Modes of Entry
1. Exporting –
Indirect exporting means that the company does not deal with foreign customers or companies by itself but uses intermediates such as export companies, export agents, or export partner network to take care of all export activity. Indirect exporting should be taken into consideration if a company’s own prerequisites in international business are not enough and if the intermediate’s resources as well as the know-how benefit the company. This entry alternative has quite low risks for the exporter. In direct exporting the company takes care of the exporting activity by itself. The company is in contact with the intermediates in the target market such as import agents, retailers, or brokers. It is essential for the company to know the markets, pick the agent or distributor carefully and posses the knowledge in marketing as well as exporting routines. Benefits in direct exporting are shorter distribution channels, smaller distribution expenses as well as closer connection to the end user and greater potential return. 2. Joint Venture - A second method of entering a foreign market. Joint venture differs from exporting in that the company joins with foreign companies to produce or market a product or service. This includes modes such as licensing, franchising, management contracting, project operations, and joint ownership. Jointly owned subsidiaries - Joint ownership is the mode of joint venturing in which a company joins investors in a foreign market to create a local business in which they share joint ownership and control. The foreign countries’ regulations may require joint ownership as a condition to enter the country, or company’s financial, physical, or managerial resources are not enough to undertake the venture alone. 3.Licensing - International licensing means that the manufacturer sells the right to use the company’s immaterial rights such as manufacturing process, trademark, patent, trade secret, or other valuable information to a licensee in the foreign market for a fee or royalty. The company expands to the market with little resistance and the licensee gains the production expertise or well known product or name as agreed in the contract without having to start from scratch. However, the company has less control over the licensee than it would over its own operation. 4.Franchising - Franchising is another option, in which the company sells the right to the franchisee (independent businesspeople) to produce its products or provide a service in a foreign market. Mainly franchising has been prominent in fast foods, fitness centers, hotels, real estate, and dozens of other product and service areas. The benefit is to start internationalization faster with fewer assets. The company will gain valuable information and experience from the target country for later usage. 5.Turnkey projects - Contract manufacturing is beneficial when manufacturing costs are cheaper abroad than in the home country. Project operations include selling a specific project abroad such as equipment installation, implementation of the factory investments, or community building project. Projects can be partial projects, turn key projects, and turnkey plus projects or consortiums. Suggested Modes of Entry for UAE
Limited Liability Companies - Doing business in the United Arab Emirates When entering the UAE a company can either establish a permanent presence in the UAE or use a commercial agent. The permanent presence may be pursued by: Incorporating a Limited Liability Company (LLC)
Establishing a Branch office or Representative office
Establishing a wholly owned entity in one of the UAE Free Trade Zones 1.Operating as an LLC in the country permits the company to engage in all activities as licensed in the UAE. However, a foreign entity can only operate in those activities licensed by the relevant UAE authority such as contracting, providing services, and...