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INDIRECT MARKET ENTRY STRATEGIES - Coggle Diagram
INDIRECT MARKET ENTRY STRATEGIES
EXPORTING
Defined as the marketing of goods produced in one country into another
May not obtain as much detailed marketing information as compared to manufacturing in marketing country
DIRECT EXPORT
Advantage:
Personal contract with customer
Product can reach international market with less international risk
Disadvantage:
High expenses
Time consuming
INDIRECT EXPORT
Advantage
Get instant payment
Risk is shared with merchant exporters
Disadvantage
Manufacturer remains unaware about export market
Not useful where goods requires after sales service
LICENSING
A firm in one country agrees to permit a company in another country to use the manufacturing, processing, 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
Advantage
Appealing to small companies that lack resources
Faster access to the market
Rapid penetration of the global markets
Disadvantage
It increase the opportunities for IP theft
It creates the dependency on the licensor
It could damage the reputation of both parties
FRANCHISING
Franchising is a form of licensing in which one firm contracts with another to operate a certain type of business under an established name according to specific rules
Advantage
Overseas expansion with a minimum investment
Availability of local franchisees knowledge
Diadvantage
Lack of control over the franchisee's operation
TURNKEY OPERATION
Is an agreement by the seller to supply a buyer with a facility fully equipped & ready to be operated by the buyer who will be trained by the seller.
The term is used in fast food franchising when a franchiser agrees to select a store site build the store, equip it, train the franchisee & employee.
Advantage
Can earn a return on knowledge asset
Less risky than conventional FDI
Disadvantage
No long-term interest in the foreign country
May create a competitor
MANAGEMENT CONTRACT
Management contract is an agreement between a property owner and a management company (who agrees to take the operational responsibilities)