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

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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.