examples of cost drivers in globalization

Licensee pays royalty or fees to the licensor. Under international licensing, a firm in one country (licensor) permits a firm in another country (licensee) to use its intellectual property (such as patents, trade marks, copy rights etc.). But exporting is not a good strategy in the long run. Licensing or contract manufacturing is not a better alternative.Įxporting is considered to be a good strategy in initial stages.Foreign investment is not favored by the foreign country.The company has no permanent interest in the foreign market or there is no guarantee of the market available for a long period.There are political or other risks of investment in the foreign country.Foreign market is characterized by production bottlenecks like infrastructural problems, problems of raw materials.Cost of production in the foreign market is high.The volume of foreign business is not large enough to justify production in the foreign market.Exporting is the appropriate strategy in following conditions:

Wholly Owned Manufacturing Facilities Companies.Įxporting is the most traditional strategy of entering the foreign market.

List of various Strategies of Globalization for Foreign Market Entry:

Examples of cost drivers in globalization