ENTRY MODES

IN
INTERNATIONAL
MARKETING
Entry modes in International marketing - it is a dictum of development economic that
the inflow of foreign capital to the economy will help a country attain its much
desired industrialization.

Franchising - a continuing relationship in which a franchisor provides a license

privilege to the franchee.
 Advantages and Disadvantages of Franchising
ADVANTAGES
• Possibly easier to finance
• Access to quality training and ongoing support
• Established concept with reduced risk of failure
• Access to extensive advertising
• Access to lower cost and possibly centralized buying
• Few start-up problems
• Use of well-known trademark or trade name
DISADVANTAGES
• Onerous reporting requirements
• Supplies or materials may be more expensive
• Possible exaggeration of advantages by franchisor
• Franchisor may saturate franchisor's territory
• Cost of franchise and other fees may reduce franchisee's profit
margins
• Inflexibility due to restrictions imposed by franchisor
• Termination pourites of franchisor afford little security
Licencing - entails only a part of the whole franchising aspect. It allows a
company to grant the rights to use it's intellectual property such as patents,
trademark,or technology.
 Advantages and Disadvantages of Licensing

ADVANTAGES DISADVANTAGES
• It requires little capital.
• It is the quickest and easiest way to enter a foreign market.
• The licensor may establish his/her own competitor.
• It enables the firm to gain knowledge of and access to the local
• It provides limited returns.
market.
• Problem of control on license may arise.
• It provides a means of entry when import restrictions forbid any
other ways or when a country is sensitive to foreign ownership.
• It offers savings on tariff, transport, and local production costs.
 MANUFACTURING

MANUFACTURING - the process of turning raw materials or

parts into finished goods.

CATEGORIES OF
MANUFACTURING

1. Assembly Plant
2. Contract Manufacturing
3. Joint Ventures
4. Wholly-Owned Plant
MANAGEMENT
CONTRACTS In a management contract, the mother company’s
role is to supply its management expertise to a
foreign company. The local company, on the other
hand, is responsible for exporting management
services.
The advantage of management contracts is that local companies providing
services do not need to risk setting up operations in countries where the
foreign clients are based.
Exporting - refers to the marketing of goods and
services produced in one country into another
country. It allows a company to enter foreign EXPORTING
markets with a minimum change in product lines,
company organization, investment, or company
mission. Exporting offers several modes of entry for
entities namely (1) as producer exporter, (2) as
exporter trader, (3) as selling agent, (4) as buying
agent, and (5) subcontractor.
 ADVANTAGES CONSTRAINTS

• Enhance domestic competitiveness

• Develops new promotional material
• Increase sales and profits
• Subordinates short-term profits to long-term gainS
• Gains global market share
• Incurs added administrative costs
• Exploits corporate technology and know-how
• Allocates personnel for travel
• Extend the sales potential of existing products
• Waits longer for payments
• Stabilizes seasonal market fluctuations
• Modifies product or packaging
• Enhances potential for corporate expansion
• Applies for additional financing
• Sells excess production capacity,
• Obstain special export licenses
• Gains information about foreign competition
INCOTERMS PURPOSE OF
- short term for International Commercial Terms
- is a set of internationally recognized rules that
define the responsibilities of seller and buyers in INCOTERMS
international trade transactions.
- this term were first introduced in 1936, by the ICC
or International Chamber of Commerce.

ICC - is an organization designed to promote

international trade and investment as means of
achieving growth and prosperity.
11 RULES OF INCOTERMS

1. Ex Works (EXW) Factory

2. Free Carrier (FCA)
3. Carriage Paid To (CPT)
4. Carriage and Insurance Paid (CIP)
5. Delivered at Terminal (DAT)
6. Delivered at Place (DAP)
7. Delivered Duty Paid (DDP)
8. Free Alongside Ship (FAS)
9. Free on Board Vessel (FOB)
10. Cost and Freight (CFR)
11. Cost, Insurance and Freight (CIF)
EX WORKS FACTORY
Ex - WORKS FACTORY - THE SELLER
FULFILL HIS/HER OBLIGATION WHEN
HE/SHE HAS MADE THE GOODS AVAILABLE
AT HIS/HER PREMISES ( IE.
WAREHOUSE,FACTORY). THE SELLER IS NOT
RESPONSIBLE FOR LOADING THE THE
GOODS FOR TRANSPORTATION.
FREE ON BOARD PART SHIPMENT
•Free on Board (FOB) Port Shipment means that the
seller fulfills his/her obligation when the goods have
passed the ship's rail at the named port of shipment.
This means that the buyer has to bear all cause and
risk of loss or damage to the goods from that point.
 COST AND FREIGHT PORT OF DESTINATION
COST, • Cost and Freight (CFR) Port of Destination means

AND FREIGHT
that the seller must pay the cost and freight
necessary to bring the goods to the named port of
destination. However, but the risk of loss of or

PORT OF damage to the goods, as well as an any additional

cost due to any event occurring after the time the
goods have been delivered on board the vessel, is

DESTINATION transferred from the seller to the buyer when the

good pass the ship's rail in the port of shipment.
 COST, Cost, Insurance, and Freight (CIF) Port of
Destination means that the seller has the same

INSURANCE, obligations as those under CFR Port of Destination,

but with the addition that he/she has to procure
marine insurance against the buyer's risk insurance
AND FREIGHT and pay the insurance premium.

PORT OF The buyer should note that under CIF, the seller is
only required to obtain insurance on minimum

DESTINATION coverage. Likewise, it assigns the seller to clear the

goods for export.
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