objectives
Internalization.
because:
objectives.
enforcing an agreement
Appropriability
agreements.
Pursuit of Global Strategies
When a company has a wholly owned foreign operation, it
may more easily have that operation participate in a global
or transnational strategy. Furthermore, the fact that most
countries have laws to protect minority shareholders’
interest means that sharing of ownership may restrict a
company from implementing a global or transnational
strategy.
Advantages for multinational enterprises (MNES).
option.
With rapid globalization of many industries and vertical
clients.
It becomes imperative to follow the expansion of key
be maintained.
New market access is also another major reason to
◦ competitiveness
◦ market analysis
◦ market expectations.
Methods for Making FDI
time.
The Ministry of Commerce and Industry, Government of India is the
would be required.
Sector wise FDI in INDIA
100% FDI Limit
Single Brand retail
trading
Satellites Defence
Stock Exchange
26% FDI Limit
Chit funds
Nidhi company
Real Estate Business or Construction of Farm Houses (Real estate business does not
roads or bridges )
tobacco substitutes
FDI in Retailing in India:
Until 2011, Indian central government denied Foreign
Direct Investment (FDI) in multi-brand retail, forbidding
foreign groups from any ownership in supermarkets,
convenience stores or any retail outlets.
Even single-brand retail was limited to 51% ownership
and a bureaucratic process.
In November 2011, India's central government announced
retail reforms for both multi-brand stores and single-brand
stores.
These market reforms paved the way for retail
innovation and competition with multi-brand retailers
such as Wal-Mart, Carrefour and Tesco, as well single
brand majors such as IKEA, Nike, and Apple. Even
single-brand retail was limited to 51% ownership and a
bureaucratic process.
The statement flickered intense activism, both in
opposition and in support of the reforms
In December 2011, under pressure from the opposition,
Indian government placed the retail reforms on hold till
it reached a consensus. The statement flickered
intense reactions, both in opposition and in support of
the reforms.
In January 2012, India approved reforms for single-
brand stores welcoming anyone in the world to innovate
in Indian retail market with 100% ownership, but
imposed the requirement that the single brand retailer
source 30% of its goods from India.
Major Players in the International
Market:
Wal-Mart:
be listed.
The chances of risks and hazards, their potential causes
Advantages
contracts
• Minimal financial exposure
Disadvantage expertise
pays part and the rest is left to the management of the group
through tolls.
For example: Bechtel, Brown Bovary, Hyundai,
entity.
another company.
dollars. This acquisition will see the Korean company’s flagship SUV models,
the Rexton II and the Korando C foray into the Indian market.
Oracle acquired Siebel, BEA, Peoplesoft and more recently SUN through
altogether.
What Happens In A Joint Venture?-
Before two or more companies join together, they decide on the terms and
the conditions of the venture. The terms are decided in a way that all
formed, the parent companies pool together agreed resources like capital,
Uninor was a joint venture between Unitech (India) and Telenor (Norway)
Infosystems.
Strategic Alliance
rather than linkage with their overall goals. The risk is greatest
increased productivity.
◦ Customs Union
◦ Common Market
◦ Economic Union
◦ Political Union
political systems.
territories.
Benefits of Regional Integration
Nations engage in specialization and trade because of the gains in
standards of living.
1. Trade Creation
tariffs. Lower costs lead to higher demand for goods because people
political weight than nations have individually. The group may have more
higher wage.
Drawbacks of Regional Integration
1. Trade Diversion
ASEAN
Association To accelerate the Indonesia, Malaysia,
market similar
to the European
Union, and
even considered
introducing a
REI Full Form Objective Member country
promotion of Korea, Mexico,
international Russia, Saudi
Africa, Turkey,
United
Kingdom , United
REI Full Form Objective Member country
and Mexico. By
countries hope to
create a free-trade
zone where
companies can
REI Full Form Objective Member country
Co-operation life.
Maldives
To promote and
Nepal
strengthen collective
understanding and )
REI Full Form Objectives Member country
2. Counter-purchase
3. Tolling
4. Barter
5. Buyback
6. Switch Trading
Offset
Offset has traditionally been used by governments around the world
when they have made major purchases of military goods but is becoming
B. indirect offset: the purchaser requires suppliers to enter into long
term industrial (and other) co-operation and investment but these are un-
supplier himself provides the raw material (steel ingots, say) and
steel tubes). These are then bought by a final customer who pays
export is paid for with goods (or services) from the importing
return for cigars - they will probably hold some of the mining
equipment back until they have made some good profit from the
cigars.
Buyback
Suppliers of capital plant or equipment agree to be paid
by the future output of the investment concerned. For
example exporters of equipment for a chemical plant
may be repaid with part of the resulting output from the
factory. This practice is most common with exports of
process plant, mining equipment and similar orders.
Buyback arrangements tend to be much longer term
and for larger amounts than counter purchase or barter
deals.
Switch Trading
Imbalances in long term bilateral trading agreements