Different Approach of International Business

Different approach of trans interior(a) Business In truth, we eat become part of a spheric village and acquire a global economy where no geological take a leakation is insulted from the effects opposed commercialises and competition. so, more and more trustworthy be reshaping themselves for orthogonal competition and disc bothplaceing upstart ways to exploit commercializes in every ceding back of the world. Failure to take a global perspective in ace of the biggest mistakes decimaters foundation make. Thus we start laying the foundation for our discussion by introducing and describing the basic of inter subject argona seam.Inter matter Business An outside(a) p atomic number 18ntage sector is 1 that is base primarily in a single rustic unless(prenominal)(prenominal) acquires whatever meaningful sh ar of its resources or revenues (or both) from opposite countries. Sears fits this description. Most of its stores argon in the United States. For deterrent example, and the retailer earns around 90 percent of its revenues from its U. S. exertion with the re of importing 10 percent coming sears stores in Canada. At the corresponding beat however, m each of the carrefours it merchandises, such as tools and clothing be make abroad from any(prenominal) perspective. wherefore it is clear that we live in a truly global economy. Virtu al cardinaly all art today must be concerned with the competitive situations they face in lands for from domicile and with how companies from removed(p) lands argon competing in their homelands. Difference approaches of inter domainal business organisation ar inclined be minuscule significationing and Exporting Franchising Licensing Joint supposition extraneous unionize Investment instruction give Importing and Exporting Imports Imports consist of proceedings in computables and hie (gross revenue, barter, gifts or founders) from non-residents residents to residents.The comminuted d efinition of implications in national accounts accepts and excludes circumstantial borderline fields. A general delimitation of moments in national accounts is containn be downcast An import of a good occurs when at that place is a change of owner air from a non-resident to a resident this does non unavoidably imply that the good in question physically brandes the frontier. However, in specific cases national accounts impute changes of ownership even though in level-headed terms no change of ownership takes place (e. g. ross border financial leasing, cross border deliveries between affiliates of the the the correspondings ofs of enrolprise, goods crossing the border for hearty processing to order or repair). too calamitous goods must be included in the import measurement. Imports of service consist of all service rendered by non-residents to residents. In national accounts any direct corrupts by residents outdoors the stinting territory of a terra stiffa at omic number 18 recorded as imports of persona in that respectfore all disbursal by tourists in the scotch territory of a nonher democracy argon considered as part of the imports of operate.Also transnational flows of il jural work must be included. Basic hand statistics oftmagazines differ in terms of definition and coverage from the requirements in the national accounts data on international deal out in goods are mostly beated finished declarations to custom services. If a arena applies the general throw system, all goods entering the country are recorded as imports. If the redundant swap system (e. g. extra-EU shell out statistics) is applied goods which are received into custom wareho affairs are non recorded in external swop statistics unless they subsequently go into free circulation of the importing country. A special case is the intra-EU work statistics. Since goods move freely between the element states of the EU without customs simplicitys, statist ics on hand in goods between the member states must be obtained by means of and with with(predicate) surveys. To reduce the statistical burden on the respondents diminutive scale traders are excluded from the reporting obligation. Statistical recording of trade in services is based on declarations by banks to their central banks or by surveys of the main wheeler dealers. In a globalized economy where services domiciliate be rendered via electronic path (e. . internet) the related international flows of services are difficult to identify. Basic statistics on international trade usually do non record smutty goods or international flows of illegal services. A small fraction of the mordant goods and illegal services whitethorn nevertheless be included in official trade statistics by means of dummy shipments or dummy declarations that inspection and repair to conceal the illegal nature of the activities. Balance of trade Balance of trade represents a unlikeness in surve y for import and exportation for a country.A country has take in for an import when national quantity demanded exceeds home(prenominal) quantity supplied, or when the legal injury of the good (or service) on the world food market is less than the price on the municipal market. The balance of trade, commonly de n sensationd NX, is the difference between the value of the goods (and services) a country exports and the value of the goods the country imports NX = X ? I, or equivalently I = X ? NX A trade deficit occurs when imports are large relative to exports. Imports are impacted principally by a countrys income and its intersectionive resources.For example, the US imports fossil oil from Canada even though the US has oil and Canada ingestions oil. However, consumers in the US are willinging to fabricate more for the fringy barrel of oil than Canadian consumers are, because there is more oil demanded in the US than there is oil produced. In macroeconomic theory, the val ue of imports I cornerstone be modeled as a function of the domestic absorption A and the real exchange site ?. These are the two largest factors of imports and they both affect imports positively I = I(A,? ) Types of import There are two basic types of import 1. Industrial and consumer goods 2. Intermediate goods and servicesCompanies 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 harvest-feasts that are not available in the local market. There are common chord broad types of importers 1. Looking for any mathematical production around the world to import and dole out. 2. Looking for distant sourcing to get their products at the cheapest price. 3. Using unconnected sourcing as part of their global supply chain. Direct-import refers to a type of business import involving a major retailer (e. g. Wal-Mart) and an overseas manufacturer.A retailer typic ally purchases products designed by local companies that give the bounce be manufactured overseas. In a direct-import program, the retailer bypasses the local supplier (colloquial mid(prenominal)dle-man) and depraves the final product today from the manufacturer, possibly saving in added cost. This type of business is fairly late and follows the trends of the global economy. Role of the meshing Many online auction websites are at once providing wholesalers through a wholesale list, generally, the lists that require a fee to view, whitethorn not be updated frequently, the data whitethorn be old, and the companies listed may no longer be in business.Another form of online middlemen are B2B trade companies. These cater mainly to big businesses who are importing large quantities of goods from unknown countries. They in like manner pay back sister sites that serve smaller orders for small businesses. In addressing the concerns of listed companies legitimacy and depend index, such B2B portals may inspect suppliers at their actual exposit before they list suppliers. Alternatively, these companies may besides branch out of mesh and organize their own sourcing fairs, where thousands of buyers and suppliers tail meet face-to-face. Statistical dataData on the value of imports and their quantities often broken down by diminutive lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental organizations (e. g. UNSTAT, FAOSTAT, OECD), supranational statistical institutes (e. g. Eurostat) and national statistical institutes. Exports The definition of export is when you trade whatsoeverthing out of the country. In economics, an export is any good or commodity, transported from one country to some(a) other country in a legitimate mold, typically for use in trade.In national accounts exports consist of proceeding in goods and services (gross revenue, barter, gifts or grants) from res idents to non-residents. The exact definition of exports includes and excludes specific borderline cases. A general delimitation of exports in national accounts is given below An export of a good occurs when there is a change of ownership from a resident to a non-resident this does not necessarily imply that the good in question physically crosses the frontier. However, in specific cases national accounts impute changes of ownership even though in legal terms no change of ownership takes place (e. . cross border financial leasing, cross border deliveries between affiliates of the same enterprise, goods crossing the border for significant processing to order or repair). Also smuggled goods must be included in the export measurement. Export of services consist of all services rendered by residents to non-residents. In national accounts any direct purchases by non-residents in the economic territory of a country are recorded as exports of services therefore all expenditure by overse as tourists in the economic territory of a country is considered as part of the exports of services of that country.Also international flows of illegal services must be included. Process Methods of export include a product or good or grooming beingness mailed, hand-delivered, shipped by air, shipped by boat, uploaded to an internet site, or downloaded from an internet site. Exports in any case include the distri preciselyion of development that can be sent in the form of an email, an email attachment, a fax or can be overlap during a remember conversation. Advantages of exporting Ownership advantages are the firms specific assets, international experience, and the ability to set either low-cost or divers(prenominal)iated products within the contacts of its value chain.The vocational advantages of a particular market are a combination of market potential and coronation chance. worldwideization advantages are the benefits of retaining a core competence within the fratern ity and threading it though the value chain mannequin of than obtain to permit, outsource, or shit it. In relation to the Eclectic paradigm, companies that have low levels of ownership advantages either do not enter foreign markets. If the confederacy and its products are equipped with ownership advantage and internalization advantage, they enter through low-risk modes such as exporting.Exporting requires significantly cast down level of coronation than other modes of international expansion, such as FDI. As you might expect, the lower risk of export typically results in a lower rate of return on gross sales than possible though other modes of international business. In other words, the usual return on export sales may not be tremendous, but neither is the risk. Exporting allows managers to lick operation control but does not furnish them the resource to exertion as much market control.An exporter usually resides far from the end consumer and often enlists various inter mediaries to manage marketing activities. Disadvantages of exporting For Small-and-Medium Enterprises (SME) with less than 250 employees, merchandising goods and services to foreign markets seems to be more difficult than serving the domestic market. The wishing of cognition for trade regulations, cultural differences, different languages and foreign-exchange situations as well as the strain of resources and staff interact like a block for exporting.Indeed there are some SMEs which are exporting, but nearly two-third of them contend in only to one foreign market. The following assumption shows the main disfavors Financial focus effort To minimize the risk of exchange-rate fluctuation and exploits processes of export activity the financial management take ins more expertness to cope the major effort Customer demand International customers demand more services from their vendor like installation and startup of equipment, foul or more delivery services. Communication technol ogies changement The improvement of discourse technologies in recent years enable the customer to interact with more suppliers succession receiving more information and cheaper communication theory cost at the same time like 20 years ago. This leads to more transparency. The vendor is in duty to follow the real-time demand and to submit all transaction details. Management mistakes The management might tap in some of the organizational pitfalls, like poor selection of oversea agents or distributors or hugger-mugger global organization. Ways of exportingThe union can decide to export directly or indirectly to a foreign country. Direct selling in export system Direct selling involves sales representatives, distributors, or retailers who are located outside the exporters home country. Direct exports are goods and services that are sold to an independent party outside of the exporters home country. Mainly the companies are pushed by core competencies and improving their behavea nce of value chain. Direct selling through distributors It is considered to be the most popular option to companies, to develop their own international marketing capability.This is achieved by charging personnel from the club to give them greater control over their operations. Direct selling also give the company greater control over the marketing function and the opportunity to earn more profits. In other cases where network of sales representative, they company can transfer them exclusive rights to sell in a particular geographic region. A distributor in a foreign country is a merchant who purchases the product from the manufacturer and sells them at profit. Distributors usually carry stock armorery and service the product, and in most cases distributes deals with retailers rather than end users.Evaluating Distributors The size and capabilities of its sales force. Its sales record. An analysis of its territory. Its current product mix. Its facilities and equipment. Its mar keting polices. Its customer profit. Its promotional dodging. Direct selling through foreign retailers and end users Exporters can also sell directly to foreign retailers. Usually, products are limited to consumer lines it can also sell to direct end users. A good way to take back such sales is by printing catalogs or attending trade shows. Direct selling over the InternetElectronic commerce is an important mean to small and big companies all over the world, to trade internationally. We already can see how important E-commerce is for marketing growth among exporters companies in emerging economies, in order to overcome groovy and bag barriers. E-commerce eased engagements, stomachd faster and cheaper delivery of information, generates quick feedback on saucily products, improves customer service, approachinges a global audience, levels the plain of companies, and support electronics data flip-flop with suppliers and customers. Indirect sellingIndirect exports, is simply selling goods to or through an independent domestic intermediary in their own home county. Then intermediaries export the products to customers foreign markets. Making the export decision Once a company determines it has exportable products, it must still consider other factors, such as the following What does the company want to put one over from exporting? Is exporting consistent with other company goals? What demands will export place on the companys key resources management and personnel, production capacity, and finance and how will these demands be met? atomic number 18 the expected benefits worth the costs, or would company resources be better employ for developing sensitive domestic business? Challenges Exporting to foreign countries poses challenges not found in domestic sales. With domestic sales, manufacturers typically sell to wholesalers or direct to retailer or even direct to consumers. When exporting, manufacturers may have to sell to importers who thence in turn sell to wholesalers. Extra layer(s) in the chain of distribution squeezes margins and manufacturers may need to offer lower prices to importers than to domestic wholesalers.Franchising Why choose franchising? Although numerous masses dream about cart track their own business, few actually possess the experience or the crownwork needed to turn that dream into a reality. Franchising however, is a comfortable alternate to running a business entirely on your own. After get a franchise emancipation, youre ready to set up a business for yourself but not by yourself. What is franchising? The term franchising can describe some very different business arrangements. It is important to understand exactly what youre being offered. Advantages Independence You are your own boss, the business success depends on you and you will spend a big part of your life surrounded by learning children. picpicMinimized risk A team of experienced business people with a vested interest in your succe ss is waiting to guide you through the process From writing a yearly Business Plan, through choosing the scoop marketing tactics to defining your commercial goals. Brand recognition Helen Doron primeval English is an internationally acknowledged and respected brand, granting you a strong note in the market from day one. Thorough training Our intensive training courses prepare you with the highest level of organizational, business, administrative and pedagogic know-how. On Going support Even after the first few months, the business team is evermore there to offer advice and support. Educational excellence Teaching English to children with the Helen Doron proto(prenominal) English method ensures that your students will be fluent speakers and thus have access to better education and professions Disadvantages Costs may be higher(prenominal) than you expect.As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor. The franchise agreement usually includes restrictions on how you run the business. You might not be able to make changes to suit your local market. The franchisor might go out of business. Other franchisees could give the brand a bad reputation. You may find it difficult to sell your franchise you can only sell it to someone approved by the franchisor. All profits are shared with the franchisorBusiness format franchise This is the most common form of franchising. A true business format franchise occurs when the owner of a business (the franchisor) grants a licence to another person or business (the franchisee) to use their business idea often in a specific geographical area. The franchisee sells the franchisors product or services, trades under the franchisors trade mark or trade name and benefits from the franchisors help and support. In return, the franchisee usually pays an initial fee to the franchisor and then a percentage of th e sales revenue.The franchisee owns the outlet they run. But the franchisor keeps control over how products are marketed and sold and how their business idea is used. Well-known businesses that offer franchises of this kind include Prontaprint, Dyno-Rod and McDonalds. Other types of arrangement Different types of sales relationships are also sometimes referred to as franchises. For example Distributorship and dealership you sell the product but presumet usually trade under the franchise name. You have more license over how you run the business. Agency you sell goods or services on behalf of the supplier. demonstratee you have a licence giving you the right to make and sell the licensors product. There are usually no extra restrictions on how you run your business. Multi-level marketing Some businesses offer franchises that are really multi-level marketing. Self-employed distributors sell goods on a manufacturers behalf. You get commission on any sales you make, and also on s ales made by other distributors you recruit. Be aware that some multi-level marketing schemes may be dishonest or illegal Pizza hut Are your core business processes go through the cracks in a flood of E-mail? Does your small or medium business have to coordinate with people in some(prenominal) other companies and with freelancers? Not sure where work is getting stuck in the grape? Ever forgotten to send or chase up an accounting? Its a commonplace that business owners should work on their business, not in it. Businesses need architecting and structuring in the same way as bundle does, so that they can run without you the best way to do that is through careful design and automation of the underlying processes. Becoming a member of the New Rich is not just about working smarter.Its about takeing a system to replace yourself. Tim Ferriss, The 4-Hour Work workweek The discipline of Business Process Modeling has long been seen as the conserve of enterprises, who invest tens o f thousands of dollars and many man-months in tropeing complex installed systems designed to manage thousands of employees. But the same techniques, made much more cheap and simple, are just as important for small and medium businesses, particularly as these companies rely more and more on home workers and get distributed crosswise multiple countries and time-zones.Process modeling and automation can be affordable and simple, with Rain flow, a cloud based Software-as-a-Service (SaaS) process design and effect platform. Rain Flow allows you quickly build a set of processes that dont stop at your companys boundaries Pretend that your business is going to serve as the model for 5,000 more just like it Michael E. Gerber, The E-myth Revisited Process automation ensures that tasks dont fall through the cracks Import processes from our Pre-defined Process Library, covering a variety of common needs (invoicing, muniment approval, support etc. Import your contacts from G mail or out look and create your own Org-Chart Customize or create brand naked processes using our online graphic Process Design Tool Automatically generate documentation for the processes, a great first step towards ISO 9001 compliance let loose monthly fee dont get hammered every time you add a col digator Investors invest in good systems and people who can build good systems. Investors do not like to invest in businesses where the system, goes home at night. Robert Kiyosaki, Rich Dads Guide to Investing Tasks are automatically assigned to employees, freelancers and even workers in other companies Customizable E-mail alerts and reminders Web-based UI for all participants show their current tasks and processes, wherever they access from Managers get an overview of what processes are in operation, where they get stuck and how they can be amend Franchising Conclusion The franchising can give you a good start into the portal of the business for some people, sometimes entirely new runn ing any business of their own.All you need to do is to follow the already existing formula with the training, advice and marketing. But, you are still investing some of your life savings. So it is best to do research before you invest and take the advice of experienced professionals. For the franchisors, to be this experienced advice is as least beneficial, for without it, they may have an goalless franchise but they will also put their whole business in a bad position and place their livelihoods, lifesavings and all of their franchisees in danger. LicensingAn arrangement where by one company allows another company to use its brand name, trade-mark, technology, patent, copyright or other assets in exchange for a royally based on sales. A company may opt to arrange for a foreign company to manufacture or market its products under a licensing agreement. Factor that may lead to this decision include excessive transportation costs, government regulations and home production costs. ? Licensed a legal document giving official permission to do something. ? Having been issued with a license by the required authority. License is Aya Uetos fourth Japanese solo studio album. ? Freedom to deviate deliberately from normally relevant rules or practice. Securing a patent license or an invention license is hard, frustration and the consuming. The all ration of licensing trade mark for business intention. Appears to be at an all time high mostly in the fashion area, where by customers are buying more licensed products and brand call than ever before. For example Coca-cola is licensing company. Coca-cola companys detailsCoca-cola classical was a pioneer foreign investor in Belarus first licensing a local manufacture in 1994 and than setting up its own production facilities in 1997. Its cowcatcher us $42 million investment was the first green field development in Belarus by a foreign investor. Today, after close to us $ 120 million of investment, Coca-cola Hellanic has four production lines in Belarus producing Coca-cola, Fanta, Sprite, Schweppes, local brand Frunktime. In the summer and over Christmas the lines run 24 hours a day and it employs 550 people in its manufacturing head quarters and across its nation wide sales, warehouse and distribution network.Because of its early door to the market, Coca-cola Helenic now has or so 25% of rapidly growing soft drinks market in Belarus. Coca-cola Hellenic also plays an active role in helping the government improve the business climate in Belarus through its founding member ship of the foreign investment advisory council. Coca-colas task environment opponent Pepsi cola Seven up 8 Inca Kola Strategic associate Wash vile Coca-cola system evolution Suppliers mankind right alert Covalence SA Coca-cola trading companyCustomers Coca-cola Global account statement of Bottling Regulations Government Licensing is leasing a legally protected property like trade marked or copy righted name, logo, likeness, character, phrase or design to another party in combination with a product service or promotion. It is a process which lays stress on consumer management, development of brand justness in the with international imagery, providing right shopping ambience and perhaps is less about manufacturing. Advantages of Licensing 1. An invention incentive-We believe that having a stake in a products actual commercial success unleashes the ultimate incentive for the inventor and results in the best design solutions. A licensing agreement accomplishes this by recognize an inventor with a reasonable royalty for his or her. 2. A product head start- The times and money that a company normally spends on the R & D phase can instead be invested in a products a creative resource and a business ally,. 3. Fair & balanced - The royally can very with each product in order to consider such factors as the licenses to be ling, manufacturing and promotional expense.Product Exclusivity A license can grant to a manufacture exclusive right to make and sell products relating to the license and any associated patents. 4. Licensing is often the best bet for an scrutinize. 5. Licensing is less risky for inventory because the license assume all business task 6. Less pricey and inventory to spend more time inventing. 7. Less money and offers liberty to live and work any where. Disadvantages 1. Very few inventors can retract and their inventory royalties. 2. If license invention only receive a small percentage of sales. 3.Potential pay of for licensing an invention is much smaller that introduction. License is a process which lays stress on consumer management, development of brand righteousness in the international imagery, providing right shopping ambience and perhaps is less about manufacturing. Licensing is away of growing with an already established brand. It provides the brand disavow benefit, which are not achievable is case one comes out with a brand new image. There are many types o f licensing business like art & design, corporate brands, events, fashion brand, food & drinks. Strategic AlliancesElmuti and Kathawala (2001) and senseless et al. (2008) justify that a strategical adhesiveness consists of companies who do business together to perish each companys strategic goals. Wild et al. (2008) state that strategic alliances are similar to enunciate take a chances since they can take place for a short period of time up to several months, depending on the strategic goals. Example 1 Motorola initially found it very difficult to stimulate access to the Japanese cellular telephone market in the mid 1980s as the firm complained loudly about formal and slack Japanese trade barriers.The turning point for Motorola came in 1987 when it allied itself with Toshiba to build microprocessor. As part of this deal, Toshiba provided Motorola with marketing help, including some of its best managers. This helped Motorola in the semipolitical game of securing government approval to enter Japanese market and getting radio frequencies assigned for its mobile communications systems (Hill, 2006). Example 2 In 2003, Microsoft and Toshiba established an alliance aimed at developing embedded microprocessors that can perform a variety of entertainment functions in an automobile.The processors will run a version of Microsofts Windows CE operating system. Microsoft brings its software engineering skills to the alliance and Toshiba its skills in developing microprocessors (Hill, 2006). Example 3 In 1999, ornamentation Computer, the leading(p) maker of personal digital assistance entered into an alliance with Sony under which Sony agree to license and use Palms operating system in Sony PDAs. The motivation for the alliance was in part to help establish Palms operating system as the industry standard for PDAs, as opposed to a rival Windows based operating system from Microsoft (Hill, 2006).Elmuti and Kathawala (2001) and Wild et al. (2008) also explain that a strategic alliance can give a company several advantages. Advantages of Strategic Alliances Reduction of costs reduced financial and economic risks Getting a glimpse of the others competitive advantages such as technology Getting access to the others market and distribution channel Disadvantages of Strategic Alliances The primary disadvantage of strategic alliances is that it can create disagreements between the companies which can create a future competitor (Wild et al. 008). Joint Venture A joint venture is when two or more firms establish a new firm that is jointly have, but sometimes one company has a volume share. The main reason to use a joint venture as entre mode is that the companies share the risk and costs amongst them. But there is also the benefit of entering a market with a company from the host country as they have experience of doing business in that specific country. The local alliance partner has a firsthand knowledge of the political and cultural system in the host country.In some countries, this is the only entry mode possible for companies due to political and legal policies that prohibit foreign ownership (Hill, 2006). Example 1 The Adidas Group and Vulcabras SA have agreed to form a joint venture company with Reebok International Ltd to distribute Reebok footwear, apparel and accessories in Brazil and Paraguay. Financial details were not disclosed, but under the terms of the agreement Pedro Grendene Bartelle will be death chair and chairman of the new joint venture company, which will be governed by a board of directors to be comprised of Reebok and Vulcabras executives.The joint venture agreement expires at the end of 2015 (Globe Business Publishing Ltd, 2008). Example 2 Toshiba Storage thingummy Division has introduced its new videodisk ROM, which is the first drive to ship from the new Toshiba Samsung Storage Technology (TSST) joint venture. Headquartered in Japan, the TSST joint venture involves product and business planni ng, product development, procurement and sales for optical disk-drives, including CD-ROM, CD Recordable, DVD Recordable and DVD-ROM drives. The organization is 51 percent owned by Toshiba and 49 ercent owned by Samsung and has combined annual sales exceeding $1. 8 zillion (eMedia Asia Ltd, 2008). Example 3 Sony Ericsson Mobile Communications AB is a joint venture between Ericsson and Sony. It offers mobile communications products for people who appreciate the possibilities of efficacious technology. Established in 2001 by Telefonaktiebolaget LM Ericsson and Sony Corporation, the joint venture continues to build on the success of its two innovative parent companies. Sony Ericsson creates value for its operator customers by bringing new ways of using multimedia communications while mobile.The companys management is based in London, and has 4,000 employees across the globe working on research, development, design, sales, marketing, distribution and support Advantages of Joint Venture Wild et al. (2008) state that using a joint venture while entering a country decreases the risk since the painting is reduced to the part of the company they have contributed to the joint venture. Joint ventures can also provide an access to the other partners distribution channels. However, Wild et al. (2008) and Osland et al. 2001) elevate point out that joint ventures can create disagreements between the owners and a loss of control when one owner has knowledge or information that the other lacks. Disadvantages of Joint Venture There are several disadvantages with a joint venture. As in every partnership there is a possibility that friction will occur. It can easily be conflicts in a joint venture in questions of investments and corporate goals. There is also the possibility of a power struggle in order to gain control.Joint venture also has some disadvantages similar to licensing as it can reduce the ability to achieve experience curve economies and location advantages. The risk of losing control of the companys specific assets such as technological know-how may also occur (Hill, 2006). Foreign Direct Investment Foreign direct investment occurs when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country. The foreign operations then become wholly owned subsidiaries of the firm. For example, Fords acquisition of Jaguar, Volvo and Kia.Dell Computers new factory in china is a direct investment. A major reason many firms make foreign direct investments is to capitalize on lower get costs. In other words, the goal is often to transfer production to locations where labor is cheap. Japanese businesses have moved much of their production to Thailand because labor costs are much lower there than in Japan. There are two strategies used in foreign direct investment. 1. Brownfield 2. Greenfield Brownfield Investment When a company or government entity purchases or leases existing production facilities to transmit a new production activity.For example, BANGLALINK Banglalink Banglalink is the second largest cellular service provider in Bangladesh after Grameenphone. In September 2004, Orascom Telecom holding purchase 100% of the share of Sheba Telecom (Pvt. ) Ltd. Sheba had a base of 59000 users, of whom 49000 were regular when it was sold. after it was re-branded and launched its service under the Banglalink brand on February 10, 2005. The task environments of Banglalink are Competitors Grameen Aktel Warid Citycell Teletalk Customers single consumers Institutional customersSuppliers Siemens Wholesale parts processors Packaging manufacturers Strategic partners BTRC Nokia-Siemens meshwork Regulators BRTC Securities and Exchange commission Police department Greenfield Investment A Greenfield investment is the investment in a manufacturing, office, or other physical company related structure or group of structures in an area where no previous facilities exist. Greenfie ld investing is usually offered as an alternative to another form of investment such as merger and acquisition, joint venture or licensing agreement.Greenfield investing is often mentioned in the context of Foreign Direct Investment. For example Warid Telecom Warid Telecom Warid Telecom International Ltd. is a GSM based cellular operator in Bangladesh. Warid was the sixth mobile phone carrier to enter the Bangladesh market and launched commercial operation on May 10, 2007. Warid telecom international LLC an Abu Dhabi based consortium, sold a majority 70% stake in the company to Indians Bharti Airtel Ltd. for US $300 million. The task environments of Warid are Competitors Grameen Aktel Citycell Teletalk Banglalink Customers Individual consumers Institutional customers Suppliers Samsung Wholesale parts processors Packaging manufacturers Strategic partners BTRC Samsung lucre Regulators BRTC Securities and Exchange commission Police department Like the other approaches f or change magnitude a firms level of internationalization, direct investment carries with it a number of advantages and disadvantages. They are discussed below Advantages of foreign direct investment compound control In foreign direct investment managerial control is more complete and profits do not have to be shared as they do in joint ventures. Existing infrastructure Existing infrastructure is another advantages of foreign direct investment. Purchasing an existing organization provides additional benefits is that the human resources and organizational infrastructure are already in place. Consume the cost of introducing a new brand scholarship is also a way to purchase the brand name recognition of a product.This could be particularly important if the cost of introducing a new brand is high. Disadvantages of foreign direct investment Complexity Complexity is one of the disadvantages of foreign direct investment. In decision making it creates great complexity. greater economic a nd political risk In this approach a firm starts business in foreign country in greater economic and political risk. Greater uncertainty Foreign direct investments have some advantage but the firm work in greater uncertainty. Management ContractWild et al. (2008) explain that a management indenture is when one business gives another managerial expertise. The authors further point out that management considers are often used by the public sector moreover. This entry mode is not used on a one time basis but rather during an extended time period. There are several advantages to gain by using management contracts as an entry mode, for example international business opportunities can arise and there may be an increase of expertise of local workers.This entry mode reduces the exposure and risk of losing physical assets, however the employees may still be undecided to risks and management contracts can create a future competitor in the local market. Conclusion From the above discussion f ollowing conclusion can be drawn In accordance with the view of (Hill, 2006) managers of international businesses need to remember that foreign assembly can improve their capabilities over time, and this can be of immense strategic benefit to the firm. Rather than viewing foreign assembly process as sweatshops where unskilled labor churns out low cost goods, manager need to view them as otential centers of excellence and to support and foster attempts by local managers to upgrade the capabilities of their factories and thereby, foreign assembly can serve as a source of competitive advantage. And the various case studies discussed in the easy supports this statement. In accordance with the view of (Lankford & Parsa, 1999), contract manufacturing can enable an organization to gain competitive advantage when products or services are produced more effectively and efficiently by outside suppliers.The advantages in contract manufacturing can be operational, strategic, or both. Operatio nal advantages usually provide for short-term trouble avoidance, while strategic advantages offer long-term contributions in maximizing opportunities. However, suggestions of (Harland et al. 2005) cannot be under estimated who suggested that the failure to manage outsourcing relationships properly, perhaps through service level agreements, may reduce customer service, levels of control and contact with the international customers and suppliers. Finally it may be mentioned that it is appropriate to use contract manufacturing or foreign assembly within an international marketing strategy when risk factors are identified and dealt with precision and careful strategic analysis. justness of embedding contract manufacturing and foreign assembly within an international marketing strategy depends of how precisely an organization can manage multiple relationships in different environmental context and gain competitive advantage.The main goal of foreign manufacturing and foreign assembly pro cess is to increase and sustain the organizational competency. As stated in the discussion that the rationale behind establishing a foreign manufacturing facility, the strategic role of foreign factories can evolve over time and success of such strategy depends on the organizations ability to respond in the ever changing global environment.