8 Most Commom Forms of International Business

We can’t avoid the importance of international business because as result of international business our earth is rising very quickly.

There are 8 forms of international business which described below in detail:

Forms of international business

  1. Exporting: Exporting means producing/procuring in the home market and selling in the foreign market. Exporting is not an activity just for large multinational enterprises; small firms can also make money by exporting. In recent days, exporting has become easier though it remains a challenge for many firms.
  2. Licensing: A licensing is an agreement whereby a licencor grants the rights to intangible property (patents, intentions, formulas, processes, designs, copyrights and trademarks) to another entity (licensee) for a specified period and in return the licencor receives a royalty/fee from the licensee.
  3. Franchising: Franchising is basically o specialized form of licensing in which the franchiser not only sells intangible property to the franchisee but also insists that the franchisee agrees to abide by strict rules as to how it does business.
  4. Joint venture: A joint venture entails establishing a firm that is jointly owned by two or more independent firms.

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    Forms of International Business

  5. Management Contracts: A firm in one country agrees to operate facilities or provide other management services to a firm in another country for an agreed upon fees.
  6. Turnkey projects: In a turnkey project, the contractor agrees to handle every details of the project for a foreign client, including the training of operating personnel. At completing of the contract the foreign client handles the ‘key’ of a plant that is ready for full operation
  7. Strategic international alliances: A strategic international alliance is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective.
  8. Direct foreign investment: Direct foreign investment is another important form of international business. Companies may manufacture locally to capitalize on low cost labor, to avoid high import taxes, to reduce the high cost of transportation to market, to gain access to raw materials or gaining market entry.

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