Method of Conducting International Business
Exporting denotes selling of goods and
services from the home country to a foreign country. Similarly importing refers
to purchasing of products from foreign country and bringing them into home
country
It connotes a type of international
business where a firm enters into a contract with one or a few local
manufacturers in foreign countries in order to get certain components of goods
produced according to its specifications. It is also called outsourcing or
contract manufacturing
Licensing is contractual agreement
wherein one firm grants access to its plants, trade secrets or technology to
another firm in a foreign country, for a fee called royalty, e.g. McDonald,
Pisa Hut, etc., The firm which grants such permission is called Licensor or
Franchisor and other firm to
whom the license is granted is
called Licensee or Franchisee
A Joint venture is a business agreement
wherein parties agree to develop a new entity and assets subscribing to equity
shares and thereby exercising control over enterprise and consequently sharing
revenues, expenses and the assets. It can be established under three different
ways namely
·
Foreign Investors buying an interest in
local company
·
Local firm acquiring an interest in the
existing foreign firm
·
Both the foreign and local firms jointly
forming a new enterprise.
FDI means investment made by a company
or individual in one country in the business interest in another country in the
form of either establishing new business operations or acquiring business
assets in the other country.
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