Rajkaran

St.
Xavier’s College,Kolkata Term Paper:

Project
Department of Accounting & Finance
Title: Modes of Entry into Foreign Markets
Appendix A
DECLARATION: ________________________
I declare the following:
• The material contained in this paper is the end result of my own work
and that due acknowledge has been given in the bibliography and
reference to all sources be they printed / electronic / personal.
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St. Xavier’s College,Kolkata Term Paper:
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Abstract:
Table of contents
Introduction
Literature review
Hypothesis
Methodology
4.1 Positivism Vs phenomenology

4.2 Qualitative and quantitative research
4.3 Data gathering and analysis
4.4 Research instrument
Analysis
5.1 What is foreign market?
5.2 Why enter foreign markets?
5.3 Where to make an entry?
5.4 When to enter foreign markets?
5.5 What does entry mode depend on?
5.6. Different modes of entry into foreign markets:
5.6.1 Exporting
Direct
Indirect
5.6.2 Overseas sales branches

5.6.3 Licensing
5.6.4 Franchising
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5.6.5 Counter trade

Barter
Buy-back
Compensation deal
Counter purchase
5.6.6 Strategic alliance
5.6.7 Contract manufacturing

5.6.8 Management contract
5.6.9 Turnkey projects
5.6.10 Joint ventures
5.6.11 foreign direct Investment
5.6.12 Merger & acquisition
5.6.13 fully owned manufacturing unit
5.6.14 Third country location
The case
Limitation and conclusion
Executive summary
References and bibliography
10. Glossary
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Introduction
Management study includes various fields namely- Marketing, Finance,
Human Resource, Operations Research and Information technology.
Components of marketing includes topics such as consumer behavior,
marketing research and information systems and product, distribution,
promotion, and price planning. Thus, pricing belongs to the area of marketing
management. Marketing explains all major principles, defines key terms,
integrates topics and demonstrates how marketers make everyday and long
run decisions.1
Marketing is a societal process by which individuals and groups obtain what
they need and want through creating, offering and freely exchanging
products and services of value with others. Marketing has often been
described as “the art of selling product”.2
Marketing management is the art and science of choosing target markets
and getting, keeping, and growing customers through creating, delivering and
communicating superior customer value.3
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International business management deals with the international operations
from the perspective of economics and politics as well as the functional
disciplines of strategic planning, finance, marketing, human resources
management and operations management. Most importantly it seeks to show
how the international economic and political environment serves to act as a

very powerful influence over how company policies are set.
What this paper can do is create awareness of what there is to be known
and motivate the user to find out what he or she will need to know in
addition to what this paper contains.
News papers frequently announce international mergers, acquisitions and
strategic alliances between companies from different countries, and almost
equally frequently their failure and dismantling after few years.
This evidence only stresses the need to educate a new generation of future
managers and professional in the essentials of international business.
The boundary-less business world of today has seen organizations operating

from multiple locations across the globe. While expanding business
operations, an organization has to consider several factors. One of them is
the choice of the mode of entry into foreign markets. Some foreign market
entry modes include licensing, franchising, and exporting. The paper
examines various foreign market entry modes supported with examples and
prolonged case studies.
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Literature review
When I took this topic for my term paper I came across some brilliant ideas
of The Authors like M.V.Kulkarni, Margaret Woods, Jhon.D.Daniels,
Lee.H.Rradebaugh, Daniel P.Sullivan on which their research was done to a
great extent. Various websites had some facts and data which were really
helpful. There were few thoughts about which authors had different
viewpoints but they had also their reasons for it.
My term paper covers the work done by researchers, authors and various
articles in journals and magazines.
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METHODOLOGY
4.1 Introduction to research methodology
A research methodology defines what the activity of research is, how to
proceed, how to measure progress, and what constitutes success. It also
states the type of data used in the research.
4.2 Data Gathering
The material of this study comes from an on-line and print literature review,
books on marketing available from the British Council Library, the Learning
Resource Center in our college and The National Library. The content has
been gathered from extensive reading and analysis of the various Human
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Resource Management books written by various authors in this field of
management as well as extensive searches of various websites and articles
available.
Hypothesis
Analysis (Body)
5.1 What is foreign market?
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A market which is beyond the territory of ones own nation is foreign

market.
Why enter foreign markets?
As we move from secondary to higher secondary and then to graduation,

why? We need to grow, as we have completed one level, we need to move
further to develop ourselves. Similarly we enter foreign markets to grow our
business, reach larger economies of scale by selling to more customers in
other countries. This helps to reduce the risk of over dependence on one
country by spreading sales in multiple countries which will lead to replicate
the success at home in new settings. It enables superior knowledge about
institutional intricacies in various countries. We will come across superior
technologies which will again help the business to prosper.
Where to make an entry?
Firstly we should be able to make our base stronger in domestic market and
understand the fundamentals, consumer behavior towards the products. We
should enter countries which are culturally similar countries during the first
stage of internationalization and, as they gain confidence, enter culturally
more distant countries in later stages. The Considerations of strategic goals
such as market and efficiency are important other than
cultural/institutional consideration. The Firms from common-law countries
are more likely to be interested in other common-law countries. The extent
of similarity or dissimilarity between the regulatory, normative, and
cognitive institutions of two countries. These things help us to undermine
the above question.
When to enter foreign markets?
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No one can time the market, whether domestic or foreign. But there is
certainly First or Late Mover Advantages
 While evidence supports first mover advantages, there is also
evidence supporting a late mover strategy.
 Although first movers may have an opportunity to gain
advantage, pioneering status is not a birthright for success
Entry timing, although important, is not the sole determinant of success and
failure of foreign entries.
What does entry mode depend on?
A company’s choice of entry mode to foreign markets depends basically on

three factors:
• Ownership (O): ownership advantages are specific assets,

international experience, the ability to develop differentiated
products, better management and coordination internationally.
• Location (L): Location, location, location! (See “Where to enter”

section). It is a combination of market potential (size and growth
potential) and investment risk.
• Internalization (I): Replacing arm’s-length market transactions, which

usually have high transaction costs internationally, with internal
relationships among MNE subsidiaries in different countries. The
benefit of holding on to specific assets or skills within the company
and integrating them into its activities rather than licensing or selling
them.
5.6 Different modes of entry:
A way to gain access to new markets and opportunities
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This refers to the way in which a product is sold into a given market. Entry
modes vary in the degree of control the firm has over invested tangible and
intangible resources and the transactions costs associated with that
resource commitment. It is reasonable to assume that the managers will
want to minimize the risk of loosing their investment or/and credibility in
the market. In addition to thinking about the relative risk of different
alternatives, it is important to ensure that the company has the ability to
fulfill its aims. Deciding to set up a wholly owned foreign subsidy without
having regard to whether one have cash resources, skills and staff to run it
is just stupid. Marketing decision need to be assessed in the context of
their operational implication.
5.6.1 Exporting
Export is an important part of international trade. Its counterpart is

import.A company say, manufacturing goods in India and supplying to
countries like Srilanka Nepal etc. is exporting. Exporting is a traditional and
well-established method of reaching foreign markets. Since exporting does
not require that the goods be produced in the target country, no investment
in foreign production facilities is required. Most of the costs associated

with exporting take the form of marketing expenses.
Exporting commonly requires coordination among four players:
• Exporter
• Importer
• Transport provider
• Government
There are direct and indirect approaches to exporting to other nations.

Direct exporting is straightforward but it puts pressure on selling company,
because they are now required to go out and find potential distributers and
end customer. Essentially the organization makes a commitment to market
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overseas on its own behalf. This gives it greater control over its brand and
operations overseas, over an above indirect exporting. On the other hand, if
you were to employ a home country agency (i.e. an exporting company from
your country - which handles exporting on your behalf) to get your product
into an overseas market then you would be exporting indirectly. In simple
words if company sells through its own sales offices then it is direct
exporting. If company sells through middlemen then it is called as indirect
exporting.
Example of direct exporting, The Leicestershire-based company BRUSH, and the Brussels-
based ABB Altsom power are examples of companies that are both involved in the direct
export of power generating equipment such as gas turbines. Direct exporting is preferable
to indirect for these companies because of the direct contact with end customer means
that equipment designs can be refined to meet individual requirements where necessary,
and long term contracts can be agreed foe maintenance and the supply of spares.
Examples of indirect exporting include:
• Piggybacking whereby your new product uses the existing distribution and logistics
of another business.
• Export Management Houses (EMHs) that act as a bolt on export department for
your company. They offer a whole range of bespoke or a la carte services to
exporting organizations.
• Consortia are groups of small or medium-sized organizations that group together to

market related or sometimes unrelated products in international markets.
• Trading companies were started when some nations decided that they wished to
have overseas colonies. They date back to an imperialist past that some nations
might prefer to forget e.g. the British, French, Spanish and Portuguese colonies.
Today they exist as mainstream businesses that use traditional business
relationships as part of their competitive advantage.
There are two types of export insurance:
• Insurance on transportation risks, such as weather or rough handling

by carriers.
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• Political, commercial, foreign exchange risk that might keep the
exporter from collecting from the importer.
5.6.2 Overseas sales branches
Once export sales have been well established, and a company is able t feel
certain that a market is expanding, it may consider increasing its investment
in the country via the establishment of one or more overseas sales branches.
Instead of operating through agents or distributors, the company invests in
its own office, storage facilities and sales force in the chosen location.
Needless to say, such investments will only be undertaken if there is seen to
be strong groth potential in a region. At the same time, the increased fixed
costs of such offices means that in the early months there may be a period
when the profit from overseas sales branches becomes a loss. Until the new
break even position is reached.
A small service company, Impact Development Training Company based in the English Lake
District is an example of a company that uses this type of arrangement. Impact offer
adventure training and team-building courses for managers, and after twenty years of UK
operations, they now operate in thirty countries around the globe. Demand across the thirty
countries is serviced from four non-UK permanent sales bases in Poland Japan Thailand and
Italy.
5.6.3 Licensing
Licensing is where your own organization charges a fee and/or royalty for
the use of its technology, brand and/or expertise. It essentially permits a
company in the target country to use the property of the licensor. Such
property usually is intangible, such as trademarks, patents, and production
techniques. The licensee pays a fee in exchange for the rights to use the
intangible property and possibly for technical assistance.
Licensing is defined as "the method of foreign operation whereby a firm in

one country agrees to permit a company in another country to use the
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manufacturing, processing, copyrights, trademark, know-how or some other
skill provided by the licensor".
Licensing involves little expense and involvement. The only cost is signing the
agreement and policing its implementation. Because of little investment on
the part of the licensor is required, licensing has the potential to provide a
very large ROI. Licensing can also offer valuable opportunities to local
manufacturers and distributers that are keen to expand but lack the
product line to do so. If may be easy to gain rapid growth of sales.
For example:
In 1965 Piago of Italy licensed bajaj auto of India to use its brand name Vespa. For this
agreement bajaj was supposed to pay 5% royalty payment to piago.
Coca Cola is an excellent example of licensing. In Zimbabwe, United Bottlers have the
license to make Coke.
UK record companies do not usually export CDs or tapes to overseas markets, but instead
license a local manufacture to produce and distribute the music on their behalf. In return
for granting of license, the UK Company then receives royalties based on percentage of the
wholesale value of the sales
5.6.4 Franchising
Franchising is basically a specialized form of licensing in which the

franchisor not only sells intangible property to franchisee but also insists
that the franchisee, agree to abide by the strict rules as to how it does
business.
A franchise is a form of business ownership created by contract whereby a

company grants to a buyer the rights to engage in selling or distributing its
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products or services under a prescribed business format in exchange for
royalties or share of profits.
The buyer is called the franchisee, and the company that sells rights to its
business concept is called the franchisor. The contract between them is
called the franchise agreement, and it is regulated form of business under
state and federal commercial laws. Entrepreneurs interested in franchises
can obtain specific information on a franchisor from government offices in
the state where the franchisor is registered.
Franchising must be considered from two distinct view points. First, the
small business entrepreneur can consider buying into business as a
franchisee. Second, the successful entrepreneur with an innovative business
concept can consider becoming a franchisor. Franchising is a system of
business acquisitions, and we will describe this system and address both
entrepreneurial viewpoints.
A very good example of a firm that has grown by using a franchising strategy. McDonald’s
has strict rules as to how franchisees should operate a restaurant. These rules extend to
control over the menu, cooking methods, staffing policies, and design and location of a
restaurant. McDonald’s also organizes the supply chain for its franchisees and provides
management training and financial assistance.
5.6.5 Counter trade
Under counter trade, there could be 4 possibilities.

(a) Barter: This system rules out usage of currency. Goods or equipment
are exchanged with goods and equipment. The amount or quantity to
be exchanged depends on mutual discussion.
For example, Damler Benz of Germany supplied 100 trucks to Bolevia
and brought 250 jeeps. These jeeps it sold to equator and purchased
bananas, which is sold in home market to doish market.
(b) Buy back: A country sales a plant to other country and buys back from
it the components manufactured on the plant. For example USSR
supplied to India steel plants and brought back the products like
beams, channels, sheets etc manufactured in the steel plant.
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(c) Compensation deal: In this type of counter trade, when a company of
one country sales products to that of any other country, the part of
sale is made in cash and balance is paid in kind i.e. some other product.
For example, if Indian aviation company sales helicopter to say Nepal,
80% payment will be paid in cash by Nepal and balance 20% in say
fruits.
(d) Counter purchase: in this case, full payment is made in cash with the
condition that the amount of earned by exporter must be spent in the
importer’s country.
For example, when PepsiCo sold soft drink to USSR, it paid full
amount in rural. PepsiCo spent rubals in purchasing Vodka from USSR
markets and sold that Vodka in European markets and thus got money
realized.
5.6.6 Strategic alliance
A Strategic Alliance is a formal relationship between two or more parties to

pursue a set of agreed upon goals or to meet a critical business need while
remaining independent organizations.
The recent economic slowdown has resulted in a significant decrease in the

availability of equity capital. Those entrepreneurs that are fortunate to
raise capital in the current environment often must accept lower valuations
and more investor-favorable terms. As a result, strategic alliances are
becoming an increasingly attractive alternative for information technology
and life science companies to raise capital and survive the current economic
situation.
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Generally, strategic alliances are arrangements between two or more

entities that are created to achieve mutual goals through collaboration.
Strategic alliances take many forms, including contractual arrangements
(such as license agreements, marketing agreements, and development
agreements), minority equity investments, and joint ventures that are
operated as separate legal entities (such as corporations, limited liability
companies, or partnerships). In strategic alliances scope and objectives are
defined. Interdependent contractual arrangements within the defined scope
and to achieve the goals. It specifically defined responsibilities and
commitments for each party. There is Independence of the parties outside
of the defined scope of the alliance and a fixed time period in which to
achieve the strategic goals.
• For example, the travel agency and the luggage store. Both companies look for
people who travel. The luggage store was happy to include the agent's information when
they sold a piece of luggage and the agent provided luggage tags to her clients when they
booked a trip. Both companies benefited from the alliance and their customers received
an additional value added service.
• The real estate agent and the pizzeria. When a client was moving in to their
new home, the agent had a pizza delivered, with a magnet congratulating the client on the
move. The magnet included the pizza shop number and the agent's contact information.
The pizza shop was introduced to the new resident, the agent was cemented in the mind
of the customer and the customer didn't have to worry about what to fix for dinner
during the move. (A special incentive: the agent was able to negotiate a reduced rate on
the pizzas he purchased!)
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5.6.7 Contract manufacturing
Contract manufacturing is work sub-contracted to a manufacturer by a

company that owns the product design and IPR (intellectual property right).
In some cases, the manufacturer takes the responsibility of marketing the
products using the vendor’s brand and provides after-sales support. [24]
a foreign company agreeing a contract with a local firm to manufacture

items on their behalf, making to order as and when required. The use of such
local contract manufactures is becoming increasingly widespread, as
multinational companies seek to optimize the geographic distribution of
their production capacity across the world, so that they have access to all
of their main markets.
For example, in the semiconductor business, there are companies who
specialize in the production of semiconductors for the sale to other firms in
their names.
A good example of global company that makes extensive use of international

Contract manufacturing is Nike. Donaghu and Braff point out that Nike that
do not own any integrated product facilities, but instead manage a network
of sub-contractors that specializes. The position of Nike in this scenario is
essentially one of a merchandiser, with 100% market focus. [23]
5.6.8 Management contract

A management contract is an arrangement under which operational control
of an enterprise is vested by contract in a separate enterprise which
performs the necessary managerial functions in return for a fee.
Management contracts involve not just selling a method of doing things (as
with franchising or licensing) but involves actually doing them. A management
contract can involve a wide range of functions, such as technical operation of
a production facility, management of personnel, accounting, marketing
services and training.
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In Asia, many hotels operate under management contract arrangements, as
they can more easily obtain economies of scale, a global reservation systems,
brand recognition etc. It is not unusual for contracts to be signed for 25

years, and having a fee as high as 3.5% of total revenues and 6-10% of gross
operating profit. The Marriott International Corporation operates solely on
management contracts.
Management contracts have been used to a wide extent in the airline

industry, and when foreign government action restricts other entry
methods. Management contracts are often formed where there is a lack of
local skills to run a project. It is an alternative to foreign direct investment
as it does not involve as high risk and can yield higher returns for the
company
5.6.9 Turnkey projects
A project in which a builder/developer contracts to construct a completed

facility that includes all items necessary for use and occupancy. All that is
required of the buyer to begin using the facility is to turn a key in the new
door unlock and enter. [22]
The term is common in the construction industry, for instance, in which it

refers to the bundling of materials and labor by sub-contractors. Turnkey
projects are most common in chemical pharmaceutical, petroleum refining
and metal refining strategy. This type of projects will have very high values,
So they will gain high foreign sales. On the contrary it may also result in
cost escalation, which is a disadvantage.
For example, the UK Company Hawker Siddeley has constructed a number of power stations
in the sub Saharan Africa on a turnkey basis. Less developed nations may lack both the
engineering expertise and production capability for such projects, and so they employ
foreign companies to complete the full projects. Hydro-electric plants, dams and road
building projects are all well suited to turnkey projects.
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5.6.10 Joint ventures
The term joint venture is used to describe an arrangement between two or more
independent companies to establish a separate company for the purposes of
pursuing a particular business project.
Joint ventures can be defined as "an enterprise in which two or more

investors share ownership and control over property rights and operation".
Joint ventures are a more extensive form of participation than either

exporting or licensing. In Zimbabwe, Olivine industries has a joint venture
agreement with HJ Heinz in food processing.
In JV the necessity for both partners to accept that their gains will flow
only from the gains of the joint venture and both partners should appreciate
the need for the joint venture. The partners should clearly agree on the way
the joint venture will be managed. It is important that both partners work
towards a system based on trust and transparency. The important thing
here is the level of comfort on such ‘important’ consultations. This is to
make for the long term success of the joint venture, it is also important
that both partners are equally able to service its growing need for capital as
the business expands. [26]
Bharti Enterprises and Wal-Mart Stores, Inc. today announced that they have signed an agreement to
establish Bharti Wal-Mart Private Limited, a joint venture for wholesale cash-and-carry and back-end
supply chain management operations in India, in line with Government of India guidelines. Under the
[25]
agreement, Bharti and Wal-Mart will hold a 50:50 stake in Bharti Wal-Mart Private Limited.
5.6.11 foreign direct Investment

FDI or Foreign Direct Investment is any form of investment that earns interest in
enterprises which function outside of the domestic territory of the investor. [27]
If trade barrier are strong, so that exporting is impossible, and it is difficult to

identify potential local companies.
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5.6.12 Merger & acquisition
1.Mergers
Merger is a financial tool that is used for enhancing long-term profitability by expanding
their operations. Mergers occur when the merging companies have their mutual consent as
different from acquisitions, which can take the form of a hostile takeover.
The business laws in US vary across states and hence the companies have limited options to
protect themselves from hostile takeovers. One way a company can protect itself from
hostile takeovers is by planning shareholders rights, which is alternatively known as “ poison
pill. If we trace back to history, it is observed that very few mergers have actually added
to the share value of the acquiring company. Corporate mergers may promote monopolistic
practices by reducing costs, taxes etc.
http://www.economywatch.com/mergers-acquisitions/
Such activities may go against public welfare. Hence mergers are regulated d supervised by
the government, for instance, in US any merger required\s the prior approval of the
Federal Trade Commission and the Department of Justice. In US regulation son mergers
began with the Sherman Act in 1890.
Mergers may be horizontal, vertical, conglomerate or congeneric, depending or the nature

of the merging companies.
2.Acquisitions
Acquisitions or takeovers occur between the bidding and the target company. There may be
either hostile or friendly takeovers. Reverse takeover occurs when the target firm is larger
than the bidding firm. In the course of acquisitions the bidder may purchase the share or
the assets of the target company.
• Vodafone's Hutch stake acquisition fourth largest in

global M&A.
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According to market researcher Dealogic, Vodafone's acquisition of Hutch-
Essar is the fourth largest deal in terms of value at $13.3 billion dollar ($11.1
billion plus $2 billion debt) in 2007 year-to-date.
http://www.domain-
b.com/companies/companies_v/vodafone/20070217_acquisitio
n.htm
• HDFC Bank acquiring Centurion Bank of Punjab,

shape of things to come ahead.
HDFC Bank Board on 25th February 2008 approved the acquisition of Centurion Bank of
Punjab (CBoP) for Rs 9,510 crore in one of the largest merger in the financial sector in
India. CBoP shareholders will get one share of HDFC Bank for every 29 shares held by
them.
This will be HDFC Bank’s second acquisition after Times Bank. HDFC Bank will jump to
the 7th position among commercial banks from 10th after the merger. However, the
merged entity would become second largest private sector bank.
http://www.banknetindia.com/banking/80142.htm
5.6.13 Wholly owned manufacturing unit
In a wholly owned manufacturing unit, the firm owns 100% of the stock.
Establishing a wholly owned subsidiary in a foreign market can be done in two ways.
The firm either can set up a new operation in that country, often referred to as a
green- field venture, or it can acquire and establish firm in that host nation and use
that firm to promote its product.
For example:
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ING’s strategy for entering the US markets was to acquire established US
enterprises, rather than try to build an operation from the ground floor.
KELLOGG is a company from US, who has formed KELLOGGS India Ltd, having a
fully owned manufacturing of Taloja, near new Mumbai.
5.6.14 Third country location
There are two issues in going from third country location

a) to face political rivalry
b) to face dumping duities.
For example:
Made in India cigarettes were popular in Pakistan, but due to rivalry, Indian
company ITC, was not able to sell it to Pakistan. It formed ITC Singapore,
where it sourced raw-material from India and just packed it in Singapore.
Now it became Made in Singapore cigarettes, which were easily sold to
Pakistan.
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The Entry Modes: A Hierarchical Model
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Source: Adapted from Y. Pan & D. Tse, 2000, The hierarchical model of
market entry modes (p. 538), Journal of International Business Studies, 31:
535–554.
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http://paginas.fe.up.pt/~ptcastro/PRESENTA/sld061.htm
References and Bibliography
1. Evans J. R., Berman B. (2003), “Marketing, 8e, Marketing in the 21st
century”, Biztantra, 2003 Edition, Pg. Xiv [pg 6 of present research]
2. Kotler Philip (2005), “Marketing Management”, Pearson Education, 11th
Edition, Pg. 9 [pg 6 of present research]
3. ibid, Kotler, Pg. 9 [pg 6 of present research]
4. Chapter 6: Entering Foreign Markets, Book: Global Strategy Author:

Mike W.Peng
5. file:///C:/Documents%20and
%20Settings/Administrator/Desktop/abstract.htm
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6. http://www.fao.org/docrep/w5973e/w5973e0b.htm#chapter
%207:%20market%20entry%20strategies
7. http://www.marketingteacher.com/Lessons/lesson_international_mod
es_of_entry.htm
8. http://en.wikipedia.org/wiki/Export
9. http://www.rnbresearch.com/
10. http://www.allbusiness.com/marketing-advertising/373056-1.html
11. http://www.outsource2india.com/kpo/SuccessStories/market-entry-
strategy.asp
12. http://www.academon.com/lib/paper/55066.html
13. http://www.vainteractive.com/inbusiness/editorial/bizdev/ibt/emergi
ng.html
14. http://www.academon.com/lib/essay/0_2.html
15. http://en.wikipedia.org/wiki/Strategic_alliance
16. 5. Korey, G. "Multilateral Perspectives in International Marketing

Dynamics". European Journal of Marketing, Vol. 20, No. 7, 1986, pp
34-42.
17. 6. Khoury, S.J "Countertrade: Forms, Motives, Pitfalls and Negotiation

Requisites". Journal of Business Research, Vol. 12, 1984, pp 257-270.
18. http://www.zeromillion.com/entrepreneurship/strategic-alliances.html
19. http://en.wikipedia.org/wiki/Turnkey
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20. http://www.financialexpress.com/news/L&T-clinches-Rs-2-000-crore-
Bombay-Dyeing-turnkey-project/297407/
21. http://www.freshfoodtechnology.com/PD/documents/FFTReference1-
Exampleofaturnkeyproject-ColdchainsinIndia.pdf
22. http://en.wikipedia.org/wiki/Management_contract
23. http://www.askthebusinesslawyer.com/blog/2008/3/24/creative-
strategic-alliances-examples.html
24. http://www.nelligan.ca/e/pdf/StrategicAlliances.pdf
25. http://teachmefinance.com/Financial_Terms/turnkey_project.html
26.Donaghu, M.T. and Braff, R (1990) ‘nike just did it: international
subcontracting and flexibility in international footwear
production’,regional studies, vol.24. pp537-552
27. http://www.expresscomputeronline.com/20030811/indtrend1.shtml
28. http://www.bharti.com/48.html?&tx_ttnews%5Btt_news
%5D=218&tx_ttnews%5BbackPid%5D=116&cHash=4239949416
29. http://www.sanmargroup.com/Misc-files/joinmain.htm
30. http://www.economywatch.com/foreign-direct-investment/
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Xavier’s College,Kolkata Term Paper:

Title: Modes of Entry into Foreign Markets

I declare the following:

4.1 Positivism Vs phenomenology

5.6. Different modes of entry into foreign markets:

5.6.2 Overseas sales branches

5.6.5 Counter trade

5.6.6 Strategic alliance

5.6.7 Contract manufacturing

Limitation and conclusion

References and bibliography

Management study includes various fields namely- Marketing, Finance,

Human Resource, Operations Research and Information technology.

Components of marketing includes topics such as consumer behavior,

marketing research and information systems and product, distribution,

management. Marketing explains all major principles, defines key terms,

Marketing is a societal process by which individuals and groups obtain what

described as “the art of selling product”.2

Marketing management is the art and science of choosing target markets

communicating superior customer value.3

how the international economic and political environment serves to act as a

The boundary-less business world of today has seen organizations operating

4.1 Introduction to research methodology

A research methodology defines what the activity of research is, how to

proceed, how to measure progress, and what constitutes success. It also

states the type of data used in the research.

4.2 Data Gathering

management as well as extensive searches of various websites and articles

5.1 What is foreign market?

A market which is beyond the territory of ones own nation is foreign

Why enter foreign markets?

As we move from secondary to higher secondary and then to graduation,

Where to make an entry?

When to enter foreign markets?

What does entry mode depend on?

A company’s choice of entry mode to foreign markets depends basically on

• Ownership (O): ownership advantages are specific assets,

• Location (L): Location, location, location! (See “Where to enter”

• Internalization (I): Replacing arm’s-length market transactions, which

5.6 Different modes of entry:

A way to gain access to new markets and opportunities

Export is an important part of international trade. Its counterpart is

in foreign production facilities is required. Most of the costs associated

Exporting commonly requires coordination among four players:

There are direct and indirect approaches to exporting to other nations.

Examples of indirect exporting include:

• Consortia are groups of small or medium-sized organizations that group together to

There are two types of export insurance:

• Insurance on transportation risks, such as weather or rough handling

5.6.2 Overseas sales branches

Licensing is defined as "the method of foreign operation whereby a firm in

Franchising is basically a specialized form of licensing in which the

A franchise is a form of business ownership created by contract whereby a

5.6.5 Counter trade

Under counter trade, there could be 4 possibilities.

5.6.6 Strategic alliance

A Strategic Alliance is a formal relationship between two or more parties to

The recent economic slowdown has resulted in a significant decrease in the

Generally, strategic alliances are arrangements between two or more

an additional value added service.

the pizzas he purchased!)