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8 Cards in this Set
- Front
- Back
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3 Questions to ask before making global decisions |
1.) Which foreign market to enter? - PEL, culture 2.) When to enter? - first mover advantage, costs 3.) On what scale? - strategic commitments (shipping, transportation, etc.) |
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Export Strategies |
- Manufacture and supply from home country to other countries Adv: low capital requirements, no distribution risk, no direct investment Dis: high transportation and shipping costs, exchange rate risks, tariffs/import duties, loss of channel control |
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Turnkey Projects |
- contracor handles all details of a project for a foreign client, including training of operating personnel Adv: low capital requirements, less risky (PE), Good way of earning on competencies and skills, good on FDI limited host countries Dis: no long term focus, creating competition, selling/losing core competencies |
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Licensing and Franchising |
Licensing - grants rights to intangible property (technology) in return for royalty. PRODUCTION Franchising - grants right to intangible property such as a trademark and ensures rules to conduct business. Also in return for royalty. SERVICES Ad: low resource requirements, income from royalties and franchising fees, rapid expansion into many markets Dis: maintaing control of proprietary know-how, low control of quality, loss of operational and quality control, adapting to local market tastes and expectations |
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Partnerships (SA and JV) |
JV - firm jointly owned by 2 or more independent firms Ad: avoid entry barriers, allow for resource and risk sharing, partners knowledge of local market cond't, joint learning and sharing Dis: cultural and language barriers, costs of establishing the working arrangement, issues of joint control, protection of proprietary tech or competitive advantage |
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Wholly Owned Subsidary Acquisition Strategies |
- Adv: high level of control, quick large-scale market entry, avoids entry barriers, access to acquired firms skills - Dis: costs of acquisitions (over-pay), complexity of acquisition process, integration of the firms structures, cultures, operations and personnel |
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WOS Greenfield |
- builds own subsidairy from scratch Adv: high level of control over venture, "learning by doing" in local market, direct transfer of firms technology, skills, business practices and culture Dis: capital cost of initial development, risks of loss due to political instability or lack of legal protection of ownership, slowest form of entry due to extended time required to construct facility |
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Profit potential Financial commitment, risk, and operational control |
Exporting - lowest profit potential, lowest risk, commitment, and control licensing - Second least JV - Second most Direct Investment - Most profit potential, highest risk |
