International business refers to the

trade of goods, services, technology,

capital and/or knowledge across
national borders and at a global or
transnational level.
 Direct exporting

EXPORTING Indirect exporting

Inter-corporate transfers
LICENSING

FRANCHISING
Contract manufacturing

SPECIAL MODES Management contracts

Turnkey projects
FDI WITH
ALLIANCES

FDI WITHOUT
ALLIANCES
 FDI WITH FDI WITHOUT
BASIS EXPORTING LICENSING FRANCHISING SPECIAL MODES
ALLIANCES ALLIANCES
MEANING Exporting is the Licensing is an Franchising is an 1)CONTRACT MANUFACTURING / Strategic alliance is Companies enter
sale of products arrangement arrangement in OUTSOURCING: a co operative and the international
and services in in which a which the Companies outsource their part of collaborative market through FDI,
foreign countries company franchisor permits or entire production and approach to invest their money,
that are sourced (licensor) sells franchisee to use concentrate on marketing achieve the larger establish their
from the home the right to use business model or operations. goals manufacturing and
country. intellectual brand name for a marketing facilities
property or fee, to conduct 2)MANAGEMENT CONTRACTS: MODES: through ownership
produce a business, as an It is an agreement between two 1)MERGERS and control.
company's independent companies whereby one company 2)ACQUISITIONS
product to the branch of the provides managerial assistance, GREENFIELD
licensee, for parent company technical expertise and specialised STRATEGY:
royalty. (franchisor). services to the second company of It refers to starting
the agreement for a certain agreed of operations of the
period in return for monetary company from
compensation scratch in a foreign
market.
3)TURNKEY PROJECT:
It is a contract under which a firm
agrees to fully design, construct and
equip a
manufacturing/business/service
facility and turn the project to the
purchaser when it ready for
operation for a renumeration.
EXAMPLE 1) DIRECT EXPORTING Microsoft Office Mc Donald's 1)CONTRACT 1)MERGERS Toyota Motor Corp.
2) INDIRECT KFC MANUFACTURING 2)ACQUISITION In Mexico
EXPORTING 2)MANAGEMENT
3) INTRA CORPORATE CONTRACTS
TRANSFER 3)TURNKEY PROJECTS

GOVERNED BY Foreign exchange Contract law, 1872 Company law, 1872 1)CONTRACT Indian Contract law, 1872
management act 1999 or franchising MANUFACTURING companies act
regulations, 2004 2)MANAGEMENT 2013
as the case may be CONTRACTS
3)TURNKEY PROJECTS
Foreign exchange
management act 1999

REGISTRATION It is necessary to get Not necessary Mandatory 1)CONTRACT Compulsory Not always
registered with the MANUFACTURING registration
DGFT (Director 2)MANAGEMENT
General of Foreign CONTRACTS
Trade), Ministry of 3)TURNKEY PROJECTS
Commerce,
Government of India.
TRAINING AND Not needed Not provided provided Not provided Not related Not related
SUPPORT
PROCESS Acquire knowledge Involves one time Needs ongoing Needs ongoing Work together and May not realize
about local market transfer of property assistance of assistance assist each other experience curve
or rights. franchiser.

FEE Low financial exposure NEGOTIABLE STANDARD Lower cost Assumes all Shared cost
STRUCTURE (ROYALTY)- MANAGEMENT strategies
FEES
Degree of Potential conflicts with The licensor has Franchisor exerts Considerable Depends om the Complete control
control distributors and control on the use considerable control type of alliance
logistical complexities of intellectual control over
property by the franchisee's
licensee, but has no business and
control on the process.
licensee's business.
FINANCIAL low low low 1)CONTRACT expensive expensive
RISK MANUFACTURING
low
2)MANAGEMENT
CONTRACTS
low
3)TURNKEY
PROJECTS
high
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