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Strategies for Reaching Global Markets

Strategies for Reaching Global Markets. Exporting – --one of the easiest and simplest methods; --export trading companies facilitate the process between exporters and buyers from different countries; --can lead to assigning a foreign company to sell the goods or services locally

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Strategies for Reaching Global Markets

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  1. Strategies for Reaching Global Markets Exporting – --one of the easiest and simplest methods; --export trading companies facilitate the process between exporters and buyers from different countries; --can lead to assigning a foreign company to sell the goods or services locally --considered least risky and potentially very profitable

  2. Global Market Strategies • Licensing - • --a company (licensor) enters the global market by looking for a foreign company (licensee) to produce and/or sell it’s product in exchange for a fee (royalty.) • --poses some advantages and disadvantages • --a licensor can have access to the promotion and marketing of it’s produce in the global market; • --a licensee can sometimes copy or “steal” a company’s secrets, etc., and compete with the licensor • --requires little commitment by the licensor and little risk

  3. Global Strategies • Franchising • An agreement between a franchisor – who sells the rights to use the business name, produce or service to the franchisee • Must adopt to local customers traditions, preferences, likes and dislikes, etc. • Examples include: McDonald’s, Tim Horton’s, Boston Pizza, etc. • Considered fair amount of commitment while maintaining some control

  4. Global Strategies • Contract Manufacturing (“outsouring”) • a company will enter into business with a foreign company to produce it’s goods or services and then apply it’s brand name on that product or service • Considered a slight risk in the foreign market with some potential profit potential

  5. Global Strategies • Joint Ventures – • A partnership usually between a foreign and a domestic company to offer a new produce or service; • Several advantages: • 1. shared technology and risk; • 2. shared marketing and business experience; • 3. entry into a global market is usually easier to facilitate if a partnership is entered into with a local business

  6. Global Strategies • Strategic Alliance – • A long-term partnership of two or more businesses to help each business build a competitive advantage; • Each company uses their “advantage” to assist in gaining a market share; • Combining the skills, experience and technology of both companies

  7. Global Strategies • Foreign Direct Investment – • Buying businesses and property in a foreign country; • Foreign subsidy – a company that is owned in a foreign country by another company, which is referred to as a parent company; • There are both pros - the parent company maintains control over the technology, marketing, etc. • As a con – the parent company spends a lot of money and commits to technology, facilities, etc. in the foreign boundary • Expropriation-- If difficulties arise, the business assets of the parent company could be taken over by the foreign government • Would GM be considered a foreign direct investment – if so, then what are some of the advantages/ disadvantages of this type of global market strategy?

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