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Krinjal UNIT 3 Short answers 1 Write a brief note on exporting as a market entry strategy A1 Exporting Exporting is the most traditional and well established form of operating in foreign markets. Exporting can be defined as the marketing of goods produced in one country into another. Whilst no direct manufacturing is required in an overseas country, significant investments in marketing are required. The tendency may be not to obtain as much detailed marketing information as compared to manufacturing in marketing country; however, this does not negate the need for a detailed marketing strategy. The advantages of exporting are:  manufacturing is home based thus, it is less risky than overseas based  gives an opportunity to "learn" overseas markets before investing in bricks and mortar  reduces the potential risks of operating overseas. The disadvantage is mainly that one can be at the "mercy" of overseas agents and so the lack of control has to be weighed against the advantages. For example, in the exporting of African horticultural products, the agents and Dutch flower auctions are in a position to dictate to producers. This is the strategy of producing products and services in one country (often the producer’s home country), and selling and distributing them to customers located in other countries. It is a traditional and well-established method of reading the foreign markets. Exporting does not require that the goods be produced in the target country; no investment in foreign production facilities is needed. Most of the costs associated with exporting take the form of marketing expenses. 2Write a note on international franchising A2 International franchising refers to a domestic business’s expansion into foreign countries and markets. International franchising is a complex process that requires thorough considerations of many factors, such as feasibility, adaptability, and benefits versus risks. Main aspects of international franchising are as follows;  Replication: During the process of international franchising, companies often strive to replicate successful domestic business models in foreign markets.  Challenge: Differences in language, laws and financial systems, between franchising business and host foreign market can pose serious challenges during international expansion.

 Benefits: International franchising means new markets with new customers and selling potentials. International franchising also places company’s name and presence in a global market.  Adaptability: learning to adapt to the needs and demands of a new foreign market can attract local customers and buyers and lead to higher business success in a new country.  Counsel: International franchising experts help companies understand a foreign market before expansion. Consultants advise businesses on a number of subjects, from financing to culture gaps. Purchasing a franchise is one way for an entrepreneur to get started in business . Franchises offer a proven business model to follow as well as support in areas like financing and training. International franchises can provide the opportunity to take advantage of growing global markets , although the franchisee will need to overcome the hurdles associated with adapting to the ways of a new country. The two principal kinds of franchise contracts in international markets are:  direct franchise agreement, which are direct contracts between the franchiser or sub- franchiser and the operator of the franchise unit.  master franchise agreement under which the franchiser grants another party the right to sub-franchise within a given territory . In international markets, relationships between the franchisor and the franchisee are governed through a International Franchise Agreement 3 Write a brief note on strategic alliance A3 The Strategic Alliance refers to the agreement between two or more firms that unite to pursue the common set of goals but remain independent after the formation of the alliance. In other words, when two companies come together to achieve the common objective by sharing the particular strengths (resources) with each other is called as a strategic alliance. The partner firms in the strategic alliance share the benefits and control over the performance of the assigned task but are less involved and less permanent than the joint venture. Unlike joint venture where the partner firms pool their resources to form a separate business entity, in a strategic alliance, the firms to the agreement remain independent and come together just to capitalize on the strengths of each other. There are four types of strategic alliances . These are: 1. Procompetitive Alliances 2. Noncompetitive Alliances 3. Competitive Alliances 4. Precompetitive Alliance Disadvantages of Strategic Alliances Though, the strategic alliance brings lots of advantages for the partnered firms it has certain loopholes.

5 Explain in detail turnkey contract? A5 A turnkey , a turnkey project , or a turnkey operation (also spelled turn-key ) is a type of project that is constructed so that it can be sold to any buyer as a completed product. This is contrasted with build to order , where the constructor builds an item to the buyer's exact specifications, or when an incomplete product is sold with the assumption that the buyer would complete it. A turnkey project or contract as described by Duncan Wallace (1984) is: [1] …. a contract where the essential design emanates from, or is supplied by, the Contractor and not the owner, so that the legal responsibility for the design, suitability and performance of the work after completion will be made to rest … with the contractor …. 'Turnkey' is treated as merely signifying the design responsibility as the contractor's. A turnkey computer system is a complete computer including hardware, operating system and application(s) designed and sold to satisfy specific business requirements. Turnkey contract is typically a construction contract under which a contractor is employed to plan, design and build a project or an infrastructure and do any other necessary development to make it functional or ‘ready to use’ at an agreed price and by a fixed date. In trunkey contracts, most of the time employer provides the primary design. The contractor must follow the primary design provided by the employer. The concept is contractor shall hand over the project fully in the operational state. The employer just needs to ‘turn the key’ . The Most Important Clauses Of A Turnkey Contract Are:

 Design of the facility or project  Completion time  Price  Payment terms & conditions  Performance guarantee and  Defect liability period etc. Long answers 6 Discuss the trends in, and advantages and risks of, cross-border mergers and acquisitions. A6 Mergers and Acquisitions (M&A) is the process of consolidation of a company and its assets. Merging is essentially the joining of two or more companies to form a completely individual entity (Gavin 2019). On the other hand, an acquisition is a transfer of ownership where a pre-existing company buys and gains ownership over another company or asset. To put it simply, Company A assumes control over Company B and they both function but as Company A. The purpose of these Mergers and Acquisitions is to increase market value and power, expansion, geographic, diversification of products and services, and overall increase in profitability. Advantages of mergers and acquisitions  Obtaining quality staff or additional skills, knowledge of your industry or sector and other business intelligence. For instance, a business with good management and process systems will be useful to a buyer who wants to improve their own. Ideally, the business you choose should have systems that complement your own and that will adapt to running a larger business.  Accessing funds or valuable assets for new development. Better production or distribution facilities are often less expensive to buy than to build. Look for target businesses that are only marginally profitable and have large unused capacity.  Your business underperforming. For example, if you are struggling with regional or national growth it may well be less expensive to buy an existing business than to expand internally.  Accessing a wider customer base and increasing your market share. Your target business may have distribution channels and systems you can use for your own offers.  Diversification of the products, services and long-term prospects of your business. A target business may be able to offer you products or services which you can sell through your own distribution channels.

M&A Risk 4 – Inefficient communication and lack of transparency Since this process requires plenty of communication between the parties, it’s even more valuable. It is imperative that all gaps communication and transparency about assets, productive details, and staff. All companies involved can share consumer trends and integrate well to make sure there are no discrepancies. M&A Risk 5 – Legal Risks: There is a high possibility of ignoring rules and regulations while the process of mergers and acquisitions. Abiding by the set laws regarding topics like labour law, wages and salaries and other information of litigation helps avoid trouble with the law and positively affects the success of the firm. Miscellaneous risks: Apart from the above mentioned five risks there are other factors that might risk the success and behave as obstacles like cyber security threats, failure to catch synergies, unanticipated market crashes or ‘Acts of God’ (example – global pandemic of COVID – 19), a simple Integration risk during the M&A cycle and unforeseen overhead costs during the deal. Recent trends  New framework by SEBI on the aspect of issuance of Shares with Differential Voting Rights. This enables organisations and its members to receive investment without losing any control.  Tax incentives and exemptions were granted to all registered start-ups, which increases M&As in the start-up sector.  Reform of Corporate Income Tax rates reduction has made India to be a high in investment all over the world, which would increase M&As in all sectors. 7 Discuss briefly the import foreign market entry strategies. A7 An import in the receiving country is an export from the sending country. Importation and exportation are the defining financial transactions of international trade . [3] In international trade, the importation and exportation of goods are limited by import quotas and mandates from the customs authority. The importing and exporting jurisdictions may impose a tariff (tax) on the goods. In addition, the importation and exportation of goods are subject to trade agreements between the importing and exporting jurisdictions. An import is a good or service bought in one country that was produced in another. Imports and exports are the components of international trade . If the value of a country's imports exceeds the value of its exports, the country has a negative balance of trade , also known as a trade deficit . The United States has run a trade deficit since 1975. The deficit stood at $576.86 billion in 2019, according to the U.S. Census Bureau

Real Life Example of Imports The United States' top trading partners, as of November 2020, included China, Canada, Mexico, Japan, and Germany. 3 Two of these countries were involved in the North American Free Trade Agreement (NAFTA) that was implemented in 1994 and, at the time, created one of the largest free-trade zones in the world. With very few exceptions, this allowed the free movement of goods and materials between the United States, Canada, and Mexico There are two basic types of import: 1. Industrial and consumer goods 2. Intermediate goods and services Companies import goods and services to supply to the domestic market at a cheaper price and better quality than competing goods manufactured in the domestic market. Companies import products that are not available in the local market. There are three broad types of importers: 1. Looking for any product around the world to import and sell. 2. Looking for foreign sourcing to get their products at the cheapest price. 3. Using foreign sourcing as part of their global supply chain . Direct-import refers to a type of business importation involving a major retailer (e.g. Wal- Mart ) and an overseas manufacturer . A retailer typically purchases products designed by local companies that can be manufactured overseas. In a direct-import program, the retailer bypasses the local supplier (colloquial middle-man ) and buys the final product directly from the manufacturer, possibly saving in added cost data on the value of imports and their quantities often broken down by detailed lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental organisations (e.g. UNSD , [7] FAOSTAT , OECD ), supranational statistical institutes (e.g. Eurostat ) and national statistical institutes. Industrial and consumer goods. Import of goods . Importation and declaration and payment of customs duties is done by the importer of record, which may be the owner of the goods, the purchaser, or a licensed customs broker. 8 Give a brief account of international licensing A8 Licensing is defined as a business arrangement, wherein a company authorizes another company by issuing a license to temporarily access its intellectual property rights, i.e. manufacturing process, brand name, copyright, trademark, patent, technology, trade secret, etc. for adequate consideration and under specified conditions. The firm that permits another firm to use its intangible assets is the licensor and the firm to whom the license is issued is the licensee. A fee or royalty is charged by the licensor to the licensee for the use of intellectual property right. For example : Under licensing system, Coca-Cola and Pepsi are globally produced and sold, by local bottlers in different countries. In finer terms, it is the simplest form of business alliance, wherein a company rents out its product based knowledge in exchange for entry to the market.

coordination and planning of relevant activities, as well as documentation in a contract file throughout the process. Contract management includes monitoring and documenting performance. Depending on the organization and goods or services procured, daily/regular monitoring of the contract may be primarily the responsibility of the requisitioner. In all situations, the procurement officer is responsible for following up and ensuring that the actions of the supplier and the UN organization are in line with the contractual responsibilities, that the contract is amended to reflect agreed changes in circumstances, and that any claim or dispute is resolved amicably according to the terms of the contract. Payment for the goods or services should be handled independently from the procurement function, while contract close out again is the responsibility of the procurement officer. What Is Contract Manufacturing? With the popularity of shows like Shark Tank and online marketplaces such as Amazon and eBay, an entrepreneur can dream up just about anything, have it manufactured relatively easily, and start selling it to the masses, thanks to contract manufacturers. These companies agree to make a certain number of a product according to the specifications given to them by the hiring company. A contract manufacturer may be located in the U.S. or overseas . The hiring company should seek out a contract manufacturer that has expertise in the type of product the company wants to make. That expertise could take the form of more than just the manufacturing itself; the company may be able to offer help with chemical or engineering processes or packaging . Here are some other things to look for in a contract manufacturer:  Highly reputable in the marketplace  Financially sound  A clean, well-managed facility  ISO-certified manufacturing quality standards  Dropshipping capabilities to send the product directly to customers if that's something the business needs  The ability to keep up with production demand for a product The biggest cost benefit of using contract manufacturing is from not having to build a production facility and staff it with workers and managers. Aside from that obvious benefit, companies may save money by hiring a manufacturer based in a low-wage country. The

location of the manufacturing plant might also offer savings in energy, overhead , and raw material costs as well as tax savings Perhaps the biggest disadvantage of contract manufacturing is a lack of direct control over the quality of the final product. The hiring company can't manage what goes on day to day, and it might not get exactly what it wants on a consistent basis. The hiring company also runs the risk of having its ideas appropriated. Some unethical contract manufacturers have been known to give away product ideas from one client to another favored client or to produce its own similar product with only a slight tweak or two. Business owners should hire an attorney to get a strong legal contract that will protect against any such behavior. 10 Explain in detail about FDI A10 Foreign direct investment (FDI) is when a company takes controlling ownership in a business entity in another country. With FDI, foreign companies are directly involved with day-to-day operations in the other country. This means they aren’t just bringing money with them, but also knowledge, skills and technology. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company. Where is FDI made? Foreign Direct Investments are commonly made in open economies that have skilled workforce and growth prospect. FDIs not only bring money with them but also skills, technology and knowledge. FDI in India FDI is an important monetary source for India's economic development. Economic liberalisation started in India in the wake of the 1991 crisis and since then, FDI has steadily increased in the country. India, today is a part of top 100-club on Ease of Doing Business (EoDB) and globally ranks number 1 in the greenfield FDI ranking. Routes through which India gets FDI Automatic route: The non-resident or Indian company does not require prior nod of the RBI or government of India for FDI. Govt route: The government's approval is mandatory. The company will have to file an application through Foreign Investment Facilitation Portal, which facilitates single- window clearance. The application is then forwarded to the respective ministry, which will approve/reject the application in consultation with the Department for Promotion of