HOW TO GO GLOBAL ?

OCCASIONAL EXPORTING VS ACTIVE EXPORTING

PASSIVE INVOLVEMENT

EXPORT TAKES PLACE FROM TIME TO TIME DEPENDING ON OWN INITIATIVE

OR IN RESPONSE TO ORDERS FROM ABROAD

ACTIVE INVOLVEMENT

COMMITMENT TO EXPAND INTO A PARTICULAR MARKET

WHAT ARE THE WAYS TO ENTER A

FOREIGN MARKET?

THERE ARE FIVE MAIN WAYS TO ENTER A FOREIGN MARKET

Direct Export

Indirect Export

Licensing Joint Venture

Direct Investment

WAYS TO ENTER A FOREIGN MARKET

WHAT ARE THESE ?

INDIRECT EXPORT

Producer Intermediaries Customer

These intermediaries include

1) Domestic-based export merchants

2) Domestic-based export agents

3) Cooperative organizations

4) Export-management companies

EXPORT MERCHANTS They buy manufacturer’s product and sell them abroad

EXPORT AGENTSSeek and negotiate foreign purchases and are paid some commission

COOPERATIVE ORGANIZATIONThey carry out exporting activities on behalf of several producers and are partly under their administrative control

EXPORT MANAGEMENT COMPANIESThey manage a company’s export activity for a fee

WHAT ARE THE ADVANTAGES OF INDIRECT EXPORT ?

LESS INVESTMENT The firm need not develop an export department, an overseas sales force etc.

LOWER RISK The intermediaries bring in the advantage of know how and services. This ensures that the seller makes fewer mistakes.

DIRECT EXPORT

It occurs when a manufacturer sells directly to an importer or buyer located in a foreign market.

DIRECT EXPORT

DOMESTIC BASED

EXPORT DIVISION

FOREIGN BASED

AGENTS

TRAVELLING EXPORT SALES

REPRESENTATIVES

OVERSEAS SALES

BRANCH

The licensor issues a license to the licensee to use a manufacturing process, trademark, patent, trade secret and other items of value for a fee or royalty

SOME EXAMPLES

DIRECT INVESTMENT

WHAT IS DIRECT INVESTMENT ?

The purpose of a direct investment is to gain enough control of a company to exercise control over future decisions. This can be accomplished by gaining a majority interest or a significant minority interest. Direct investments can involve management participation, joint-venture or the sharing of technology and skills.

TO KEEP IT STRAIGHT & SIMPLE……

IT IS THE PURCHASE OF A CONTROLLING INTEREST IN A COMPANY OR AT LEAST TO HAVE ENOUGH INFLUENCE TO DIRECT THE COURSE OF THE COMPANY.

Some examples of direct investment in India

JOINT VENTURES

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity.

In a joint venture, each of the participants is responsible for profits, losses and costs associated with it.

The venture has its own entity, separate and apart from the participants' other business interests.

SOME EXAMPLES

Direct Investment

Licensing

Joint Ventures

Direct Exporting

Indirect Exporting

Com

mitm

ent,

Risk

, Con

trol

and

Pr

ofita

bilit

y

Created by Akash Yadav, IIT Kharagpur, during an internship by Prof. Sameer Mathur, IIM Lucknow.

www.IIMInternship.com