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Global Market Entry Strategies Explained

The document outlines various strategies for reaching global markets, including licensing, exporting, franchising, contract manufacturing, international joint ventures, and foreign direct investment, each with its own advantages and disadvantages. It also discusses the role of multinational corporations and protectionism, highlighting methods such as tariffs and import quotas, as well as the benefits and drawbacks of these economic policies. Additionally, it mentions free trade agreements aimed at reducing trade restrictions and promoting collaboration.

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3 views2 pages

Global Market Entry Strategies Explained

The document outlines various strategies for reaching global markets, including licensing, exporting, franchising, contract manufacturing, international joint ventures, and foreign direct investment, each with its own advantages and disadvantages. It also discusses the role of multinational corporations and protectionism, highlighting methods such as tariffs and import quotas, as well as the benefits and drawbacks of these economic policies. Additionally, it mentions free trade agreements aimed at reducing trade restrictions and promoting collaboration.

Uploaded by

bsanto19
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Strategies for reaching Global markets

1. Licensing:
●​ Companies allow foreign firms to produce and sell their products in exchange for
royalties
Advantages:
●​ Requires minimal Financial investment
●​ Generates Revenue that might not be possible domestically
●​ Provides help with distribution, promotion, and consulting in foreign markets
Disadvantages:
●​ The bulk of Revenue may go to the licensee If the product succeeds in foreign
markets
●​ Risk losing control of trade secrets and expertise

2. Exporting:
●​ Directly or indirectly selling Goods to foreign markets
●​ Export Assistance Centers (EACs) and export trading companies help navigate and
negotiations and trade relationships
●​ Exporting provides a boost to the economy by expanding market reach

3. Franchising:
●​ Selling a company’s business model and brand to foreign operators
●​ Example: Domino's Pizza expanding their toppings to fit local taste (squid toppings
in Japan, curry in India)
●​ Franchisees are expected to maintain quality while catering to regional
preferences

4. Contract Manufacturing:
●​ Outsourcing production to foreign companies
Uses:
●​ Enables companies to experiment in new markets without building manufacturing
plants
●​ Addresses sudden increase in demand without significant loss

[Link] joint ventures and strategic alliances:


●​ Partnerships between companies to share resources, technology, risks
Benefits:
●​ Provides access to Market where foreign companies are restricted
●​ chairs expertise in marketing and management
Drawbacks:
●​ Potential theft of technology
●​ Risk of becoming inflexible due to size

●​ Strategic alliances differ by not sharing costs, risks, or profits but still providing
access to markets and expertise

6. Foreign direct investment (FDI):


●​ Establishing foreign subsidiaries or investing directly in another country's market
Advantages:
●​ Full control over technology and operations
Disadvantages:
●​ Significant financial commitment and risk

Role of multinational corporations (MNCs)

[Link]:
●​ Economic policies aimed at shielding domestic industries from foreign competition

2. Advantages:
●​ Protect jobs in local industries, especially in places vulnerable to foreign
competition
●​ Encourages domestic production and self-sufficiency
●​ provides governments with additional Revenue through tariffs

3. Disadvantages:
●​ Increases consumer prices due to tariffs on imported goods
●​ limit product variety and innovation by reducing competition
●​ can trigger trade disputes or retaliatory measures from other countries

4. Methods of Protectionism:
●​ Tariffs: taxes on imports to make foreign goods more expensive
●​ import quotas: restrictions on the quantity of certain goods that can be imported
●​ embargoes: complete bands on specific goods or trade with certain countries
●​ non-tariff barriers: regulations such as product testing or customs procedures

5. Free trade agreements:


●​ Agreements like the United States- Mexico-Canada agreement aim to reduce trade
restrictions and encourage economic collaboration

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