Global Market Strategies

Revision notes for Unit 3 Business studies Edexcel on Global Market Strategies

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Harry Bindloss
Global Marketing: The marketing strategies used by businesses when operating in global
In order for a MNC to enter a new market there is always going to be a risk however the
MNC will always try to reduce that risk. They can do this by the following.
1. Licensing ­ Under a licensing agreement a foreign company will be afforded the rght
to utilise a company-specific process in manufacturing their product. This will often
include training, it can also include the use of a brand name.
2. Franchising ­ A form of licence where the franchisor gives a standard package of
products, systems, training and management services and the franchisee provided
market knowledge, capital, personnel and personal involvement in management. The
franchisor has all the local knowledge and contacts and the franchisee gets the
benefits of the international brand and economies of scale.
3. Management contracts ­ Similar as the above two, but are based upon a legal
contract transferring management control systems and know-how involving
personnel training. Host countries are usually those where a managerial gap exists. In
addition they are often used in industries where quality, service and attention to
detail are an expectation.
4. Joint ventures ­ In this instance each of the partners gives a sum either in equity or
technological knowledge in return for a given stake in the operation. This is generally
used when one company has technological expertise and the other has access to a
local market.
5. Mergers and takeovers ­ Many MNC's expand their operations in foreign markets
by merging or buying domestic firms in the desired market. This can overcome many
of the problems associated with the expansion into foreign markets. Local firms will
have cultural, language and legislative knowledge of the country. They may also have
brands well known in the foreign markets and access to effective local distribution


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