1. COUNTRY EVALUATION AND
SELECTION
Having understood the overall aspects of PEST in IB
environment along with its relationships and connectivity to
various Countries Economies – Advanced, Developed,
Developing and LDC’s Plus the role of Trade Forum –
Like WTO, Trading Blocs- Regional Co-operations like EU,
ASEAN, SAARC, etc, Trade Barriers ( Tariff like Taxes and
Duties and Non- Tariff like Quotas, Licenses, Certifications,
etc) we will need to further concentrate on the following
aspects to enable evaluate country selection for Global
Operations.

2. GENERAL FEATURES OR BASIC
CONDITIONS OF THE INDUSTRY
• Demand Details :
(i) Demand – Industry demand/ Overall market size
(ii) Growth Rate
(iii) Nature of demand (i.e) Derived or Direct Demand ?
Regular or Seasonal ? Cyclic Character ?
(iv) Demand Trends
(v) Price elasticity of demand
(vi) Substitutes
(vii) Who are the real consumers ?
(viii) Purchase method of consumers

3. Product Details
• Products and Their Characteristics
• Product Mission
• Trends in product – market structure
TECHNOLOGY DETAILS
- Basic Technologies
- Technology Level
- Trends in Technology
- History of Innovations
- Technological Trends – Threats and Opportunities
- Role of Technology in Success
- How energy intensive is technology

4. INVESTMENT DETAILS
• Cost of Entry and Exit
• Typical Asset Patterns in firms
• Rate & Type of Obsolescence of assets
• Role of Capital / Investment in success
• Availability of Capital / Sourcing – Interest Cost/ Foreign
Currency related aspects
OTHER GENERAL POINTS
- Public policies relating to the industry
- Natural and Other Resources
- Raw Materials Position
- Environmental Impact (Social –Political– Legal )
- Energy Requirements
- Key Ingredients in success

5. INDUSTRY ENVIRONMENT
• Fragmented Industry ?
• Emerging Industry ?
• Industry Undergoing a transition to maturity ?
• Declining Industry ?
• Global Industry ?
INDUSTRY STRUCTURE
- Number of players
- Total Market and relative shares of the players
- Installed production capacity and relative shares of the players
- Nature of Competition : Monopoly, Oligopoly, Perfect Competition
or a mixture
- Differentiation practiced by various players in the industry

6. BARRIERS IN THE INDUSTRY
• Entry Barriers
• Mobility Barriers
• Exit Barriers
• Shrinkage Barriers
• Technology Barriers
• Investment Barriers
• Size Barriers
• Gestation Barriers

7. INDUSTRY ATTRACTIVENESS
• Industry Potential
• The prospects of the industry as a whole
• Industry Growth
• Industry Profitability
• History
• Forecasts
• Averages and Norms typical of the Industry
• Relation of Life Cycle
• Basic Determinants of Demand
• Likely Future Pattern
• Barriers in the Industry
• Forces Shaping Competition
INDUSTRY PERFORMANCE
Production – Sales – Profitability – Technological Advancement

8. COLLABORATIVE STRATEGIES
• Globalization, Liberalization and Privatization facilitates economic
progress through various business related strategies known as
FOREIGN MARKET ENTRY STRATEGIES. They may be :
1. Licensing
2. Franchising
3. Contract Manufacturing
4. Management Contract
5. Assembly Operations
6. Fully Owned Manufacturing Facilities
7. Joint Ventures
8. Counter Trade
9. Mergers and Acquisitions
10. Strategic Alliance
11. Third Country Location

9. LICENSING
• Involves Minimal Commitment of Resources
• Under International Licensing a firm in one
country ( the licensor ) permits a firm in another
country ( the licensee ) to use its
INTELLECTUAL PROPERTY – such as patents,
trade marks, copy rights, technology, technical
know-how, marketing skill or some other specific
skill.
• THE MONETARY BENEFIT : Licensor gets
Royalty or Fees which the Licensee Pays.
However this is regulated by Government in
various countries.

10. FRANCHISING
• Involves minimum commitment of resources.
• Franchising – A form of licensing in which a
parent company ( the franchiser ) grants another
independent entity (the
franchisee) the right to do business in a
prescribed manner.
• This right can take the form of selling the
franchisor’s products, using its name,
production, and marketing techniques, or
general business approach.

11. CONTRACT MANUFACTURING
• A company doing International Business contracts with
firms in foreign countries to manufacture or assemble the
products while retaining the responsibility of marketing
the product or / and materials management (i.e) NON
FUNDING ( sourcing approvals ), TQM - quality
approvals, inspections, process related techniques,
defining the machineries and equipments required, etc.
ADVANTAGES
- No resource commitment for setting up production
facilities
- Free from risk of investing in foreign countries
- Idle production capacity in a foreign country can be
utilised immediatley.
- Cost of product becomes lower when manufactured
through contract manufacturing system.

12. MANAGEMENT CONTRACTING
• The firm providing management know how
may not have any equity stake in the
enterprise being managed.
• The supplier brings together a package of
skills that will provide an integrated service
to the client without incurring the risk and
benefit of ownership.
• Tata Tea in Sri Lanka – Managing no of
plantations due to their expertise.

13. TURNKEY CONTRACTS
• Common in IB related to supply, erection and
commissioning of plants, as in the case of oil
refineries, steel plants, cement, fertilizer plants,
railway projects, construction projects, etc.
• A turnkey operation is an agreement by the
seller to supply a buyer with a facility fully
equipped and ready to be operated by the
buyer’s personnel, who will be trained by the
seller.
• However a Turnkey Contractor may subcontract
different phases/parts of the project.

14. Fully Owned Manufacturing
Facilities
• Companies with long term and substantial interest in the
foreign market normally establish fully owned
manufacturing facilities there.
• For example – Coke in India, Pepsi in India entered India
initially by supplying the secret ingredients to the bottling
plants. Later they bought over the bottling plants.
• Benefits – Population and Market in India and SAARC
Countries, Raw Materials like Sugar, Water, Labor, etc.
at lower costs and accessibility.
• Higher Profits and Margins with Repatriation Benefits.
• LPG Process facilitating the economic and strategic IB
decision through FDI process.
• Mahindra and Mahindra in USA – Tractor Division.

15. ASSEMBLY OPERATIONS
• Economies of Scale of production
• Labor Intensive Production activities
• Parts and Components
• Cost advantage in developing countries/ LDC’s as the
Import Duties are also lower on the parts and
components as compared to finished products
• Benefit of opposite countries domestic market and
advantage of export benefits also.
• Favorable attitude from a Government for creating
employment opportunities and earning foreign exchange
through investments and exports.

16. JOINT VENTURES
• A Common IB Strategy through -
1. Sharing of ownership and management in an
enterprise.
2. Licensing/ Franchising agreements.
3. Contract Manufacturing.
4. Management Contracts.
(example )
– Pepsi’s Indian Joint Venture involved Voltas
and Punjab Agro Industries Corporation
- TOYOTA with Kirloskars.
- Maruti Suzuki ( Government – PSU )
- Tata Tea with TETLEY for overseas markets
-NOTE-
Many foreign companies entered the communist,

17. COUNTER TRADE
• PEPSICO entered USSR by employing this
strategy – Receive Rubles payment for exports (
sell concentrates ) and buy vodka, wine, etc and
pay in Rubles.
• India and USSR since many years – Import of
Defence related items and export of various
items in Rupee Terms.
• A form of International Trade in which certain
export and import transactions are directly linked
with each other and in which import of goods are
paid for by export of goods, instead of money
payments.

18. MERGERS AND ACQUISITIONS
• ( M & A’S) are very important market entry
strategy and growth strategy.
• Mittal – Arcelor or Tata – Corus, etc.
• Vijay Mallya’s UB Group acquired a small British
Co – Wiltshire Brewery. The attraction of
Wiltshire for UB was that the former offered a
ready made chain of 300 Pubs through out
Britain which could be used for the Marketing of
UB’s Brands of Beer like Kingfisher, Kalyani, etc.
The UB Group has also gone in for such
acquisitions in USA and S. Africa.

19. STRATEGIC ALLIANCE
• WIDE SCOPE
• IMPORTANT FOR TECHNOLOGY
ACQUISITION AND OVERSEAS
MARKETING.
• GOOD OPPORTURINTIES FOR INDIAN
FIRMS TO ENTER IB.
• EXAMPLE – Airlines, Hotels, Hospitals,
Tourism Industry, Banking and Insurance
Industry, Film Industry etc.

20. THIRD COUNTRY LOCATION
• Example – India and Pakistan
• It has been the practice earlier to Import or Export
through / Via Arab Countries since the relationship has
been bad between both the Countries.
• Israel and Arab Countries
• OR In the past India before going in for LPG could not
export directly to many countries – ADVANCED AND
DEVELOPED ( except by Foreign MNC’s in India ) and
Indian Business Houses used to route the Products
through Third Countries with those countries packaging
and labeling.

21. TOYOTAS GLOBALISATION STRATEGIES
• Toyota is a car company that challenges itself in a way that makes the world
shudder, Toyota announces it is shooting for 15% of the global market and
50% cost cuts, and everyone goes ‘Ooof!’ It is like getting hit in the solar
plexus.”
• If people started living at the South Pole, we would want to open a
dealership there.”
• Reaching No 2 slot was a major achievement for toyota, which had begun
as a spinning and weaving company during 1918. Ford was reportedly
plagued by high labour costs, quality-control problems, lack of new designs
and innovations, and a weak economy during the early 21st century, which
made it vulnerable to competition.
• Toyota aided by its new product offerings and strong financial muscle had
successfully used this scenario to surpass Ford and affect a dramatic
increase in its sales figures
• In January 2004, leading global automobile co and Japan’s number one
automaker, Toyota Motor Corporation (Toyota), replaced Ford Motors
( Ford), as the world’s second largest automobile manufacturer
• Ford had been in that spot for over seven decades

22. MARKET ENTRY STRATEGIES OF
STARBUCKS
• Starbucks is one of the leading international food retailing chains with US $
4.1 bn revenues for the fiscal year 2002-2003
• It has 7225 outlets the world over
• With saturation in the North American markets, starbucks started expanding
internationally. It decided to enter the Asia Pacific rim markets first
• Growing consumerism in the Asia Pacific countries and eagerness among
the younger generation to imitate western lifestyles made these countries
attractive markets for starbucks
• Starbucks decided to enter the international markets using a three-pronged
strategy-joint ventures, licensing and wholly owned subsidiaries. Prior to
entering a foreign market, starbucks focused on studying the market
conditions for its products in the country. It then decided on the local partner
for its business
• Initially, starbucks test marketed with a few stores that were opened in
trendy places and the company’s experienced managers from Seattle
handled the operations
• After successful test marketing, local baristas(brew masters) were given
training for 13 weeks in Seattle. Starbucks did not compromise on its basic
principles. It ensued similar coffee beverage line-ups and ‘No Smoking’

23. DRL – DR Reddy’s Laboratories
• STRATEGIES
• Founded – 1984
• Dr Anji Reddy – Farmer’s Family in AP
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