Although most companies operating internationally would prefer exporting to other market entry modes, there are circumstances in which exporting may not be feasible. In these cases, companies may engage in direct investment in other countries, or enter markets through various collaborative strategies such as joint ventures and alliances. Collaborative strategies allow firms to spread both assets and risk across countries by entering into contractual agreements with a variety of potential partners.
We examine reasons for not exporting and then explore the motives that drive firms to engage in non-collaborative and collaborative arrangements, as well as the various types of possible arrangements, including foreign direct investment, licensing, franchising, joint ventures and equity alliances. We go on to explore the various problems that may arise in foreign direct investment and collaborative ventures and determine various methods for managing these evolving arrangements.
To clarify why companies may need to use modes other than exporting to operate effectively in international business.
Participate in markets using a variety of equity and non-equity arrangements ranging from wholly owned operations to partially owned subsidiaries, joint ventures, equity alliances, licensing, franchising, management contracts, and turnkey operations.
Tools and Techniques
~ Market Research and Location Decision
~ Products and Services Alteration
~ Country of Origin
To comprehend why and how companies make foreign direct investments.
Decide on methods for making foreign direct investment, either by acquiring an interest in an existing company or construct new facilities.
Tools and Techniques
~ Buying and Greenfield Investments
~ Investment Generation Toolkit (World Bank)
~ Investment Promotion Agencies
To understand the major motives when choosing a collaborative arrangement in either domestic or foreign operation.
Comprehend and compare different types of collaborative arrangements in terms of responsibilities, ownership or management structure and decide arrangement matching company strategic objectives.