QUESTION 1

Describe 5 stages in the evolution of global marketing emphasizing on the management orientations
at different stages.
There are five identifiable stages in the evolution of marketing across national boundaries.
These evolutionary stages are first are called, domestic marketing. The first step before entry into
national markets, many companies focuses solely on their domestic market. Of course this are the
beginning for every new company, when they are doing good in their own domestic market then
probably they can make a decision to go more further in this stages, their marketing strategy is
developed based on information about domestic customer needs and wants, industry trends,
economic, technological and political environment at home.
After the first stages, if the company decided to expand their markets after doing well in
domestic market, they can enter the second stages which are, export marketing. Usually export
marketing begins with unsolicited orders from foreign customers. When a company receives an
order from abroad, initially it may fill it reluctantly, but it gradually learns the benefits of marketing
overseas. In the early stage of export marketing involvement, the internalization process is a
consequence of incremental adjustment to the changing conditions of the company environments.
Such pattern is due to the consequence of a greater uncertainty in international business, higher
cost of information, and the lack of technical knowledge about international marketing activities.
Once export marketing becomes an integral part of the companys marketing activity, it will
begin to seek new directions for growth and extension. We call this third stage as, international
marketing. A unique feature of international marketing is its polycentric orientation with emphasis
on product and promotional adaptation in foreign markets, whenever necessary. Polycentric
orientation refers to predisposition of a firm to the existence of significant of local cultural
differences across markets, necessitating the operation in each country being viewed independently.
A benefit can be obtained from multi domestic market is, economies of scale. And it is also useful
when customer needs are so different across different national markets that no common product or
promotional strategy can be developed.
The next stage is multinational marketing. At this stage, the company markets its products in
many countries around the world. Management of the company comes to realize the benefit of
economies of scale in the product development, manufacturing, and marketing by consolidating
some of its activities on a regional basis. This egocentric approach suggests that product planning
may be standardized within a region, such as Western Europe, but not across regions. Products may
be manufactured regionally as well. Similarly, advertising, promotion, and distribution costs may also
be shared by subsidiaries in the region. In order for the company to develop its regional image in the
market place, it may develop and acquire new regional brands to beef up its regional operations.
Last stage in this evolution of global marketing is, global marketing. It refers to marketing
activities by companies that emphasize standardization efforts, coordination across markets, and
global integration. Through standardizing marketing programs across different countries particularly
with respect to product offering, promotional mix, price, and channel structure. Such efforts
increase opportunities for the transfer of products, brands, and other ideas across subsidiaries and
help address the emergence of global customers. While for the coordination across markets, to
reducing cost inefficiencies and duplication of efforts among their national and regional subsidiaries.
And for global integration, participating in many major world markets to gain competitive leverage
and effective integration of the firms competitive campaigns across these markets by being able to
subsidize operations in some markets with resources generated in others and responding to
competitive attacks in one market by counterattacking in others.

QUESTION 2
Among the fastest growing groups of emerging economies are so-called BRIC countries(Brazil,
Russia, India, China). You are asked for advice by the owner of a Malaysian medium-sized firm
manufacturing furniture. He thinks there is a market for its product in the BRIC countries. How
would you advise him on what to look for first?
Seeking export opportunities in emerging markets can be an excellent way to build your
business, since these countries often exhibit the fastest economic growth. Emerging markets
typically have a low to middle per capita income and have undertaken substantial economic reforms
to open their economies. That makes it suitable for a Malaysia medium sized firm to enter the
market. A BRIC country has experienced exponential growth and all have populations hungry for
new products and services. These countries hold great promise to entrepreneurs.
Your first step is you must determine which emerging markets are best suited the furniture
that you want to produce. Some factors need to be considering is including local demand and
competition, customer dynamics such as why, when, how much the price.
A good place to start is the Canadian Trade Commissioner Service, which offers free
information about specific countries and sectors. When evaluating a country is sure you carefully
assess the risks involved, such as political instability or economic challenges. Contact the Canadian
embassy in that country and talk to trade commissioners about local conditions. It's also worth
finding a local partner or agent to help you better penetrates your market. A local agent usually has
good contacts and can help you navigate through red tape. Take the necessary time to explore the
market before diving in. Remember that becoming familiar with local customs, culture and language
will generally improve your odds of success.
The rapid economic growth of emerging markets and their heavily populated urban centres
has created an increase in demand for raw and specialized products. Top export niches include
infrastructure (roads, railways, ports, urban transport and airports), the transport sector (including
seaways and cars), telecommunications, health-related products, business management systems,
agribusiness, environmental technologies, power generation to meet an explosive demand for
energy, measuring instruments, and machinery and equipment (particularly for the oil, gas and
mining sectors).
Below is an overview of the world's 4 biggest emerging markets. This information can change
quickly, so be sure to check with your Canadian Trade Commissioner Service on local conditions.

China
With one of the world's largest economies and the second largest in Asia, China is a big draw
for exporters. Bilateral trade with Canada represents billions of dollars. China's massive population,
growing disposable income and sophisticated consumer tastes make it a prime emerging market.
Doing business there requires a significant investment of time and resources because China
is a complex market. Money need to be set aside for airfares, accommodation, legal services,
advertising, promotion, translation and setting up representative offices. Intellectual property is also
a major consideration; it is highly recommended that you register any copyrights, patents and
trademarks with the appropriate Chinese agencies. As always, perform due diligence when doing
business in China by checking any potential partner company's financial record and key personnel.
Sensitivity to cultural differences is of the utmost importance in China. Mutual trust is an
important value and is the basis for doing business in China. Be sure you arrange meetings through
appropriate channels and build long-term relationships. Allowing your interlocutors to save face is
especially important; never take actions that cause potential customers or partners to feel they have
been insulted or criticized in front of others.
Always show respect. Offer your business card with 2 hands and make sure it is in Mandarin.
The Chinese are often inquisitive and may seek information about your personal life. During
negotiations, don't be offended if potential customers or partners talk openly about competitors'
offers. It's also important to use qualified interpreters and translators; these intermediaries help
ensure there are no misunderstandings or miscommunications.
India
India's explosive population growth has led forecasters to predict it will become one of the
world's top 5 economies within the next 3 decades. One of India's biggest potential niches is in its
telecommunications infrastructure, the fifth largest in the world. India is known as the world's
information technology lab: Google, Nokia and IBM have all set up research and development
centers there.
When doing business in India, refine your market entry strategy. India is such an enormous
country that it makes sense to consider its regions separately. Contracts should always be vetted by
Indian and Canadian lawyers, and keeping good documentation is important, especially when
dealing with Indian bureaucracy. Avoid long payment terms such as open credit, and take your time
to make the right decisions: Indian business people can be averse to risk. It's advisable to do
business in person, dress conservatively and never judge a person on appearances.
Within an organization, make sure you deal with decision-makers. Exchange business cards
with both hands. Allow women to offer a handshake first, don't be aggressive, avoid discussing
religion and show respect for elders.

Brazil
Brazil has by far the largest economy in Latin America. A stable democratic government has
had a positive impact on the country's economy. When doing business in Brazil, perform due
diligence on any potential partner. Understand all issues involving contacts with a Brazilian partner,
and formalize everything. Brazil has an excellent postal service; direct marketing can reach up to 35
million Brazilian customers. And with one of the world's largest Internet markets, e-commerce
initiatives are worth exploring.
Advertising in specialized trade magazines can be a good way of reaching target audiences.
Brazil is known for the creativity of its business sector. Ensure your products are high-quality, and
adapt them to meet the cultural differences of the country's various regions. When preparing bids to
the public sector, consider establishing a joint venture with Brazilian partners. Be sure to build
strong relationships with people, discuss business after a meal and speak in Portuguese unless
otherwise indicated.
Russia
Russia shares land borders with 14 countries and spans 11 times zones. Moscow is a
principal attraction for foreign investment. Russia has seen rigorous growth in the past decade, and
its credit rating has improved substantially. Its major source of revenues are oil and gas, with the
petroleum sector making up more than 35% of total revenues and 55% of exports.
When doing business there, find a local Russian partner who knows the ins and outs of the
market. Watch your costs, as wages and prices in Russia are subject to rapid change. Do
backgrounds check on people you deal with; Russia's tumultuous political environment creates
security issues for exporters.
Cultural differences are also important to take into account. Respect hierarchical formalities,
and be sure you're doing business with someone at the right level within an organization. Russians
should be addressed by their name and father's name not by their family name. Be direct and
punctual with local business people. Russians are more "people-to-people" oriented than contract
oriented are to keep this in mind when closing a deal. If you're invited to somebody's home, a gift is
seen as a token of your appreciation. Emerging markets shift according to political and economic
conditions. Countries such as Malaysia, South Africa and Vietnam may also warrant your attention.
However, be sure you consider all the risks involved and exercise patience before pursuing any
venture.

QUESTION 3
Describe culture, and discuss the significance of any two (2) cultural elements below for global
marketing. Use your relevant examples to support your answer. a) Education, b) Material life, c)
Religion, d) Aesthetics
Culture is defined as all the ways of life including arts, beliefs, and institutions of a
population those are passed down from generation to generation. Culture is a learned, shared,
compelling, interrelated set of symbols whose meanings provide a set of orientations for members
of society. These orientations, taken together, provide solutions to problems that all societies must
solve if they are to remain viable.
One of the cultural elements is aesthetics. It refers to the idea and perceptions that a culture
uphold in terms of beauty and a good taste. Cultures differ sharply in terms of their aesthetic
preferences, though variations are mostly regional, not national. In the Asia-Pacific region, aesthetic
expressions are driven by three principles first, complexity and decoration (multiple forms, shapes
and color). Second is harmony and third is nature displays such as mountains, flowers and trees.
Aesthetic plays a major role in designing the visuals of the product, including components such as
the packaging and logo.
Color also brings different meanings and aesthetic appeals. Blue, green, and white appear to
convey universal meanings in all eight countries it shows peaceful, gentle and calming. However,
other colors reveal striking cultural differences in the emotions they create. For example black is
seen as masculine in Hong Kong and the United States but formal in Brazil. In Chinese cultures,
red is perceived as a lucky color. Yellow on the other hand, is perceived as a pleasant and associated
with authority. In Japan, pastel tones, expressing softness and harmony.
Religion is another element of culture. Religion is refers to a belief that people practice.
Religions embrace three distinct elements which are explanation, a standardized organization, and
moral rules of good behavior. Religion plays a vital role in many societies. To appreciate peoples
buying motives, customs and practices, awareness and understanding of their religion is often
crucial. When religion is an important part of a consumers life, consumer companies should
acknowledge it. In Islamic societies, companies can broaden the appeal of their brands and grow
their business by engaging with Muslim consumers.
For example like in Malaysia people are more concern about a Halal product so a product
that wanted to enter to Malaysia market need to get the certificate of Halal and make sure the the
product contains of Halal ingredient then only the goods will be accepted by most of the people in
Malaysia.

QUESTION 4
Describe under what conditions companies should pursue universal market segments. Also explain
the weaknesses of lifestyle based segmentation schemes and suggest what kind of application
lifestyle segmentation would be appropriate.
Segmentation refers to grouping of the people into clusters in a systematic manner, so that
targeting becomes simpler. Universal market segments refer to the division of the world or the area
the business is catering into segments. A company should pursue universal market segments when
the companys product has a universal presence
Specific product features/attributes. First thing first you must look into the product features
itself. Product that are offer benefits that are universally important to them then the product will
easily be accepted by them. In business to business markets, where buyer behavior is often
somewhat less cultural bound than for consumer goods. Because of that, all consumer goods will be
better in terms of the quality of the goods, the performance, or productivity. Benefit based
positioning will be more on consumer markets.
Product benefits (rational or emotional). Next, by looking on the products benefits that is
used as a solution for problems. If the product offer the consumer with many benefits and there are
more chances to be solution for many problems then it will be easily accepted by the consumer
market in order to pursue in universal market segment. On the other hand, in business to business
market they will require a product that can help them in order for them to produce a better product.
For example if a tea shop somewhere in London that have been selling a tea from many country and
they wanted to sell Sabah tea so they will need the best tea that can long lasting and taste good
for them to sell there and make it easier for them.
Lifestyle segmentation approach requires the organization have detailed data/research on
the consumer. Hence it is far more suitable for a larger organization and is probably beyond the
scope of a small business. There are also some concerns regarding data and interpretation, and
perhaps the creation of segments that cannot be easily accessed or practical in real life. And as a
suggestion you should look into this matter;
Homogeneous, this means that the consumers allocated to each segment should be similar
in some relevant way. This is the basis of market segmentation that the consumers in each segment
are similar in terms of needs or characteristics. Next is by using heterogeneous, each segment of
consumers should be relatively unique, as compared to the other segments that have been
constructed. This demonstrates that the consumers in the overall market have been effectively
divided into sets of differing needs. Next it must be measurable, some form of data should be
available to measure the size of the market segment. Measurements are very important to be able
to evaluate the overall attractiveness of each segment

Substantial, the market segment should be large enough, in terms of sales and profitability,
to warrant the firms possible attention. Each firm will have minimum requirements for the financial
return from their investment in a market, so it is necessary to only consider segments that are
substantial enough to be of interest. Its also must be accessible.The market segment should be
reachable, particularly in terms of distribution and communication. Each segment needs to be able
to be reached and communicated with on an efficient basis. It also must be actionable and practical.
The firm needs to be able to implement a distinctive marketing mix for each market segment. The
range of segments identified generally need to be defined for the capabilities and resources of the
organization, so very specialized segments may not be appropriate. Lastly it must be responsive.
Each market segment should respond better to a distinct marketing mix, rather than a generic
offering . The key outcome of the STP process is to develop a unique marketing mix for a specified
target market, if the segment will not be more responsive to a distinct offering, then the segment
can probably be combined with another similar segment.

QUESTION 5
Discuss major issues that might challenge researchers in collecting data in foreign markets. Also,
explain three ways in which the internet could assist international marketing.
Marketing research is the process or set of processes that links the consumers, customers,
and end users to the marketer through information and all the information are used to identify and
define marketing opportunities and problems, evaluate marketing actions, monitor marketing
performance, and improve understanding of marketing as a process. Marketing research specifies
the information required to address these issues, designs the method for collecting information,
manages and implements the data collection process, analyzes the results, and communicates the
findings and their implication. The major issues that might challenge the researcher is;
Language problems
Conducting market research other country are difficult in terms of their language. Most of
country speak different language and it is hard to negotiate or doing a plan there because there
might be a misunderstanding. For example in South Africa, one enjoys the benefit of a certain
degree of familiarity with the nature of the society, its values and laws. Foreign market research is
like a great jump into the dark, where many variables are unknown. Unless it is conducted by local
nationals in the country concerned. The scope of error is huge. This is particularly so where a
multinational may be enquiring about the local acceptability of a product, concept, service or slogan
currently in use in other parts of the world. "Come alive with Pepsi" may be a familiar slogan in the
English-speaking world but how would the English-speaking manager react upon hearing that his
product slogan had been translated in Chinese as "Pepsi reawakens your dead relatives" that brings
the bad impression towards China citizen.
Fewer reliable statistics available in developing countries
It is generally accepted that the availability and reliability of market data are in proportion to
the level of economic development in a particular country. Thus, the lower the national income, the
more difficult it becomes for a researcher to obtain representative and reliable information about a
particular market. In many developing countries, it is not possible to draw a reliable sample for
surveying the market. Often, demographic statistics are inadequate, street maps are unavailable or
are out-of-date, and houses may not be numbered. For example like India they still have a rural area
and it is hard to discover all areas of India because of its bad infrastructures.

Cultural factors affect in-market research

Cultural factors are often the main cause of the problems related to data collection in
developing countries. Where the researcher is unfamiliar with the local cultural system,
questionnaire design and the interpretation of results could be difficult. In international research,
translation of the questionnaire is often essential, providing yet more scope for misunderstanding.
Moreover, in some societies there is an inherent reluctance to answer questions possibly resulting
from the mistrust of strangers, conservatism or fear of losing face or status, or revealing one's
deficiencies. Opinion formation particularly outside the capital and main urban areas tends to follow
traditional cultural patterns with the result that respondents might not express an opinion on certain
issues such as earnings, savings, spending patterns kind of questions. Exaggeration is a common
practice, especially in the Middle East, and this could cause additional problems for the researcher,
because a respondent may be tempted to make exaggerated claims about the market potential. In
some cultures, a woman may only be interviewed in the presence of her husband. It is more likely
happen in Islamic country.
And how internet can assist international marketing is by;
Provide easy access to customer service representatives
Human interaction cannot be totally replaced by even the best graphical interface. When
customers have a question, or would like to speak with a person, provide a list of contacts and
phone numbers or allow them to send e-mail directly to a customer service representative,
requesting that they be contacted. When you provide a call center make sure that the quality
provided is good in term of the time consume before getting feedback and does the information are
useable. There are many customers are turned away unsatisfied when your customer service lines
are busy Customers with problems that do not require immediate attention can send an e-mail
message through your Web site which can be handled when support people are not busy.
Telephone-tag is eliminated for your customers, and you.
Reach a worldwide audience
By having internet access, you can put all your information about your product in a website. The
Internet is a worldwide network allowing you to reach people even very expensive advertising could not.
People can open your website anytime and anywhere to gain information about your product. It is also
cheaper compare to doing an advertisement to reach the target market. It also can be a place to provide
product information and give customers direct access to information about your products. Some people prefer
to learn about products on their own. The Internet has an unsurpassed ability to make information about your
company's products or services available to potential customers. It also provides the information when the
customer wants it at the particular of time.
Save on literature costs
Providing the information online reduces the need to print and mail product literature, thereby
resulting in significant cost reductions. There a big total of money can be save by doing it online instead of
printed it and post it all around the world. In doing a good public relation also, it is important for you to keep
contacting with your customer and keep updating any new information to them. For international marketing,
it is the best way to do it by internet instead of using other method because it is the fastest and cheapest
method.

QUESTION 6
a.) Identify the five basic segmentation strategies. Give example of a company that has used
each one.
b.) Compare and contrast standardized, concentrated, differentiated global marketing. Illustrate
each strategy with an example from global company
Question (a)
Market segmentation is one of the important parts for company's marketing
strategy. It is the process of breaking down a larger target market into smaller because it is
more efficiently method. Both consumer-oriented and business-oriented companies should
segment customers using one of several common approaches such as;
Demographics
Demographic market segmentation is one of the most common approaches that
company use to segmenting markets. By doing this strategy it divides the larger market into
groups based on several differentiation such as age, race, gender, marital status, occupation,
education and income are among the commonly considered in doing demographics
segmentation. As a example, a company like Silky Girl that sells feminine hygiene products
will include "female" in its description of its primary market segment so it will only target
female.
Geographic
Geographic segmentation is used by companies that sell products or service specific
to a certain community, state, region, country or group of countries. Companies that
operate nationally can often save by delivering the same marketing messages to a national
audience through one television, radio, and magazine or newspaper. By doing this, it can
make the cost lesser. Global businesses typically decide whether to maintain a universal
message or tailor messages to each country's marketplace. For example, Coca cola are using
the same massage for each country so the advertisement will be the same for one particular
country.
Psychographics
Psychographics or lifestyle segmentation is also one of the common methods for
companies to identify consumers based on interests and activities in life of demographics. As
an example of this strategy's benefits, consider the lifestyle of people that love to play
football so 100plus will take the opportunity by sponsoring a football match so it will market
to the people that consume 100plus.

Behavioral
Behavioral segmentation is based on user behaviors, including patterns of use, price
sensitivity, brand loyalty and benefits sought. A company may have customers with a similar
demographic makeup but distinct behavioral tendencies. Some may use the product daily,
while others use it weekly or monthly. Higher-income earners may have more interest in
higher-quality models versus low-cost models. For example like people that live in a rural
area, they are more attracted to a lower price items with quality instead of a branded goods
so for goods like branded clothing line such as ZARA, TOPSHOP, and Esprit will not be
opening their branch in a rural shopping mall.
Business Segmentation
Segmenting for business customers often has overlain but commonly includes
geographic, customer type and behavior-based strategies. Geographic business
segmentation is similar to that with consumer segmenting. Customer type segmenting may
include business size or the nature of the business. Banks Islam, for instance, often have
different products for small versus large businesses. Behavioral segmenting is based on
repeat or loyal customers versus one-time users.
Question (b)
Differentiated Marketing Strategy
A differentiated marketing strategy is when a company creates campaigns that
appeal to at least two market segments or target groups. For example, a store can promote
a sale that appeals to people in at least two cities or locations, or a company can market a
product that appeals to women in at least two age groups. Differentiated marketing
strategies can target many more than two segments such as shoe companies often create
campaigns that appeal to both men and women in a variety of age groups. Differentiated
marketing strategies can also use different messages in the same campaign for different
segments. For example, a retailer might market low cost to a budget-conscious segment and
product quality to a wealthy market segment. For example, like Apple they produce Iphone
5s for people who have extra money in buying phone and Iphone 5c for people who wants
to have an Iphone but do not really afford to purchase it. It is Ideal for companies wishing to
grow and a good approach from firms who have assets/capabilities that can be leveraged
into other target markets

Concentrated Marketing Strategy

A concentrated marketing strategy is targeted to one specific market segment or
audience. For example, a company might market a product specifically for teenage girls, or a
retailer might market his business to residents in a specific town. Concentrated marketing
strategies are often geared for smaller groups of people, because they are designed to
appeal to a specific segment. It is typically adopted by small firms just starting out because
they have lack of resources and may be a good approach for firms with a limited set of
capabilities and skills. It is also used by niche marketers whose competitive advantage is
their reputation and expertise within a well-defined, and usually quite small, market
segment.
Standardized Marketing Strategy
Basically, in a standardized marketing strategy, marketers use the same message for
all segments of the market. This is similar to mass marketing that marketers typically create
a message that appeals to everyone, so the message is often general or simple to allow
more people to relate. This type of method can be very useful when there is little diversity of
core needs between the defined market segments and this is a possible approach for large
global companies that have strong offerings, for example such as Apple with their iPad,
which could be considered an example of modern day mass-marketing.

QUESTION 7
American fast food, music and movies have become popular around the world with little
product adaptation, whereas other retailers like Unilevers shampoo and cosmetics and
Mattels Barbie dolls have had to adapt their products more to the global markets.
In light above scenario, discuss why such situations exist in global product strategies.
There are three ways in bringing your goods and services to other country and every
country has a different adaption method and each method also has different adaption. It
exists because different country has their own culture and understanding so it will affect
their adaption of the product. For things like fast food, music and movies is easier to
influence because we tend to adore their lifestyle and wanted to follow the trends. In the
other hand, for products like shampoo and cosmetics it has to adapt more because it needs
to be trusted so it takes to time adapt.
Exporting
The first strategy to enter a foreign market is through exporting. This can be done
either directly or indirectly. By exporting indirectly, companies work through independent
international intermediaries. This is less expensive to the company, as it does not require an
overseas organization or network. This is also less of a risk to the company, as international
marketing intermediaries bring their knowledge and services to the company, so the seller
will make fewer mistakes. Direct exporting involves the seller handling their own exports.
This is riskier than indirect exporting but it potentially will be a better investment strategy.
Direct exporting may mean that a company will have to set up an export department with
the existing structure, or will have to set up an overseas network. The later gives the
company more of a presence in the foreign market. Direct exporting may be a good strategy
for basic products, however if you are a service company, or have a product which requires a
lot of training to use, this may not be a viable option. To successfully export you will need to
have a sound understanding of the foreign countries policies on imports and exports and the
related quotas and tariffs. Also, you obviously cannot just ship a product to foreign borders
and expect them to simply sell out of the container. You will still have to spend a
considerable amount of time selling the product and finding buyers who can move the
merchandise. The main advantage of exporting is simplicity. There is really not much to this
strategy as opposed to other methods of entry and thus there is a significant cost savings
although you may lose a lot of control of the product which may hurt branding and other
aspects of your business.

Joint Venturing
The second method is to form a joint venture. This is joining with foreign companies
to produce or market products or services. The company joins with the overseas partner to
sell or market. In some cases, joint venturing may be the only way that business are legally
allowed to enter a foreign market. This is why it is crucial that you become aware of the local
laws of the country you are thinking of entering. If you do decide to do a joint venture then
you are going to lose part of the control of the way the business is run and are going to have
a lot of communication issues to deal with. Foreign companies often operate quite
differently and so are you are going to encounter some friction when dealing with business
associates of another country. The main advantages are risk reduction because the
investment is shared with the host-country partner and increased knowledge of the foreign
market with better access to distribution channels. The downside is that you are going to
have to share profits.
There are four types of joint ventures which are licensing, contract manufacturing,
management contracting, and joint ownership. Licensing gives a foreign market the right to
use existing companies manufacturing process, thus allowing them to gain entry into a
market at little risk. The licensee gains production expertise or a known product without
having to develop it on their own. A disadvantage of this is the company has less control and
if the licensee is really successful, the company has to give up those profits. A method
similar to licensing, called franchising, is also increasingly common. With contract
manufacturing, the company contracts with overseas manufactures to produce its product
or provide its service. This venture allows for a fast start up, less risk; however there are
decreased control over the manufacturing process and loss of potential profits.
Management contracting combines foreign investment with domestic companies supplying
the management expertise. The domestic company exports management services rather
than products. This is a low risk strategy method which allows an income right from its initial
set-up. A disadvantage of this joint venture is the company may be able to make better use
and more profitable use of its management expertise. The fourth method is joint
ownership, a venture where a company joins with foreign investors to create a business of
joint ownership and control. A company would likely use this option to enter a foreign
market if they lack the financial, physical, or managerial resources to undertake the venture
alone. In some cases, it may be the only way the government will allow the new venture to
enter the country

Direct Investment
A company can also expand abroad by setting up its own manufacturing operations
in a foreign country. This option is far more likely to be undertaken by large corporations
because of the huge capital requirements. An advantage of direct investment is a likely
lowering of costs by utilizing cheaper labor and raw materials, reducing transportation costs,
avoiding high import taxes, and accessing foreign government investment incentives.
Generally, this method leads to better business relationships with the foreign countries as it
uses local suppliers, customers, and distributors. This in turn creates an improved image
within the new market through the creation of more local jobs. The main disadvantage is
the risks involved, such as falling markets, government changes, and possibly restricted or
devalued currencies.