Essay about 2101

2262 Words Feb 4th, 2012 10 Pages
Chapter 13: Entry Strategy and Strategic Alliances TECHNICO Chose wholly owned subsidiary (agribusiness) 1. Enter into china … not prepared to let chinese counterparts exploit their technology 2. Avoiding technical and licensing agreement 3. No risk in allowing co to use licensing strategy and not using it well |

Basic Entry Decisions
OLI
a) Location b) Ownership specific advantage c) internalisation-specific attributes (entry modes)

1) Which foreign markets? * Assessment of nations long run profit potential * Assess overall attractiveness of model * Suitability of product to that region * Nature of indigenous competitors

2) Timing of entry * Consider first mover
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Gather information about foreign market before deciding whether to enter on significant scale ii) difficult to build market share or capture first mover advantages
Summary
** even if a firm is a late entrant, through bench marking and differentiating itself from early movers, companies can build strong international business presence

Entry Modes 1) Exporting – international exchange relies on arm’s length arrangements * Many exporters often begin as exporters and then switch mode Advantages | Disadvantages | Avoids the often substantial cost of establishing manufacturing operations in host country | Firms may have to delegate distribution, marketing etc to someone local lose part of your value chain | Achieve experience curve and location economies | Transport costs may be very high especially if its bulky manufacturing goods Technico – chose subsidiaries instead because potatoes are bulky | May be more beneficial producing everything and a central location economies of scale from global sales volume | Foreign countries may have lower costs of production and can promote distribution efficiencies Crumpler – entered into China, VN… centralised their production at cheaper locations | | Tariff barriers may cause firm to lose competitive advantage |

2) Turnkey Projects – contractor agrees to handle every detail of project for

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