Global Market Entry Modes Flashcards

This set of vocabulary flashcards covers the key concepts of global market entry modes, including screening procedures, exporting types, licensing categories, and various partnership models.

Target Market Selection

A crucial step in developing a global expansion strategy that involves identifying potential foreign markets using socioeconomic and political indicators.

Indicator selection and data collection

The first step of the initial screening process where a company identifies critical socioeconomic and political indicators.

External Decision Criteria

Factors influencing entry mode choice including market size and growth, risk, government regulation, competitive environment, cultural distance, and local infrastructure.

Internal Decision Criteria

Factors influencing entry mode choice including company objectives, need for control, internal resources, assets and capabilities, and flexibility.

Indirect Exporting

A method where a firm uses a middleman based in its home market to handle exporting and sell products through independent intermediaries.

Cooperative Exporting

An agreement where a firm uses another company's distribution network to sell its goods; suitable for firms wanting some control without committing full resources to their own organization.

Direct Exporting

A strategy where a company sets up its own export organization/department and relies on a middleman (such as a foreign distributor) based in a foreign market.

Licensing

A contractual transaction where a licensor offers proprietary assets to a foreign licensee in exchange for royalty fees.

Patent Licensing

Complex legal agreements allowing a patent owner to let someone else manufacture and distribute their invention while receiving royalty payments.

Trademark Licensing

Agreements allowing trademark owners to let others use intellectual property such as brand names, logos, or slogans, often for commercial goods like clothing or food items.

Copyright Licensing

Agreements used for works of visual art, movies, songs, or characters like Mickey Mouse, often applied to consumer goods or distributorships.

Trade Secret Licensing

The licensing of proprietary information, like the formula for Coca-Cola, which is protected only through secrecy and typically involves non-discloure agreements (NDAs).

Non-disclosure agreements (NDAs)

Legal documents stating that a party receiving confidential information, such as a trade secret, cannot share it with anyone else.

Franchising

An arrangement where a franchisor grants a franchisee the right to use trade names, trademarks, and a business model for a specific period with minimum investment.

Contract Manufacturing

An arrangement where a company hires a local firm to manufacture or assemble products to achieve cost savings in labor, energy, or raw materials, while retaining marketing responsibility.

Joint Venture

An entry mode where a foreign company shares equity and resources with partners (local companies, governments, or other foreign entities) to establish a new entity.

Cooperative Joint Venture

A partnership agreement to collaborate on technology or distribution without involving any equity investments.

Equity Joint Venture

An arrangement in which partners agree to raise capital in proportion to agreed-upon equity stakes.

Wholly Owned Subsidiaries

Companies where common stock is $100\%$ owned by a parent company, allowing for legal control over operations and risk diversification across different industries or geographic areas.

Strategic Alliance

An arrangement between two companies to share resources for a mutually beneficial project while each entity remains independent and retains its own identity.

TNG Digital Sdn Berhad

A joint venture entity formed by CIMB Bank's subsidiary, Touch 'n Go, and Alipay to create an online and offline payments provider.

RAPID project

The Refinery and Petrochemical Integrated Development project in Johor, Malaysia, involving a strategic alliance between PETRONAS and Saudi Aramco.