Licensing
Licensing involves a contractual agreement between you and a foreign company, whereby they manufacture, distribute and/or sell your product or service as set out in the license.
Advantages:
* Receive payment for license
* Rapid entry into the market
* No capital needed to establish manufacturing operations abroad
* Quick returns in comparison with other market entry methods
Disadvantages:
* Loss of control over manufacturing and marketing of goods
* Your partner can become your competitor
* Preparing the licensing agreement - it could be timely and costly
Joint ventures
Joint ventures are contractual arrangements with a foreign partner from your chosen export market. There are two basic types of joint venture:
* Equity partnership - where the partners are equal
* Non-equity partnership - where the host country partner contributes a greater percentage of equity in the company
In some countries, a joint venture is the only legal way for a foreign company to set up operations.
Advantages:
* Control over foreign operations
* Extensive knowledge of the target market by the partner
* Partner's business and political contacts may help to smooth the market entry
Disadvantages:
* Requires more investment than licensing
* Requires training, management and transfer of technology
* Risks connected with geographical and cultural factors, which may interfere with day-to-day operations
* Dealing with entirely new management in a different country
* Communication problems if partners do not have a shared language
International base
Offshore production requires either setting up your own facility or subcontracting the manufacturing of your products to an assembly operator.
Advantages:
* Offers greater control over operations
* Lower transportation costs
* No prohibitive tariffs or duties (as with imports)
* Lower production costs
* Foreign government investment incentives (e.g. tax holidays)
Disadvantages:
* Requires greater investment than joint ventures and licensing manufacturing
* Substantial commitment of time
* Risks are relatively high
If you decide set up offshore operations, you will need to consider whether to acquire and adapt an existing facility or to construct a new one. The key factors to consider are:
* Legal and tax ramifications
* Location to set up operations
* Method of financing the foreign investment
http://www.mybusiness.co.uk/YWYADF1one4LcQ.html
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