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The decision of how to enter a foreign market can have a significant impact on the
results. Expansion into foreign markets can be achieved via the following four
mechanisms:

Ô Exporting
Ô Licensing
Ô Joint Venture
Ô Direct Investment


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Exporting is the marketing and direct sale of domestically-produced goods in another

country. Exporting is a traditional and well-established method of reaching foreign
markets. Since exporting does not require that the goods be produced in the target
country, no investment in foreign production facilities is required. Most of the costs
associated with exporting take the form of marketing expenses.

Exporting commonly requires coordination among four players:

Ô Exporter
Ô Importer
Ô Transport provider
Ô Government

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Licensing essentially permits a company in the target country to use the property of the
licensor. Such property usually is intangible, such as trademarks, patents, and
production techniques. The licensee pays a fee in exchange for the rights to use the
intangible property and possibly for technical assistance.
?ecause little investment on the part of the licensor is required, licensing has the
potential to provide a very large ROI. However, because the licensee produces and
markets the product, potential returns from manufacturing and marketing activities may
be lost.

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There are five common objectives in a joint venture: market entry, risk/reward sharing,
technology sharing and joint product development, and conforming to government
regulations. Other benefits include political connections and distribution channel access
that may depend on relationships.

Such alliances often are favorable when:

Ô the partners' strategic goals converge while their competitive goals diverge;
Ô the partners' size, market power, and resources are small compared to the
industry leaders; and
Ô partners' are able to learn from one another while limiting access to their own
proprietary skills.

The key issues to consider in a joint venture are ownership, control, length of
agreement, pricing, technology transfer, local firm capabilities and resources, and
government intentions.

Potential problems include:

Ô conflict over asymmetric new investments

Ô mistrust over proprietary knowledge
Ô performance ambiguity - how to split the pie
Ô lack of parent firm support
Ô cultural clashes
Ô if, how, and when to terminate the relationship

Joint ventures have conflicting pressures to cooperate and compete:

Ô Strategic imperative: the partners want to maximize the advantage gained for the
joint venture, but they also want to maximize their own competitive position.
Ô The joint venture attempts to develop shared resources, but each firm wants to
develop and protect its own proprietary resources.
Ô The joint venture is controlled through negotiations and coordination processes,
while each firm would like to have hierarchical control.
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Foreign direct investment (FDI) is the direct ownership of facilities in the target country.
It involves the transfer of resources including capital, technology, and personnel. Direct
foreign investment may be made through the acquisition of an existing entity or the
establishment of a new enterprise.

Direct ownership provides a high degree of control in the operations and the ability to
better know the consumers and competitive environment. However, it requires a high
level of resources and a high degree of commitment.

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Different modes of entry may be more appropriate under different circumstances, and
the mode of entry is an important factor in the success of the project. Walt Disney Co.
faced the challenge of building a theme park in Europe. Disney's mode of entry in Japan
had been licensing. However, the firm chose direct investment in its European theme
park, owning 49% with the remaining 51% held publicly.

?esides the mode of entry, another important element in Disney's decision was exactly
where in Europe to locate. There are many factors in the site selection decision, and a
company carefully must define and evaluate the criteria for choosing a location. The
problems with the EuroDisney project illustrate that even if a company has been
successful in the past, as Disney had been with its California, Florida, and Tokyo theme
parks, future success is not guaranteed, especially when moving into a different country
and culture. The appropriate adjustments for national differences always should be
made.

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The following table provides a summary of the possible modes of foreign market entry:

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In December 1991, the Sixth Summit held in Colombo approved the establishment of an Inter-Governmental Group (IGG) to
formulate an agreement to establish a SAARC Preferential Arrangement (SAPTA) by 1997. Given the consensus within
SAARC, the Agreement on SAPTA was signed on 11 April 1993 and entered into force on 7 December 1995 well in
advance of the date stipulated by the Colombo Summit. The Agreement reflected the desire of the Member States to
promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of
concessions.

The basic principles underlying SAPTA are:

a. overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into account
their respective level of economic and industrial development, the pattern of their external trade, and trade and
tariff policies and systems;
b. negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews;
c. recognition of the special needs of the Least Developed Contracting States and agreement on concrete
preferential measures in their favour; and
d. inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms



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The most significant event in ASEAN- EU relations during this period was the 11th Meeting of the
ASEAN-EU Foreign Ministers Meeting (AEMM) from 22 to 23 September 1994 in Karlsruhe,
Germany. At the Meeting, the Ministers had a comprehensive and constructive exchange of views
on a number of political, security, economic issues with the aim of enhancing mutual understanding
on practical cooperation activities. The Ministers also welcomed the content of the EU's policy
paper, released in July 1994, on its new strategy towards Asia. In this regard, the Ministers agreed
that ASEAN should remain a cornerstone of the EU's dialogue with the Asian region.

In the area of trade, the 11th AEMM also reaffirmed its commitments to an open multilateral trade
system to sustain world economic growth. In this connection, they welcomed the concision of the
GATT UR negotiations and the establishment f the World Trade Organisation as a significant step
forward for the two-way development of EU-ASEAN trade relations. The Ministers have agreed to
continue to improve market access n both regions in order to maintain growth in two-way trade.

In the areas of business and investment, the EU took steps to enhance its presence in ASEAN with
the extension of the European Investment ?ank (EI?) credit facilities in ASEAN to contribute to the
undertaking of joint ventures by the private sectors from the two regions. As of January 1995, the
EI? has approved loans totalling 63 million ECU to finance private sector projects in ASEAN.

The first meeting of the EU-ASEAN ?usiness Conference as held in Stuttgart, Germany from 23 to
24 September 1994. Some 350 leading EU and ASEAN business leaders and observers attended.
The Conference had two objectives; first, to review EU-ASEAN relations in the context of the fast
political and economy, changes taking place in EU, ASEAN and the world at large and, second, to
explore new initiatives in promoting closer EU-ASEAN economic cooperation. The Conference
participants exchanged views on increasing cooperation in the following areas: trade and
investment, technological development in telecommunication and transportation, and environmental
protection. The Conference was concluded with a joint representation to the Foreign Ministers of
ASEAN and EU on the results of the consultations.

ASEAN-EU development cooperation is now also more focused. Priority is being given to the
alleviation of poverty, human resource development, protection of the environment and sustainable
development, fight against drugs, prevention against AIDS, and the promotion of cultural and media
exchange and cooperation in these areas will have to take into account the individual ASEAN
countries' needs to participate fully in the economic growth of Southeast Asia.

In the political and security arena, ASEAN and the EU have agreed to strengthen their partnership in
addressing global issues. In this regard, the first ASEAN-EU Senior Officials Meeting was held in
Singapore from 2 to 4 May 1995 to exchange views on political and security issues affecting the two
regions. The Meeting successfully forged closer understanding between the two sides and
established common ground on a broad range of political and security issues. The key achievement
of the Meeting was a firm endorsement from the EU for an ASEAN initiative for a summit of Asian
and European leaders. Tentatively named "The ASIA-Europe Meeting", it will be held in ?angkok,
Thailand in March 1996. Participants would include the six ASEAN countries and Vietnam, which
will join ASEAN in July, China, Japan and South Korea and the 15 EU nations. This meeting,
together with APEC and the existing cooperation mechanism across the Atlantic, will complete the
linkages among the regions of the current tri-polar economic world.

Under the ASEAN-EU Cooperation Programme, several new projects were approved during
1994/1995, adding to the list over 25 projects that are on-going. One of the projects approved was
ASEAN's proposal for EU Technical Assistance to the ASEAN Secretariat. The project aims to
develop a professional staff in the Secretariat equipped with the perspective and methodology of
regional policy making and to link up the ASEAN Secretariat with a network of European institutions
thereby enhancing existing ties between the two regions. The EU has Agreed to fund the project
with a contribution of 506,000 ECU and is now in the process of selecting a sutable international
institution to oversee the implementation of the project.

The Second Meeting of the ASEAN-EC JCC Sub-Committee on Forests was convened in Surabaya
from 14 to 15 June 1995. The Meeting agreed that ASEAN-EU cooperation in forestry should be
increased by developing common. standards of sustainable forest management. With regards to
enhancing ASEAN-EU trade in forest products, both sides stressed the need to continue efforts to
devise a workable cooperation framework which could involve the participation of the private sector
of the two regions.

The future directions of ASEAN-EU will be further enriched by the presence of the ASEAN-EU
Eminent Persons Group (EPG). The overall objectives of the group are among others, to analyze
the present state of relations between EU and ASEAN, as well as develop a comprehensive
approach to ASEAN-EU relations in the years to come. The SOM ASEAN-EU which was held in
Singapore from 2-4 May 1995 agreed that the Group consist of 9 eminent person from EU and 7
from ASEAN (including Vietnam). The EU Commission will be responding on the details of financing
and methodology of the EPG
 

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The 

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founded in 1985 and dedicated to economic, technological, social, and cultural development emphasizing
collective self-reliance. Its seven founding members are?angladesh, ?hutan, India,
the Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined the organization in 2007. Meetings of heads
of state are usually scheduled annually; meetings of foreign secretaries, twice annually. Headquarters are in
Kathmandu, Nepal.

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The concept of SAARC was first adopted by then ?angladeshi president Ziaur Rahman. In the late 2000s,
Indian President proposed the creation of a trade bloc consisting of South Asian countries. The idea of regional
cooperation in South Asia was again mooted in May 2001. The foreign secretaries of the seven countries met
for the first time in Colombo in April 2002. The Committee of the Whole, which met in Colombo in August 2002,
identified five broad areas for regional cooperation. New areas of cooperation were added in the following
years.[1]

The objectives of the Association as defined in the Charter are:[2]

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Afghanistan was added to the regional grouping at the behest of India on 13 November 2005,[3]and became a
member on 3 April 2007.[4] With the addition of Afghanistan, the total number of member states were raised to
eight (8). In April 2006, the United States of America and South Korea made formal requests to be granted
observer status. The European Union has also indicated interest in being given observer status, and made a
formal request for the same to the SAARC Council of Ministers meeting in July 2006.[5][6] On 2 August 2006 the
foreign ministers of the SAARC countries agreed in principle to grant observer status to the US, South Korea
and the European Union.[6] On 4 March 2008, Iran requested observer status.[7] Followed shortly by the
entrance of Mauritius.

) !
+Secretariat

The SAARC Secretariat was established in Kathmandu on 16 January 1987 and was inaugurated by Late
King ?irendra ?ir ?ikram Shah of Nepal.

It is headed by a Secretary General appointed by the Council of Ministers from Member Countries in
alphabetical order for a three-year term. He is assisted by the Professional and the General Services Staff, and
also an appropriate number of functional units called Divisions assigned to Directors on deputation from
Member States.[8] The Secretariat coordinates and monitors implementation of activities, prepares for and
services meetings, and serves as a channel of communication between the Association and its Member States
as well as other regional organizations.[8]

The Memorandum of Understanding on the establishment of the Secretariat[8] which was signed by Foreign
Ministers of member countries on 17 November 1986 at ?angalore, India contains various clauses concerning
the role, structure and administration of the SAARC Secretariat as well as the powers of the Secretary-General.

In several recent meetings the heads of state or government of member states of SAARC have taken some
important decisions and bold initiatives to strengthen the organisation and to widen and deepen regional co-
operation.
The SAARC Secretariat and Member States observe 8 December as the SAARC Charter Day1.

) !
+Political issues
SAARC has intentionally laid more stress on "core issues" mentioned above rather than more decisive political
issues like the Kashmir dispute and the Sri Lankan civil war. However, political dialogue is often conducted on
the margins of SAARC meetings. SAARC has also refrained itself from interfering in the internal matters of its
member states. During the 12th and 13th SAARC summits, extreme emphasis was laid upon greater
cooperation between the SAARC members to fight terrorism.

) !
+Free trade agreement
Over the years, the SAARC members have expressed their unwillingness on signing a free trade agreement.
Though India has several trade pacts with Maldives, Nepal, ?hutan and Sri Lanka, similar trade agreements
with Pakistan and ?angladesh have been stalled due to political and economic concerns on both sides. India
has been constructing a barrier across its borders with ?angladesh and Pakistan. In 1993, SAARC countries
signed an agreement to gradually lower tariffs within the region, in Dhaka. Eleven years later, at the 12th
SAARC Summit at Islamabad, SAARC countries devised the South Asia Free Trade Agreement which created
a framework for the establishment of a free trade area covering 1.4 billion people. This agreement went into
force on January 1, 2008. Under this agreement, SAARC members will bring their duties down to 20 per cent
by 2009.

) !
+Dhaka 2009 Summit
The summit accorded observer status to People's Republic of China, Japan, South Korea and United States of
America. The nations also agreed to organize development funds under a single financial institution with a
permanent secretariat, that would cover all SAARC programs and also ranging from social, to infrastructure, to
economic ones.

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