What do u understand by joint venture? JOINT VENTURES Joint venture is a very common strategy of entering the foreign market.

In the widest sense, any form of association which implies collaboration for more than a transitory period is a joint venture (pure trading operations are not included in this concept). Such a broad definition encompasses many diverse types of joint overseas operations, viz. 1. 2. 3. 4. Sharing of ownership and management in an enterprise. Licensing/franchising agreements. Contract manufacturing. Management contracts.

One important advantage of joint venturing is that it permits a firm with limited resources to enter more foreign markets than might be possible under a policy of forming wholly owned subsidiaries. Partnership with local firms has certain specific advantages. The local partner would be in a better position to deal with the government and the publics. Further, there would not be much public hostility when there is a local partner; it would be much less when there is equity holding by the government sector and the public. A right local partner for a joint venture can have a major impact on a firm's competitiveness because such a partner can serve as a cultural bridge between the manufacturer and the market.

What are world economic trends? There are some world economic trends, which add momentum to the globalisation trend. One of the important trends is the difference in the growth rates of the economies/ markets. The comparatively slow growth of the developed economies or the stagnation of some of their markets and the fast growth of a number of developing countries prompt developed country firms to turn to the expanding markets elsewhere. The differences in the growth characteristics exist even within the categories of developed and developing countries. Secondly, the domestic economic growth and the opportunities outside reduce the opposition to globalisation. A classic example is China. China has benefited tremendously out of foreign investment; the fast growing Chinese economy provides scope for a large number of players in the expanding market. At the same time, China is enormously exploiting the business opportunities outside the country. Globalization should be a two way process, which can be mutually beneficial. Another driving force of globalization is the economic liberalization, as pointed out earlier, characterized by deregulation and privatisation.

What is Ethnocentric Orientation? Ethnocentric Orientation In the ethnocentric company, overseas operations are viewed as secondary to domestic operations and primarily as a means of disposing of "surplus" domestic production. The top management views domestic techniques and personnel as superior to 'foreign and as the most effective in overseas markets. Plans for overseas markets are developed in the home office, utilising policies and procedures identical to those employed in the domestic market. Overseas marketing is most commonly administered by an export department or international division, and the marketing personnel is composed primarily of home country nationals. Overseas operations are conducted from a home country base, and there is likely to be a strong reliance on export agents. There is a tendency to employ the domestic product mix without major modifications for the overseas market. In short, under ethnocentrism the international marketing is normally characterised by the extension strategy described in Chapter 9. The ethnocentric position appears to be appropriate for a small company just entering international operations, or for companies with minimal international commitment because this approach entails a minimal risk and commitment to overseas markets-no international investment is required, and no additional selling costs incurred, with the possible exception of higher distribution costs. This position may be inappropriate for a company which wants to expand its international business significantly.

What is international product Life cycle? PRODUCT LIFE CYCLE

Like living beings, products have life cycle. The Product Life Cycle (PLC) is depicted by the sales curve of the product since its introduction. A product normally passes through (i.e., a PLC has) four different stages, namely, introduction, growth, Maturity and decline. depicts a typical product life cycle. Introduction

The introduction stage of the PLC which starts with the launching of the new product is characterised by:

1. Low sales because it generally takes some time for a new product to get wide acceptance by consumers and it also takes time to expand the marketing of the product. 2. High costs per unit because of the low sales and high promotional expenditure. 3. 4. Absence of or low competition if the product is entirely new. Loss or negligible profits because of low sales and high costs

Growth

The growth stage which follows the introduction stage is characterised by:

1. Fast growth in sales because of increasing consumer acceptance and expansion of marketing. 2. Growing profits because of growing sales and fall in the incidence of fixed production cost and marketing cost per unit.

3. Increasing Competition. 4. Market segmentation and the introduction of different versions (models) of the product.

Maturity

The maturity stage is characterised by:

1. Saturation of sales (in the early part of this stage, sales may grow slowly but at the later part there could even be a fall in sales). 2. Intense competition.

3. Falling profits because of high promotional expenditure and falling margins.

Decline

The last stage is characterized by:

1. 2. 3. 4.

Entry of new products which compete with the product. Decline in sales. Decline in profits: profits may even become negative. Exit of some of the firms.

Brand Piracy?

Balance of Payment?

The balance of payment is a record of all of the economic transactions between residents of a country and the rest of the world. The balance of payment is divided into so called current and capital account. The current account is a record of all of the recurring trade in merchandise and service , and Public aid transactions between countries. The capital account is a record of all long term direct investment, Portfolio investment and other short and long term capital flows. The minus signs signify out flows of cash, that represents payment for imports. In general country accumulates reserves when the net of its current and capital account transactions shows a surplus. It gives up reserves when the net shows a deficit. The important fact to recognize about the overall balance of payment is that it is always in balance.

International v/s multinational companies

International means a company which exists in one country by self production in more than one country. A company that imports or exports products or have something to do with other nation Mu,ltinational r the compNIES THAT have work sites set up in different nation

International:- they have no investments outside their home country.

Multi :-0 they have investments in other countries but do not have coordinated products offering in each country more focussed on adapting their product an services to each individual local market.

Developing and Developed: Developing:it has comparatively low level of assulant and more unemployment rate. Developed: has comparitivey high level of assulance and less unemployment rate

Low capita income High capita income

Less education level and low capital formation They have technological improvents. Excellent roads and a steady government

These are the countries which usually suffered from war, disease, poverty The level of economic development usually translates into a high GDP per capita