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MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes

MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes

MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes

MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes: In this post, we will learn about MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes. In MCom 2nd Year there is one of the most important questions comes from Management. You will learn about MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes. MCom is a process of development.

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MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes
MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes

MODES TO ENTER IN FOREIGN MARKET

The multinational corporations of the developed countries threaten the MNCs of developing countries but they only do not threaten them but also provide them with technological and advanced knowledge about business and marketing and help to make them developed. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

Developing countries do not have sufficient marketing skills and technical know-how to avoid or sort out this major problem. Developing countries get technical knowledge and try to opt for the latest technology. Without technology, no country can be developed therefore developing countries go to the foreign market.

But this is not an easy task to make entry into a foreign market. There are different modes to being a member of a foreign market. These modes are as follows:

1. Exporting. To reduce or minimize the risk of marketing on a global scale, a nation can increase its export of domestically manufactured products. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

Marketing is the best way to enter a foreign market and experience. Without experience, a nation cannot succeed for the major part of the overseas involvement of large firms is through export trade.

2. Contractual Agreement. Contractual marketing. There are various kinds of contractual agreements. These under:

(i) Patent Licensing Agreement. Patent licensing is focused on royalty-based agreements or fixed fees. It also provides managerial training.  (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

(ii) Turnkey Operation. The turnkey operation adds construction of the plant, and personal training, and focused on fixed fees or cost plus management. 

(iii) Coproduction Agreement. Soviet-bloc countries usually use this agreement. These COLies built plants and paid for them with part of the output.  (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

(iv) Management Contract. The management contract is most common in or used in the middle east. This contract needs key personnel to operate the foreign market operations. 

(v) Licensing Licensing is an important part of contractual agreements. The marketers of multinational companies provide intangible assets (Patents, trade secrets, technical know-how, company name, and trademarks) in return for these assets, the marketer receives payment. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

3. Joint Venture. A joint venture is a business that is done by two or more persons, jointly to minimize the risk. The joint venture is riskier than licensing because it needs more direct investments. A joint venture divides the risk into different parts because two or more persons contribute and bear losses combined. A joint venture between two corporations or persons shares risks attaining the predetermined goal. Joint ventures are the next most usual way to take an entry into the foreign market.

For example: 

(i) General Motor Corporation’s partnership with Egypt’s State-owned Nasar Car Co. to establish a plant for assembling trucks and diesel engines.  (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

(ii) The agreement between Nestle and P.A. and Coca-cola Co. for the development of an increase in the sale of ready-made drinks such as tea and coffee.  (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

In the joint venture, partners come together to gain profit and take advantage of useful functions of each other and avoid weaknesses, and make good management research and marketing. A domestic company can make a joint venture with a foreign company and this joint venture make a way to take entry into the foreign market.

4. Strategic Alliances. In the last few years in the international market, a new kind of collaborative strategy has become famous. This new collaborative strategy s called ‘strategic alliances’. This is very popular in leading firms and especially in high technology industries. These industries use this technique for their mutual profit.

The merger is a strategic alliance but this is also very useful because they are deeper than lengthy market transactions. Two or more persons or firms give their own decisions independently and every firm has, an opportunity to make decisions. In other words, every firm shared in the decision-making involved.

In all of the firm. Strategic alliance and joint venture are not the same. In an alliance, activities are made for a particular time or activities which are in strategic alliances have a time limitation. The goals of strategic alliances are as follows:

(i) Reduce transaction costs by establishing a mutual commitment between the supplying and buying firms. 

(ii)  Apply new technologies and make research for development and deduce capabilities. 

(iii) Increase the demand for products make the reputation in the market and spread technology.

To take entry into emerging markets, strategic alliances are the best mode multinational corporations took to combine the markets for development. In emerging markets in which a company looks for modes into the burgeoning Worldwide economy, strategic alliances help to make a decision or solution for both sides.

5. Subsidiary Which is Wholly Owned. Multinational companies direct investment in subsidiaries (Manufacturing or Assembly). Direct investment in subsidiaries helps those companies establish themselves in global markets.

MEANING OF PRODUCT

Every day we see many types of products and use them but it is not easy to define a product. Though products are all around us. Due to this fact, we cannot give a proper meaning or definition of a product.

The difficulty to define a product is that a single product doesn’t have the same importance. Some countries have more need of this or that product is more useful for them however, it does not mean that other countries will have the same importance of that product because that country does not need that product or that product is not useful like other products for that country.

For example: A refrigerator is more important or useful for countries that have hot environments than the countries which have cold environments. A refrigerator is useful in the United States because people there like to use frozen foods. Yet in developing countries, food shopping most commonly occurs on a daily basis. A refrigerator is a status symbol in developing countries and they use refrigerators for keeping perishable foods for a short time.

On the basis of the above information, we have to give a definition that must cover all necessities and luxuries. The definition must be included qualities that delight a customer or satisfies a customer. A customer is satisfied by the qualities of the product if a product has the attributes to make a customer satisfied. The definition must include attributes of the product.

For example: The attributes of a bathing soap are fragrance, skincare, mildness, and freshness.

The attributes of different soaps are different and each brand is made to fulfill the demand of different customer classes.

The attributes of a mobile phone-wide network, a colored screen, lightweight phone book capacity to store contact numbers, and message storing capacity. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

People around the world would prefer different sets of attributes for their use. People like to buy different sets of attributes not only for the status symbols but first of all, they buy products for satisfaction. Satisfaction is derived from the quality and attributes of the product. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

OBJECTIVES OF PRODUCT

The objectives of the product are as follows:

1 Stability. Every company wants stability or wants to stable that conditions and earnings. The company manufactures and launches the demand of customers and also makes necessary development to the demand stable. A company does not want business variability.

2. Growth. The objective of a product is to expand or grow the company and the demand of customers. A company increases the number of customers through products. Product intended to satisfaction of the customer. The growth of the company helps it to enter foreign markets. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

3. Profit. Profit is the main objective of the product. Every company tries to maximize profit through better quality products. If a product does not provide profit company will stop producing because the company does not want to bear the loss.

4. Return on Investment. Before introducing a product, a company invested a big part of the money in investment as the company spends money on advertiseruent and spreads the information about the new product. And more people go to purchase that product. When more customers purchase the product the profit from large-scale sales compensates for the expenses of advertisement. So every company wants more return on investment.

5. Desired Position. Every company wants to become the leader in the market. This is possible when that company satisfies customers and completes their demand. The customer wants better quality and 100 percent satisfaction. The company does this customer like to purchase their product and give that company the desired position which was assumed by the company.

MEANING OF PRODUCT PLANNING

According to Stanton W.J., “Product planning embraces all activities which enable producers and middle man to determine what should constitute a company’s line of product”.

Product planning can be divided into two categories: (i) issues of day to day, (ii) strategic issues.

Need for day-to-day arises in the Middle East market because their climate requires that windows are opened all day and the wind which comes from opened windows carries a lot of dust into the houses. In this area need to protect working washers and dryers also need extra precaution from dust. Local managers handle day-to-day issues.

Strategic issues cannot be handled by local managers. It needs major commitments. Big corporations have taken up these commitments. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

The decision about product planning depends on the individual situation. The situation decides that planning should be based on day-to-day issues or strategic issues. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

The objective of both categories is to make satisfied the customer. The planning decides the qualities of the product or service which fulfills the demands of several customers. To know the choices of customers the research of world market is very useful. Research makes the analysis easy. The result of the research is the basis for determining the product planning of the world market. Financial specialties, social and cultural importance, consumer interests, and the rules and laws of that nation should be considered before making a product plan. (MCom 2nd Year Modes To Enter In Foreign Market Study Material Notes)

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