Embed Size (px)
DESCRIPTION
Strategies for Analyzing and Entering Foreign Markets
Citation preview
Chapter 12 - 1
Chapter 12
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Strategies for Analyzing and
Entering Foreign Markets
Chapter 12 - 2
Learning Objectives
• Learn how firms analyze foreign markets• Explore how firms choose a mode for
entering a foreign market• Investigate exporting and types of
intermediaries that help export goods• Identify international licensing issues and
pros and cons of licensing
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 3
Learning Objectives
• Identify basic international franchising issues and pros and cons of franchising
• Analyze contract manufacturing, turnkey projects, and management contracts as entry modes for international business
• Describe the greenfield and acquisition forms of FDI
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 4
Foreign Market Analysis
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 5
Assessing Alternative Foreign Markets
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Market Potential
Levels of Competition
Legal and Political Environment
Sociocultural Influences
Chapter 12 - 6
Evaluating Costs, Benefits, and Risks
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 7
Potential Costs
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Start-Up Costs
Operating Costs
Forfeit Profits
Delay Profits
Direct
Opportunity
Chapter 12 - 8
Potential Benefits
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Sales and Profits
Foreclosing of Markets
New Technology
Lower Costs
Competitive Advantage
Synergy
Chapter 12 - 9
Potential Risks
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Exchange-Rate Fluctuations
Operating Complexities
Political InstabilityDirect Financial Losses
Chapter 12 - 10
Summary of Discussion
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 11
Choosing an Entry Mode
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 12
Modes of Entry
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Decision Factors•Ownership•Location•Internalization•Other Factors
1. Need for Control2. Available Resources3. Global Strategy Foreign Direct Investment
Specialized Modes
International Franchising
International Licensing
Exporting
Chapter 12 - 13
Decision Factors
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Ownership Advantages
Location Advantages
Internalization Advantages
Chapter 12 - 14
Other Factors
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Need for Control
Availability of Resources
Overall Global Strategy
Chapter 12 - 15
Summary of Discussion
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 16
Exporting to Foreign Markets
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 17Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Control Financial Exposure
Enter Markets Gradually
MotivationsProactive(Pull)
Reactive(Push)
Advantages of Exporting
Chapter 12 - 18
Forms of Exporting
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
• Indirect Exporting
• Direct Exporting
• Intracorporate Transfers
Chapter 12 - 19
Additional Considerations
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Government Policies
Marketing Concerns
Distribution Issues
Logistical Considerations
Chapter 12 - 20
Export Intermediaries
Export Management Company
Webb-Pomerene Association
International Trading Company
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 21
Export Management Company
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Perform Export Department Functions
Act as Commission Agents
Take Title to Goods
Chapter 12 - 22
• Includes firms from same industry
• Coordinates export activities
• Performs promotional activities
• Oversees freight consolidation
• Engages in contract negotiations
• Exports goods for members
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Webb-Pomerene Association
Chapter 12 - 23
International Trading Company
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Research
Transportation
Marketing
Documentation
Distribution
Financing
Chapter 12 - 24
Other Intermediaries
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Manufacturers’Agents
Manufacturers’Export Agents
Export and Import Brokers
Freight Forwarders
Chapter 12 - 25
Summary of Discussion
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 26
International Licensing
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 27
Basic Issues in International Licensing
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Boundaries of the Agreement
Methods of Compensation
Rights, Privileges, and Constraints
Duration of the Agreement
Chapter 12 - 28
Advantages of International Licensing
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
•Low Financial Risk•Market Assessment•Sales Opportunities
Chapter 12 - 29Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
•Limited Opportunities•Potential Litigation•Competitive Issues
Disadvantages of International Licensing
Chapter 12 - 30
Summary of Discussion
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 31
International Franchising
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 32
Franchising Issues
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
•Franchise Elements•Transferability•Franchise Success•Foreign Investors
Chapter 12 - 33
International Franchises
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Opportunities Challenges
Product and System Shared Revenues
Low-Cost Expansion Increased Complexity
Learning Opportunities Quality Control
Chapter 12 - 34
Summary of Discussion
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 35
Specialized Entry Modes for International
Business
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 36
Contract Manufacturing
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Advantages Disadvantages
Reduced Costs
Distinctive Competence
Location Advantages
Loss of Control
Quality Issues
Unexpected Problems
Chapter 12 - 37Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Management Contracts
• Managerial Assistance• Technical Expertise• Other Services
Chapter 12 - 38
Specialized Strategy
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Turnkey Project B-O-T Project
Design
Construct
Equip
Build
Operate
Transfer
Chapter 12 - 39
Summary of Discussion
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 40
Foreign Direct Investment
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 41
Foreign Direct Investment (FDI)
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Opportunities Challenges
Increased Control
Profit Potential
Local Production
Complex Operations
Exchange Rates
Government Instability
Chapter 12 - 42Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
• Greenfield
• Acquisitions
• Joint Ventures
Three FDI Methods
Chapter 12 - 43
Strategic Advantages• Select the most useful site
• Construct modern facilities
• Reap economic development incentives
• Start with a clean slate
• Get acclimated to new business culture
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Greenfield Strategy
Chapter 12 - 44
Strategic Disadvantages• Implementation takes time and patience
• Location may be costly or unavailable
• Must deal with government regulations
• Must recruit and train a local workforce
• May be stigmatized as a “foreign firm”
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Greenfield Strategy
Chapter 12 - 45
Acquisition Strategy
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Strategic Advantages
Control Over the Firm’s Resources
Generates Immediate Revenues
Adds No New Capacity to the Industry
Chapter 12 - 46
Acquisition Strategy
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Strategic Disadvantages
Assumes the Firm’s Liabilities
Inherits Unresolved Problems
Requires Substantial Up-Front Spending
Chapter 12 - 47
Joint Ventures
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Joint Ownership
MutualInterests
Chapter 12 - 48
Summary of Discussion
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 12 - 49
Chapter 12
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Strategies for Analyzing and
Entering Foreign Markets
Chapter 12 - 50Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
