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International Marketing

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International Marketing ­ MKT630
VU
Lesson # 24
MODES OF ENTRY INTO INTERNATIONAL MARKETS
Franchising
Franchising:
a form of licensing
a contractual arrangement in which a firm (the franchiser) sells the right to use its intellectual
property (technology, patents, work methods, brand names, trade marks, copyrights, and company
name) to a firm (the franchisee) in return for fees
The franchiser provides significant assistance and/or exercises significant control over the
franchisee's method of operation.
Types of franchise agreements:
Product/trade name franchises
­ distribution of product in a specified territory or location with the use of manufacturer's
trademark.
­ car dealerships, petrol service stations, soft-drink bottles.
Business format franchises
­ incorporates the licensing of a trademark for business in a specified territory along with an entire
system for conducting a business.
­ These now account for nearly 75% of all franchise businesses, examples are McDonalds, KFC,
Bodyshop, Giordano concept shops etc.
Franchising strategies for rapid growth in international markets:
Single-unit franchising
­ the franchiser grants to an individual franchisee the right to operate a single unit within a
defined territory.
Multi-unit franchising
­ involves granting the franchisee the right to operate more than one franchise from the same
franchiser
Conversion franchising
­ acquiring and converting existing business into a franchise
International franchising commonly involves "Master Franchising" and joint-ventures
Creative franchising can include many things ranging from money-back guarantees, and stock
ownership, to the use of sophisticated management techniques
Key considerations in franchising:
franchising package must be sound and cohesive, adapted to environment of target country
franchiser must be able to provide value to franchisees on continuous basis
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International Marketing ­ MKT630
VU
adequate financing
careful selection of franchisees
building strong cordial relationships with franchisees
providing continuing support to franchisees
compliance with foreign regulations
The franchiser's balance:
Positive factors
demonstration effect
­
rapid expansion of business
­
franchisee's financial contribution
­
franchisee's motivation and local knowledge
­
low risks involved
­
Negative factors
lacks ultimate control
­
demands of training
­
protection of intellectual property
­
creating future competitors
­
misuse of franchise rights
­
low profitability
­
The franchisee's balance:
Positive factors
­ well known brand name
­ training
­ low failure rate
­ continuing technology and management skills transfer
­ financing support
­ independent yet linked to larger business and an international network
Negative factors
­ inappropriate or unfamiliar brand name
­ exaggerated or deceptive claims
­ inadequate support with purchase requirements
­ unsuitable technical, managerial or marketing know-how
­ lack of security
­ excessive initial investment
­ proliferation of outlets
­ disadvantage in negotiations
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Table of Contents:
  1. OVERVIEW OF INTERNATIONAL MARKETING:Domestic marketing, Multinational marketing, Globalization of markets
  2. INETRNATIONAL MARKETING PROCESS:Situation Analysis, Implementation and Control, Relationship
  3. INETRNATIONAL MARKETING PROCESS:The Product Concept, The Societal Marketing Concept
  4. INETRNATIONAL MARKETING PROCESS
  5. ENGAGING IN INETRNATIONAL MARKETS:Expansion of technology, Merchandize export and import
  6. INTERNATIONAL TRADE & INVESTMENT THEORIES:Theory of Comparative Advantage, Country Similarity Theory
  7. INTERNATIONAL TRADE & INVESTMENT THEORIES:Global Strategic Rivalry Theory,
  8. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:Foreign exchange info
  9. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:The Product
  10. FOREIGN NATIONAL ENVIRONMENTS:Political systems in the world, Political risks in international markets
  11. FOREIGN NATIONAL ENVIRONMENTS:Types of legal systems,
  12. FOREIGN NATIONAL ENVIRONMENTS:Conciliation, Mediation, Global relevance
  13. ROLE OF GOVERNMENTS IN INTERNATIONAL MARKETS:Industry-level needs, Promotion of exports by governments
  14. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:The concept of culture, Attitudes & beliefs,
  15. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:Culture is a human medium
  16. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Political Environment
  17. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Product Potential
  18. INTERNATIONAL MARKETING RESEARCH PROCESS:market structure, Implementing the research plan
  19. INTERNATIONAL MARKETING RESEARCH PROCESS:Identify alternative information sources
  20. INTERNATIONAL MARKETING RESEARCH PROCESS:Issues with primary global research:
  21. INTERNATIONAL MARKETING RESEARCH PROCESS:Problems with data, Comparative Analysis
  22. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Export intermediaries, Export and import management
  23. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Licensing contract, Licensing risks
  24. MODES OF ENTRY INTO INTERNATIONAL MARKETS:The franchiserís balance,
  25. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Forms of countertrade, Specialized entry modes
  26. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Demand factors, Political factors
  27. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Drivers behind successful joint ventures
  28. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Distribution agreements, Critical mass & optimism traps
  29. INTERNATIONAL STRATEGIC ALLIANCES:Impetus for international alliances, Management of strategic alliances
  30. INTERNATIONAL CONSUMER MARKETS:Model of Consumer BehaviorThe Buyer Decision Process
  31. INTERNATIONAL BUSINESS MARKETS:Nature of buying unit, Major influences on international business buyers
  32. INTERNATIONAL TARGET MARKETING:Market segmentation, Market positioning
  33. INTERNATIONAL MARKET SEGMENTATION:Geographic, Behavioral, Situational factors
  34. INTERNATIONAL MARKET SEGMENTATION:Basis for country segmentation, Stages of economics development
  35. INTERNATIONAL MARKET SEGMENTATION:Cultural Variables,
  36. INTERNATIONAL MARKET SEGMENTATION:Market coverage strategy, Socio-economic variables
  37. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Individual product decisions, Branding
  38. INTERNATIONAL MARKETING MIX Ė PRODUCT POLICY:
  39. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Modular Approach
  40. INTERNATIONAL MARKETING MIX Ė PRODUCT POLICY:Issues in labeling, Pricing, Distribution
  41. INTRODUCING NEW PRODUCTS IN INTERNATIONAL MARKETS:The new product development process
  42. PRICING IN INTERNATIONAL MARKETS:Factors influencing international pricing,
  43. ITERNATIONAL MARKETING CHANNELS:Channel membership, Vertical marketing, Control over distribution
  44. PROMOTING IN INTERNATIONAL MARKETS:Advertising, Direct marketing, Public Relationing
  45. REVISION