Exporting

Licensing
Franchising
Turn key Projects
Wholly owned subsidiaries

The franchising system can be defined as: A
system in which semi-independent business
owners (franchisees) pay fees and royalties
to a parent company (franchiser) in return
for the right to become identified with its
trademark, to sell its products or services,
and often to use its business format and
system.

1.Low political risk
2.Low cost
3.Allows simultaneous expansion into
different regions of the world
Franchisees may turn into future competitors
Demand of franchisees may be scarce when
starting to franchise a company, which can
lead to making agreements with the wrong
candidates
A wrong franchisee may ruin the companys
name and reputation in the market
Comparing to other modes such as exporting
and even licensing, international franchising
requires a greater financial investment to
attract prospects and support and manage
franchisees.
Subway
McDonald's
7-Eleven
Hampton Inns & Suites
Great Clips
Dunkin' Donuts
A turnkey project refers to a project when
clients pay contractors to design and
construct new facilities and train personnel.
A turnkey project is way for a foreign
company to export its process and
technology to other countries by building a
plant in that country.
Industrial companies that specialize in
complex production technologies normally
use turnkey projects as an entry strategy
Advantage
It is the possibility for a company to
establish a plant and earn profits in a foreign
country.
Disadvantage
From the companys perspective it include
risk of revealing companies secrets to
competitors.
1.Bechtel and Fluor, which have built many
foreign plants and projects.
2.Congentrix an American power company has
built electric power generation plants in several
countries.
3.An entire automobile plant was constructed in
Russia by Fiat, the famous Italian company.
4.Foreign companies have built hospitals in
Saudi Arabia; and South Korean, Chinese, and
Indian companies have built highways in Africa
and Middle East under Turnkey contracts.
Any cooperative effort between two or
more
independent organizations to develop,
manufacture or sell products or services.
This form of cooperation lies between M&A
and organic growth.
Horizontal strategic alliance
Vertical strategic alliances
Intersectoral strategic alliances
Joint venture is a strategic alliance in which two or more firms
create a legally independent company to share some of their
resources and capabilities to develop a competitive advantage.
Equity strategic alliance is an alliance in which two or more firms
own different percentages of the company they have formed by
combining some of their resources and capabilities to create a
competitive advantage.
Non-equity strategic alliance is an alliance in which two or more
firms develop a contractual-relationship to share some of their
unique resources and capabilities to create a competitive
advantage.
Global Strategic Alliances working partnerships between
companies (often more than two) across national boundaries and
increasingly across industries, sometimes formed between
company and a foreign government, or among companies and
governments
The advantages of forming a strategic alliance
include:
Allowing each partner to concentrate on their
competitive advantage.
Learning from partners and developing
competencies that may be more widely
exploited elsewhere.
Adequate suitability of the resources and
competencies of an organization for it to
survive.
To reduce political risk while entering into a new
market.

Risk of losing control over proprietary
information, especially regarding complex
transactions requiring extensive coordination
and intensive information sharing.
Coordination difficulties due to informal
cooperation settings and highly costly
dispute resolution