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Entrepreneurship

Class-XI

Ch-5

LN-4

Code-241505010114

Market(ways to enter an International market)

Notes:

A firm can enter foreign market through:
(a) Indirect Export.
(b) Direct Export
(c) Licensing,
(d) Contract Manufacturing,
(e) Joint Ventures.
(f) Direct Investment.

(a) Indirect Export: It is an occasional exporting which is a passive level of involvement where
the company exports from time to time:
1. On its own initiative,
2. By getting work through independent middlemen.
3. In response to occasional or unsolicited orders from abroad.
For this the company makes commitment to expand through exports,or the least change in the
company’s product lines.
(b) Direct Export: It is a type of export in which firms decide to handle their own exports.
Through this strategy of entering global market, the enterprise takes greater risk and
investment, but so the potential return are more. Direct export can be done by a firm through:
• Domestically based Export Division or Department
• Overseas Sales Branch or Subsidiary Establishment.
• Nominations Foreign based agents or distributors to sell the goods on behalf of the company.
(c) Licensing: The licensor licenses a foreign company to use a manufacturing process,
trademark, patent, trade secret or other item of value for a fee or royalty.
By this the licensor safely and easily can gain entry into the foreign market at little risk and the
licensee gaining production expertise or well-known product or name without having to start
from zero.
(d) Contract Manufacturing: It is a method for a local firm to go global. Here, the firm engages
local manufacturers to produce the product for them.