7 STRATEGIES IN GLOABLISATION

1. Partial Subsidiary
It means any Subsidiary of the Company of which less than 100% of the capital stock is
directly or indirectly owned by the Company.
A subsidiary is a company where at least 50% of its shares are owned by another company.
Subsidiaries can be wholly-owned or partly-owned.
In partial subsidiary, the parent company owns at least 50% but less than 100% of the
subsidiary’s shares. The parent company doesn’t have complete control, but it should have a
controlling interest.
2. Wholly-owned Subsidiary (100% subsidiaries)
With such a subsidiary, the parent company owns all of the common stock.
As such, there are no minority shareholders, and its stock is not traded publicly. Despite this,
it still remains an independent legal body—a corporation with its own organized framework
and administration. Unlike a regular subsidiary, which has its own management team, the
day-to-day operations of this structure are likely directed entirely by the parent company.
Like the regular subsidiary, wholly-owned subsidiaries help parents tap into new markets,
especially those in foreign countries. This can be done through green-field investments,
which involve setting up brand new entities from the ground up. This means getting
approvals, building facilities, training employees, among other things. The other way is to
make an acquisition of an existing company in the target market.
There are a number of advantages of setting up this type of subsidiary:
  In some countries, licensing regulations make the formation of new companies
difficult or impossible. If a parent company acquires a subsidiary that already has the
necessary operational permits, it can begin conducting business sooner and with
less administrative difficulty.
&
 There is the potential for coordination of a global corporate strategy. A parent
company usually selects companies to become wholly-owned subsidiaries that it
considers vital to its overall success as a business.
But parent companies must keep in mind that businesses that operate in different countries
may have different workplace cultures. This means that policies and procedures may not
align with those of the parent. Acquisitions may be costly to execute and there may be
inherent risks (geopolitical, currency, trade) that come with doing business in another
country.
For E.g.,
became a wholly owned subsidiary of
3. Joint Ventures
A joint venture (JV) is a business arrangement in which two or more parties agree to pool
their resources for the purpose of accomplishing a specific task. This task can be a new
project or any other business activity. In a JV, each of the participants is responsible
for profits, losses, and costs associated with it. However, the venture is its own entity,
separate from the participants' other business interests.
Reasons of Joint Ventures being formed
a) From an Indian Companies View Point
- Capital, technology, brand, management & R& D requirements
- Fear of loosing market
- Fear of getting extinct
- Fear of takeover
- Fear of competitor Indian companies joining hands first with MNCs
b) From MNCs View Point
- Market capture
- Manufacturing facilities & cost advantage (labour material)
- Distribution of marketing set up
- Knowledge of Indian markets
- Knowledge of government rules & regulations
Why many Joint Ventures have failed?
- Compulsion more than a choice
- Lifting of FDI restrictions gives opportunities to MNCs for a different plan
- Product of Joint Venture - Failure
- Cultural & managerial differences
- Limited success stories & disappointments
Examples of Joint Ventures: Hero Honda, ICICI Prudential, Kinetic Honda, HDFC Standard,
etc.
4. Franchising
Franchising is a strategic alliance between groups of people who have specific relationships
and responsibilities with a common goal to dominate markets. A contractual agreement takes
place between Franchisor and Franchisee. Franchisor authorizes franchisee to sell
their products, goods, services and give rights to use their trademark and brand name. And
these franchisee acts like a dealer. In return, the franchisee pays a one-time fee or
commission to franchisor and some share of revenue. Some advantages to franchisees are
they do not have to spend money on training employees, they get to learn about business
techniques.
Firstly, under a franchising agreement, the franchisor grants permission to the franchise to
use its intellectual properties like patents and trademarks. Secondly, the franchise in return
pays a fee (i.e., royalty) to the franchisor and may even have to share a part of his profits. On
the contrary, the franchisor provides its goods, services, and assistance to the franchise.
Finally, both parties in a franchise sign a franchising agreement. This agreement is basically a
contract that states terms and conditions applicable with respect to the franchise.
Types of Franchising: Job, Business, Product, Investment & Conversion Franchising
Fundamental Framework of a Franchising agreement:
1. Location: Franchisee’s territorial limit
Site selection: suitable place of operating the business
2. Royalties: fixed range on profits
3. Franchise validity: length of time duration of the agreement
4. Fees: trademark/patent fee
5. Training Support: to ensure uniformity in service
6. Operations: all operational details discussed
7. Trademark: how the franchisee can use the franchisor trademark/patent
8. Advertising: advertising commitment and the fees
9. Cancellation: conditions for termination or cancellation, how can it be renewed if
required.
10. Exit strategies: Not always decided, on the terms of franchisee.

Examples:
Jubilant Food Works Limited is the master franchisee of Domino’s Pizza in India,
Bangladesh, Sri Lanka and Nepal & also of iconic us-based company, Dunkin donuts in India
&
The Sapphire Foods, company is principally engaged in the franchise business of KFC and
Pizza Hut & Taco Bell restaurants in India.

5. Licensing
It is defined as a business arrangement, wherein a company authorizes another company by
issuing a license to temporarily access its intellectual property rights, i.e. manufacturing
process, brand name, copyright, trademark, patent, technology, trade secret, etc. for adequate
consideration and under specified conditions.The firm that permits another firm to use its
intangible assets is the licensor and the firm to whom the license is issued is the licensee. A
fee or royalty is charged by the licensor to the licensee for the use of intellectual property
right.
For example: Under licensing system, Coca-Cola and Pepsi are globally produced and sold,
by local bottlers in different countries.
Page Industries is an exclusive licensee of Jockey International Inc and Speedo International
Ltd. Also, Arvind Mills Ltd is a licensee of Arrow, Nautica, Philips Van Heusen etc
In finer terms, it is the simplest form of business alliance, wherein a company rents out its
product-based knowledge in exchange for entry to the market.
Primary Reasons for Licensing
 International Expansion of a brand franchise
 Need for commercialization of new technology
 Cost saving
 Risk Aversion
Types of Licensing: Patent, Brand & Trademark, Copy Right and Trade Secret Licensing

6. Special Economic Zones (SEZs)

ADVANTAGES DISADVANTAGES
Growth & Development Exploitation of Laborers

Exposure to Technology Sexual Harassment

Attracts FDI Loss of Revenue

Employment Rise Fertile Lands

SEZ Policy:
1. No license required for import;
2. Manufacturing or service activities allowed
3. Positive Net Foreign Exchange
4. Customs duty and import policy in force;
5. SEZ units will have freedom for subcontracting;
6. No routine examination of export/import cargo;
7. SEZ Developers /Co-Developers and Units enjoy tax benefits

What falls under SEZs: -

7. Collaboration
Business collaboration is leveraging internal and external connections to generate ideas, find
solutions, and achieve common goals for your business. A truly successful collaboration will
benefit both collaborators and is fostered through open, honest, and productive
communication.
Increasing channel collaboration can help businesses develop a broader value proposition to
target new overseas markets. With the expansion of customers across new territories, it is
crucial for channel businesses to have built an ecosystem of collaborative partners to
seamlessly deliver the day-to-day operation.
For e.g. GoPro & Red Bull and Pottery Barn & Sherwin-Williams.