different modes of entry in foreign market
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Different modes of entry in foreign marketTRANSCRIPT
DIFFERENT MODES OF ENTRY INTO A FOREIGN MARKETINTERNATIONAL MARKETING
Presented to : Mr. Yasir HafeezPresented by : Tayyab Hameed, UOL, Islamabad CampusOct 24, 2014
How Multinational Corporations Enter into a Foreign Market?
How Multinational Corporations Enter into a Foreign Market?
Exporting Licensing/Franchising Joint Ventures Foreign Direct Investments
Exporting
Advantages: Avoids cost of establishing
manufacturing operations May help achieve experience curve and
location economies Disadvantages:
May compete with low-cost location manufacturers
Possible high transportation costs Tariff barriers Possible lack of control over marketing
reps
Licensing/Franchising
Advantages: Reduces development costs and risks of
establishing foreign enterprise. Reduces development costs and risks of
establishing foreign enterprise. Unfamiliar or politically volatile market.
Disadvantages: May prohibit movement of profits from
one country to support operations in another country
Quality control
Joint Ventures
Advantages: Benefit from local partner’s knowledge. Shared costs/risks with partner. Reduced political risk.
Disadvantages: Risk giving control of technology to
partner. May not realize experience curve or
location economies. Shared ownership can lead to conflict.
Foreign Direct Investments
Subsidiaries could be Greenfield investments or acquisitions
Advantages: No risk of losing technical competence to
a competitor Tight control of operations. Realize learning curve and location
economies. Disadvantage:
Bear full cost and risk
Pizza Hut
Pizza Hut is a subsidiary of YUM! BRANDS, INC. the world's largest restaurant company.
Founded by DAN &FRANK CARNEY in 1958.
Initiated its operations in Pakistan in 1993.
With the passage of time, expanded its operation to 40 outlets in major cities of Pakistan.
Mode of Entry - Franchising
Operations without risk of failure in an unfamiliar market.
It helps in learning the buyer & consumer behaviour along with market realities.
In countries where FDI is restricted, franchising is the easiest route to enter.
Expand operations rapidly, with low overheads coupled with local expertise.
Spend less on infrastructure and processes than would have been in an independent business.
Environment: Internal Factors
Management Personnel Management Premises Management Quality Management …..
Manpower Appropriate hierarchy
Machine GPM (General Purpose Machine)
Material Restaurant Support System of YUM Restaurants
Money
Environment: External Factors
Macro PESTEL
Micro Customers Competitors Suppliers
Segmentation
Pizza hut has used certain demographic factors: Age – children, teenagers, adults Family size – family is having children,
college students, young professionals Income – low income, middle income and
high income families Psychological factors such as lifestyle of
customer: Executives whether the customers are
having busy life style.