1. Entering Foreign Markets

2. Foreign market entry alternatives
Exporting
Contractual Agreements
Direct Foreign Investment
Strategic Alliances
Internet

3. Exporting Direct - selling to a customer in another country
Indirect - selling to a domestic or foreign company who resells in another country
How?
Trade shows, country visits, internet

4. International Export Alternatives
Domestic Intermediaries
Foreign Intermediaries
Internet
Direct exporting
Foreign consumer
U.S. Company
Foreign Retailer
Export Management Company (EMC)
Distributor
Acts as an export department for the company; foreign buyers often don’t know the EMC isn’t actually Company X
Accumulate & distribute goods from many countries to many countries; Gray McKenzie & Company – entire middle east; Nissho-Iwai Corp – gets Nike shoes to South Korea & Taiwan
Trade Companies
(Japanese sogo shosha)

5. Contractual Agreements
Licensing -- one company (licensor) makes an asset available to another company (licensee) in exchange for royalties, fees or other compensation
Pros – little investment required; avoid tariffs, quotas & other export barriers
Cons – little control over licensee, licensees become competitors after agreement expires
Philip Morris
Amer Tobacco (Finland)

6. Contractual Agreements
Franchising – A contract that allows a franchisee to operate a business developed by the franchisor in return for a fee & adherence to franchise-wide practices UK

7. Joint Ventures
Forming a new business entity with a partner in the target country
Pros - shared risk, learn about new market, combine strengths, permit entry by means otherwise not possible
Cons – partners share rewards as well as risk, potential for conflict between partners, partner is self-interested (wants technology, expertise, know-how)
Sichuan Pepsi accused of breech of contract; refused access to financial records and transferred stock without PepsiCo’s knowledge

8. “The purpose of any joint venture, or even a wholly-owned investment, is to allow Chinese companies to learn from foreign companies. We want them to bring their technology to the soil of the People’s Republic of China.”
- Yuan Sutai
Ministry of Electronics Industry, China

9. Direct foreign investment Strategic alliances
operate manufacturing facilities and/or sales offices in the host country
align with other companies in foreign
markets to give customers access to those markets
Europe, North and Latin America, Middle East, Africa, South-east Asia and the South Pacific