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    Types of International Business: Export-Import Trade Foreign Direct Investment

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    shrivikram_795320213
    The document discusses several types of international business: 1) Importing and exporting which allows businesses to trade goods internationally in a simple manner. 2) Licensing which allows a business to use another's intellectual property internationally in exchange for royalties, such as soft drink formulas. 3) Franchising which provides a combination of trademarks, equipment, and guidelines to investors internationally for a fee.

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    Types of International Business: Export-Import Trade Foreign Direct Investment

    Uploaded by

    shrivikram_795320213
    121 views15 pages
    The document discusses several types of international business: 1) Importing and exporting which allows businesses to trade goods internationally in a simple manner. 2) Licensing which allows a business to use another's intellectual property internationally in exchange for royalties, such as soft drink formulas. 3) Franchising which provides a combination of trademarks, equipment, and guidelines to investors internationally for a fee.

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    types of ib

    Original Title

    Types of IB 1

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    The document discusses several types of international business: 1) Importing and exporting which allows businesses to trade goods internationally in a simple manner. 2) Licensing which allows a business to use another's intellectual property internationally in exchange for royalties, such as soft drink formulas. 3) Franchising which provides a combination of trademarks, equipment, and guidelines to investors internationally for a fee.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    121 views15 pages

    Types of International Business: Export-Import Trade Foreign Direct Investment

    Uploaded by

    shrivikram_795320213
    The document discusses several types of international business: 1) Importing and exporting which allows businesses to trade goods internationally in a simple manner. 2) Licensing which allows a business to use another's intellectual property internationally in exchange for royalties, such as soft drink formulas. 3) Franchising which provides a combination of trademarks, equipment, and guidelines to investors internationally for a fee.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    TYPES OF INTERNATIONAL BUSINESS

    Export-import trade Foreign direct investment

    Licensing

    Franchising Management contracts


    1

    1. IMPORTING AND EXPORTING


    I

    & E are often the simplest way a business may go global. Importing is the purchasing abroad, either directly from target suppliers or indirectly through sales agents and distributors.

    EXPORTING
    Exporting

    is the selling abroad, either directly to target customers or indirectly by retaining foreign sales agents and distributors. People who engage in this type of international trade are called importers or exporters.

    ADVANTAGE

    Absolute advantage: when a country can produce something more cheaply than any other country. Ex., Saudi Arabia, due to its natural resources, has an absolute advantage in oil. Comparative advantage: when a country can make certain items more cheaply or better than other items relative to other countries. Ex., Japan, due to its manufacturing efficiencies, has a comparative advantage in automobiles.

    2. LICENSING

    Licensing

    is an arrangement whereby a firm (the licensor) grants a foreign firm (the licensee) the right to use intangible properties such as a patent, logo, formula, process, etc.

    The

    licensee pays a royalty or percent of the profits to the licensor. Licensing allows a business to go global relatively rapidly and simply. Advantage : Avoid shipping costs and Delays,

    Ex.

    : Instead of shipping a soft drink overseas , a company may license a foreign bottler who produces the soft drink locally using the licensed formula. Pepsico has planned to license Franchise India Holdings for its merchandise. It is also a convenient way for a company to spread its products abroad with minimal risk.

    3. FRANCHISING
    Franchising

    is a form of licensing The parent company (franchisor) offers some combination of trademark, equipment, materials, managerial guidelines, consulting advice, and cooperative advertising to the investor (franchisee) for a fee and/or percentage of revenues (royalties).

    FRANCHISING ... Franchising also does not have to be an international arrangement.


    Franchising

    may take place completely within one country.


    is a convenient way for to introduce products abroad with minimal risk.

    It

    FRANCHISING

    &

    LICENSING

    Licensing, and Franchising allows a business . to go global, relatively rapid and simple It requires a greater commitment, financially by both parties. McDonalds franchise. Ex. Hotel chains such as Hilton. Involves only a lesser financial commitment

    GE has Signed a Licensing Agreement for Oil and Gas Compressors with BHEL Allows some adaptation Adaptation is not to local tastes. possible

    FDI . . . . This is a major decision for an organization FDI costs and risks of direct investment are greater than with franchising or licensing. Governments usually welcome foreign direct investment, but are also often concerned about this type of investment for several reasons. Due to their size, MNCs may influence the host countrys economic and political systems.

    5. JOINT VENTURES AND STRATEGIC ALLIANCES


    Joint

    ventures and strategic alliances are somewhat different from FDI They can be excellent, strategic ways to penetrate different global markets around the world Limits the exposure at the entry phase.

    JOINT VENTURE
    A

    JV is an organization created by two or more companies or a company and a foreign govt. Each party contributes assets, owns the entity to some degree, and shares risk A JV allows a company to partner with a firm from another country. Ex.Ford Motor Company (U.S.) entered into a JV with the Mazda Company (Japan)

    STRATEGIC ALLIANCE

    Its an agreement between potential or actual competitors to achieve common objectives. Its built on trust and so the arrangement should be undertaken with care. An Ex. You may purchase a ticket in the U.S. on Delta airlines for a flight to Italy and find yourself actually on an Al italia flight carrying a Delta flight number.

    MANAGEMENT CONTRACT
    Operational control of an enterprise is vested by contract in a separate enterprise It performs the necessary managerial functions in return for a fee. Management contracts involve not just selling a method of doing things (as with licensing) But involve actually doing them. It can involves functions, such as technical operation, management of personnel, accounting, marketing services and

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