Contents
Unit 4: International Business
Module objectives
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Objectives
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Strategies for operating internationally
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Strategies for operating internationally
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Reasons for using the selected strategy
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Re-engineering products and services to meet the demands and preferences of international markets
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Resource considerations
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Resource considerations
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Case study: Health and Her
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Module 5: Exploring strategic and operational approaches to the development of international trade

Strategies for operating internationally

 

There are a number of ways a business can choose to operate internationally:

Subsidiary businesses

Subsidiaries are companies owned by the parent company but that operate in a geographically different area or focus on a different type of business. There are two ways to create a subsidiary – formation by the parent company or by buying another business. A business that wants to operate in a foreign country can set up a business in that country or buy a local business. The latter may reduce risks, although it is not always straight-forward to buy a company abroad.

Joint ventures
This is when businesses come together to collaborate. An example of this is Sony (from Japan) and Ericsson (from Sweden) coming together as Sony Ericsson to produce mobile phones and similar goods. The venture was successful worldwide for 10 years until Sony bought Ericsson's stake in 2011. Despite this, it proved difficult to get the company to work together as a close-knit unit due to the differences of attitude between the two cultures towards things like working hours and length of holiday.
Partnerships

Partnerships are very similar to joint ventures but are usually focused on more than one project and are open-ended.

Agencies/Distributors
Agencies are able to provide local information on export markets, organise offices and staff and promote the goods of businesses; while distributors buy goods from businesses and sell them overseas.

You can learn more about agencies and distributors here:

Using an agent or distributor when exporting

Licensing

This is about giving a business in another country the right to produce and sell business goods. This can be easier than exporting the goods but it places a lot of responsibility on the foreign company in terms of ensuring the quality of the product.

Franchising

With a franchise the franchisor gives individuals or other businesses (the franchisee) the right to use their goods, branding and so on. The franchisee pays the franchisor a fee.

You can read more about franchising here:

Buy a franchise

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