Government Licensing Licensing essentially permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques.
Concentration of resources towards production Little or no financial commitment as the clients' exports usually covers most expenses associated with international sales. Export management is outsourced, alleviating pressure from management team No direct handle of export processes.
Indirect exporting is preferred by companies who would want to avoid financial risk as a threat to their other goals. In this foreign market entry mode, a licensor in the home country makes limited rights or resources available to the licensee in the host country.
The rights or resources may include patents, trademarks, managerial skills, technology, and others that can make it possible for the licensee to manufacture and sell in the host country a similar product to the one the licensor has already been producing and selling in the home country without requiring the licensor to open a new operation overseas.
The licensor earnings usually take forms of one time payments, technical fees and royalty payments usually calculated as a percentage of sales. As in this mode of entry the transference of knowledge between the parental company and the licensee is strongly present, the decision of making an international license agreement depend on the respect the host government show for intellectual property and on the ability of the licensor to choose the right partners and avoid them to compete in each other market.
Licensing is a relatively flexible work agreement that can be customized to fit the needs and interests of both, licensor and licensee. Following are the main advantages and reasons to use an international licensing for expanding internationally: On the other hand, international licensing is a foreign market entry mode that presents some disadvantages and reasons why companies should not use it as: Lower income than in other entry modes Loss of control of the licensee manufacture and marketing operations and practices leading to loss of quality Risk of having the trademark and reputation ruined by an incompetent partner The foreign partner can also become a competitor by selling its production in places where the parental company is already in.
Franchising[ edit ] The franchising system can be defined as: In addition to that, while a licensing agreement involves things such as intellectual property, trade secrets and others while in franchising it is limited to trademarks and operating know-how of the business.
Low political risk Allows simultaneous expansion into different regions of the world Well selected partners bring financial investment as well as managerial capabilities to the operation.
Disadvantages of franchising to the franchisor: A turnkey project is a way for a foreign company to export its process and technology to other countries by building a plant in that country.
Industrial companies that specialize in complex production technologies normally use turnkey projects as an entry strategy. Potential disadvantages of a turnkey project for a company include risk of revealing companies secrets to rivals, and takeover of their plant by the host country.
Entering a market with a turnkey project CAN prove that a company has no long-term interest in the country which can become a disadvantage if the country proves to be the main market for the output of the exported process. Greenfield investment and Acquisitions.
Greenfield investment and acquisition include both advantages and disadvantages. To decide which entry modes to use is depending on situations.
Greenfield investment is the establishment of a new wholly owned subsidiary. It is often complex and potentially costly, but it is able to provide full control to the firm and has the most potential to provide above average return. This entry strategy takes much time due to the need of establishing new operations, distribution networks, and the necessity to learn and implement appropriate marketing strategies to compete with rivals in a new market.Define example, if an option, which is generally considered performance-based compensation under Options Section mis cancelled in exchange for a time-based restricted stock grant, which is work from home data entry jobs bristol considered performance-based compensation under Code Section stockthe company options ultimately forego a tax.
Essentially, Strategic Alliances are non-equity based agreements i.e. companies remain independent and separate. Joint Ventures (JV) and modes of entry Joint Ventures tend to be equity-based i.e. a new company is set up with parties owning a proportion of the new business. Foreign market entry modes or participation strategies differ in the degree of risk they present, the control and commitment of resources they require, and the return on investment they promise.
 There are two major types of market entry modes: equity and non-equity modes. equity versus non-equity modes, but not within each type. In the case of China on which Pan and Tse's () study is based, these regions (normally on the coast) are preferred not only because they are prioritised, but.
Equity based modes of entry options.
Advantages. Disadvantages. Wholly Owned Subsidiary. If Foley were to buy a going concern or even make a move to purchase its local distributor in Brazil, the company can build up its presence using the ‘know-how’ expertise of the partners they already had on the ground. CHOICE BETWEEN NON-EQUITY ENTRY MODES ular among consumer-services firms (such as hotel and restaurant firms) as compared to professional-services firms.