• whether an international subsidiary is purchased or newly created depends to a large extent on its proposed operations
• By purchasing the existing marketing and sales operations of an existing firm in the target market, the parent can have the subsidiary operating relatively quickly 

• Managers have completely control over day to day operations in the target market and access to valuable technolgies processes, and other intangible properties within the subsidiary 
• is a good mode of entry when a company wants to coordinates the activities of all its national subsidiaries 

• They can be expensive undertaking because companies must typically fincance investment internationally or raise funds in financial markets
• Risk exposure is high because a wholly owned subsidiary requires substantial company resource

Privately owned companies 

government agencies

government-owned companies 

• Forward Integration 
• Backward Integration 
• Buyback 
• Multistages

• Companies rely on joint ventures to reduce risk 
• Exposures fewer of partner's assets to risk 
• When market entry requires a large investment 
• Learn about a local business environment prior to launching a wholly owned subsidiary 
• To penetrate international markets are other wise off limits
• Some government either requires non-domestic companies to share ownership with lcoal companies provide incentives for them to do so (develop countries)
• Can gain acess to another company's international distrubtion neworking through the use of joint venture
• Government controlled companies gives the government a direct stake in the venture's success

• Conflict between partners 
• Can reduce the likehood of conflict and indecision by establishing unequal ownership 
• Multiparty joint vetnure--consortium 
• Loss of contorl over a joint venture's operations can also result when the local government is a partner 

50-50 joint ventures

Managerial paralysis

Future investments and profits

• Derived from understanding that the client, who normall pays a flat fee for the project, is expected to do nothing more than simply "turn a key" to get the facility operating 
• Large scale 
• Involves government agencies
• transfer special process technologies or production facility designs to the client 

• Permits firms to dspcialize in their core competencies and to exploit opportunites that they could not undertake alone 
• Allow government to obtain designs for infrastructure projects from the world's leading companies 

Gives a company greater control over the sal of its product in a target market 

is primarily used in service industries 

Requires ongoing assistance from the franchiser 

Franchiser can use franchising as a low-cut, low-risk entry mode into new market 

that allows for rapid geographic expnsion 

Franchiser can benefit from the cultural knowledge and know-how of local managers

• Franchiser may find it cumbersome to mage a large number of franchisee

• Typically receive royalty payments based on a percentage of the licensee sale revenue generated by the licensed property 
• One-time fee to cover the cost of transferring the property to the licensee

• Patents
• Copyrights
• Special formulas
• Designs
• Trademarks
• Brand name 

• Process technologies
• Exclusive license
• Non-exclusive license
• Cross licensing  

• Licensors can use licensing to finance their international expansion 
• Most licensing agreements require licensees to contribute equipment and investment financing whether by building special production facilities or by using existing excess capacity 
• Can be less risky 
• Can be help reduce the like-hood that a licensor's product will appear on the balck market 

• It can restrict a lincesor's future activities 
• Might recue the global consistency of the quality and marketing of a licensor's product in different national market 
• Licensing might amount to a company "lending" strategically important property to its future competitors
• Agreement are often made for several years and perhaps even a decade or more 
• Contract can (and should) restrict licensees from competing in the future with product based strictly on licensed propery 

• Export/import financing in which the importer's bank issues a document stating that the bank will pay the exporter when the exporter fulfills the terms of the document 
• is typically used when the importer's credit rating is questionable 
• when the exporter needs a letter of credit to obtain financing 
• Bank normally issue 
• Only after an importer has deposited on account sum equal in value to that of the imported merchandise 

• Irrevocable 
• Revocable 
• Confirmed 

• A document ordering the importer to pay the exporter a specfied sum of money at a specified time 

Sight draft

Time draft

• A contract between the exporter and shipper that specifies merchandise destination and shipping costs 
• Proof that the exporter has shipped the merchandise 

• inland bill of lading 
• Ocean bill of lading
• Airway bill of lading 

• Who take ownership of the merchandise when it enter their country 
• Accept all the risk associated with generating local sales
• Earn a profit equal to the difference between the price they pay and the price they receive for the exporter's good 
• Redue an exporter's risk 
• Weakens and exporter's control over the price buyers are charged