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These slides are not necessarily be an original work rather these are a compilation of different Prepared By : Mazadul Hasan sheshir ID: 2010000400008 13 th Batch (session 2009-2013) Department : Wet Processing Technology Email: mazadulhasan@yahoo.com Blog : www. Textilelab.blogspot.com (visit) Southeast University Department Of Textile Engineering I/A 251,252 Tejgaon Dhaka Bangladesh Prepared By : !!!"! #$ %" &'( ) * ! !* + , %+ %- WHY COMPANIES GO INTERNATIONAL? ! .' , /' 0 "12,,320", 24+0' " 1 2 , $2' #$! 5 "2"02+ ' Why Should a Firm Enter International Markets? Growth Profitability Economies of scale Spreading Risk Access to Imported inputs Uniqueness of Product or services Marketing Opportunities Due to life Cycle Spreading R & D Cost Competition in Domestic market Govt. Policies & Regulations Spin - off benefits Strategic Vision 60 #+%" &( ) * * **" *" , 7 0 8 9:19: *; "0+ % 5 * 0 " +00 " 5 0 $ +00 ,0 0 "84 4 0 <",0"+0 +' 5 # 0 "0 , " = " 00 $0" 00"' 5 -0"+0=> 0#" " 0 +00 0 ? " 0+0' 5 , ,&'&%"" '&'% $ " "0 + , , , @"A' ) #B0 % # *" &( 60 #+ %" 7 0 - 8 % * , " * -0 * * C- C#- C## $% [...]... Licenser gives technology, manufacturing right, brand and also marketing right (unlike contract Manufacturing) • Licensee gains marketing right- Exclusive basis or Unrestricted basis • Variety of time period 5 to 15 years • Licensee makes all capital investments • Licensing agreements subject to negotiation –vary from Co to Co and industries to industries International Franchising • A special form of licensing... negotiation Standard fee structure Any variation will cause confusion Lesser control Exerts higher control Overseas Turnkey Projects • Companies utilize technical expertise to enter international markets • Types of Turnkey Projects - Build and Transfer (Conceptualizes, designs, builds, testing and transfer the project to the owner - Build/Operate and transfer (BOT) (Build the project and manage for... Greenfield operation Acquisition • A company can acquire a foreign company and all its resources in a foreign market • Acquisition provides speedy access to the resources of a foreign company such as skilled man power , the company’s product and brand and its distribution channels Green field operation • • The firm creates the production and marketing facilities on its own from scratch Green field operations... stage of the manufacturing and depends on a ready supply of components or manufactured parts to be shipped from another country • Involves heavy use of labor rather than expensive investment of capital outlets • In order to save in shipping costs and high import tariffs and counter non tariff barriers and take advantage of cheap labour cos exports components in CKD condition and assembles them overseas... government and represents local business interests • Provide greater control over production and marketing functions Examples: During 1960-70 Japanese market was viewed as a difficult environment—govt regulations—JV Mc Donald’s entered Japan in 1971 through JV with Fujita &Co Mc Donald’s in India through JV Wholly -owned foreign subsidiaries In order to have complete control and ownership of international. .. Globalization of business technologies and increasing pressure on international firms to be globally competitive in costs, product offering, speed to bring new products – driving force of international contract manufacturing • Economic development of a number of countries depend on contract manufacturing like China, Korea, Mexico, Thailand, Taiwan, Now Indonesia, Vietnam and India • Nike shoe – entirely... overseas company (Franchisee) • It includes the brand name, logo, products and method of operation • Mc Donald’s, KFC, Burger King, Holiday INN, Hertz, Carrefour, Benetton, Coca Cola (trade mark, recipe, and advertising)-independent bottlers around the world • It is a transfer of the entire system from one country to another Difference between Licensing and Franchising Licensing Franchising Royalty Management... basis Local Manufacturing A common and widely practiced form of entry is local production of company’s products Types: •Overseas Assembling • Joint Venture • Wholly Owned Subsidiaries Reasons for Local Production •Local cost, market size, tariffs, laws and political consideration may affect a choice to manufacture locally • Sometimes cost cutting rather than market entry – International firms establish... competencies • Difference between strategic alliance and joint venture - In Joint Venture two partners contribute a fixed amount of resources and the venture develops on its own Joint Venture Parent Company X Company Z (Joint Venture) Parent Company Y -In strategic alliance each partner brings a particular skill or resource – usually they are complementary and by joining forces each expects to profit from... Company X Agreement Company Y Contract Manufacturing • • • • • An international firm arranges to have its products manufactured by an offshore local company on contractual basis Local manufacturers responsibility is only production Marketing responsibility is on Parent company No legal bindings – change contracted manufacturers to improve quality and cost effectiveness A number of global companies outsource . $2' #$! 5 "2"02+ ' Why Should a Firm Enter International Markets? Growth Profitability Economies of scale Spreading Risk Access to Imported inputs Uniqueness of Product or services Marketing Opportunities Due. &'( ) * ! !* + , %+ %- WHY COMPANIES GO INTERNATIONAL? ! .' , /' 0 "12,,320", 24+0' "