Entrepreneurial entry into international business.

Entrepreneurial entry into international business.

Answer:

Entrepreneur:

            An individual who gather resources to create an economic activity while bear social & economic risks.

Entrepreneurial entry into international business.

            The choice of entry method depends on the goals of the entrepreneur & the company’s strengths and weakness.

1)                  Exporting:

            As a general rule, an entrepreneur starts doing international business through exporting

a)                     Indirect exporting:

                          It involves a foreign purchaser in the local market r using an export                                    management firm. For certain commodities, foreign buyers seek out sources of                              supply. Export management firm, another commercial central

b)                    Direct exporting:

  Thorough independent distributors or through one’s own over seas sales office in another entry method. An independent foreign distributes directly contacts foreign customers and takes care of all technicalities. Entrepreneurs who do not wish to give up control over marketing can open over seas offices and hire their own sales people

2)                  Non equity arrangement:

                        Non-equity arrangement allows the entrepreneur to enter of market without direct equity investment in the foreign market.

3)                  Licensing:

                        It involves a manufacturer giving a foreign manufactures the right to use a paten, trademark, or technology in return for a royalty. This arrangement is most appropriate             when the entrepreneur has no prospect of entering in market through exporting or direct           investment. The process in usually low risk and an easy way to generate incremental            income.

4)                  Turn key projects:

                        Lesser-developed countries are able to obtain manufacturing technology without   surrendering economic control through turn key projects. A foreign entrepreneur build   facility, trains the workers, and trains the management to run the installation. Once the        operations once line. In is turned over to local owners. Initial profits can lead to follow up   sales.

5)                  Management contracts:

                        Entrepreneurs can contract their management techniques and skills, after    following a turnkey project; the management contract allows the purchasing country to gain foreign expertise without turning ownership over to a foreigner

6)                  Direct foreign investment:

                        The wholly owned foreign subsidiary has been the preferred mode of ownership    for direct investment. The entrepreneurs are also invest to the foreign companies, whose       interest rate are high and they facilitate the investors.

7)                  Minority interest:

                        The minority interest provider the firm with either a sources of raw materials or a captive market for products. Entrepreneurs have used minority position to gain a foothold             in the market before making a major investment.

8)                  Joint ventures.

                        Two firms get together and form a third company in which they share the equity.   Joint venture does not follow the accounting concept going concern the managers of joint           venture are known as con- ventures. It is a temporary business activity.

9)                  Franchising:

                        Ranching is the practice of the right to use a firm’s business model and brand for   a prescribed period. The word franchise is of Anglo French derivation from franc meaning free and is used both as a noun and as a (transitive) verb