Chapter 4

ALTERNATIVE BUSINESS
ENTRY MODES
 SESSION 1
Factors influences business entry
 1. The important role of international
business entry

 Widen business and markets

 Widen life cycle for products
 Reduce risks and cost
 Increase sales and profit
2. Factors influences business entry

Company’s Business
resources Environment

Distribution Product
channels Characteristics
SESSION 2
EXPORT
 1. Direct Export

Produce and export directly

Be suitable with large
companies which have many
experiences and international
brand
2. Indirect Export

 The company sells to a buyer

(importer or distributor) in the
home country, then such
people will export products
Mostly apply for small
companies which don’t have
enough experiences,
understanding and finance
 SESSION 3
CONTRACTUAL AGREEMENT
 1. Contractual Agreement

 Contractual agreements are long-term, non-equity associations

between a company and another in a foreign market.
 Involve the transfer of technology, processes, trademarks, and/or
human skills
 Include 2 modes: Franchising and Licensing
 2. Licensing

 Include: Patent rights, trademark rights, and the rights to use

technological processes
 Allow companies establishing a business in foreign markets without
large capital or financial investment
 3. Franchising

 Franchising is a growing form of licensing in which the

franchiser provides a standard package of products, systems,
and management services.
 And the franchisee provides market knowledge, capital, and
personal involvement in management
 SESSION 4
JOINT VENTURE AND FOREIGN
DIRECT INVESTMENT
 1. Joint Venture

 A joint venture is a partnership of two or more companies

 Characteristics of joint ventures:
(1) The partners to share in the management of the JV
(2) Equity positions are held by each of the partners
1. Joint Venture

Advantages Disadvantages
 Combination  May hard to
between control and exist
technologies, conflicts because
capital and of differences in
market culture,
understandings management
of partners style…
2. Foreign Direct Investment

 Direct investment in a foreign

country.
 Utilize low-cost labor, to avoid
high import taxes, to reduce the
high costs of transportation to
market, access to raw materials
and technology…