Download - Foreign market entry modes
![Page 1: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/1.jpg)
FOREIGN MARKET ENTRY MODES
ABASTILLAS, JAN MAE DECAUSTRIA, JASLINE KAYECASTILLO, ALMYRHARIOFLORIDO, JAN TRISIA
![Page 2: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/2.jpg)
FOREIGN MARKET ENTRY CONCEPT
OVERSEAS MARKET
ORGANIZATION
COST RISKDEGREE
OFCONTROL
EXPORTING
LICENSING
JOINT VENTURES
DIRECT INVESTMENT
![Page 3: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/3.jpg)
E X P O R T I N G
![Page 4: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/4.jpg)
E X P O R T SGoods and services
that are made in one country and
transmitted to foreigners
![Page 5: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/5.jpg)
E X P O R T I N GMARKETING AND DIRECT SALE OF
DOMESTICALLY-PRODUCED GOODS IN A FOREIGN COUNTRY
COUNTRY A COUNTRY B
MOST COMMON
![Page 6: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/6.jpg)
E X P O R T I N G
INDIRECT DIRECT
![Page 7: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/7.jpg)
INDIRECT EXPORTING
COMPANY A COMPANY B
COMPANY C
![Page 8: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/8.jpg)
DIRECT EXPORTING
PHILIPPINES USA
![Page 9: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/9.jpg)
INTRA-CORPORATE
COMPANY A COMPANY A
![Page 10: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/10.jpg)
L I C E N S I N G
![Page 11: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/11.jpg)
When a firm leases the right to use its intellectual
property to another firm, in return of a fee.
![Page 12: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/12.jpg)
R I
E P
IGHTS NTELLECTUALPROPERTY
AYS FEEARNS
![Page 13: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/13.jpg)
JOINT VENTURE
![Page 14: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/14.jpg)
DEFINITION Joint venture is when two or more parties, whether individuals or entities,
enter into an agreement to combine resources for a specific business undertaking.
The organization of a joint venture serves as a short term partnership for the duration of the project.
![Page 15: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/15.jpg)
PURPOSE To combine strengths and increase competitive advantage while
minimizing risk
Provide a way for companies to enter foreign markets
![Page 16: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/16.jpg)
EXAMPLE OF JOINT VENTURE IN PH
Total and Filoil Joint Venture
![Page 17: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/17.jpg)
EXAMPLE OF JOINT VENTURE IN PH
Cargill Philippines, Inc. and Jollibee Foods Corporation
![Page 18: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/18.jpg)
CONTRACTUAL AGREEMENT
Joint venture has certain factors and possibilities that need consideration thus, it is important to include everything in a legal format.
Elements required for a joint venture’s contractual agreement: Structure Objective Confidentiality Financial contributions Assets and employees Intellectual property ownership Management Profits, losses and liabilities Disputes Exit strategy
![Page 19: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/19.jpg)
COMMON OBJECTIVES IN A JOINT VENTUREMarket entryRisk/reward sharingTechnology sharing and joint product development
Conforming to government regulations.
![Page 20: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/20.jpg)
WHEN IS A JOINT VENTURE FAVORABLE? The partners' strategic goals converge while their competitive goals
diverge
The partners' size, market power, and resources are small compared to the industry leaders
Partners are able to learn from one another while limiting access to their own proprietary skills.
![Page 21: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/21.jpg)
KEY ISSUES TO CONSIDER Ownership Control Length of agreement Pricing technology transfer Local firm capabilities and resources, Government intentions
![Page 22: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/22.jpg)
POTENTIAL PROBLEMS Conflict over asymmetric new investments Mistrust over proprietary knowledge Performance ambiguity - how to split the pie Lack of parent firm support Cultural clashes If, how, and when to terminate the relationship
![Page 23: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/23.jpg)
JOINT VENTURES HAVE CONFLICTION PRESSURE TO COOPERATE AND COMPETE:
Strategic imperative: the partners want to maximize the advantage gained for the joint venture, but they also want to maximize their own competitive position.
The joint venture attempts to develop shared resources, but each firm wants to develop and protects its own proprietary resources.
The joint venture is controlled through negotiations and coordination processes, while each firm would like to have hierarchal control.
![Page 24: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/24.jpg)
FOREIGN DIRECT INVESTMENT
![Page 25: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/25.jpg)
FOREIGN DIRECT INVESTMENT
Foreign direct investment 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.
Foreign direct investment 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.
![Page 26: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/26.jpg)
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.
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.
![Page 27: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/27.jpg)
Foreign Direct Investment usually occurs in one of two ways:
1.Greenfield Investment2.Cross-border merges and
acquisition
Foreign Direct Investment usually occurs in one of two ways:
1.Greenfield Investment2.Cross-border merges and
acquisition
![Page 28: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/28.jpg)
COMPARISON OF FOREIGN MARKET ENTRY MODES
![Page 29: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/29.jpg)
EXPORTING
![Page 30: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/30.jpg)
CONDITIONS FAVORING THIS MODE
Limited sales potential in target country; little product adaptation required. Distribution channels close to plants. High target country production cost. Liberal import policies High political risk
![Page 31: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/31.jpg)
ADVANTAGES
Minimizes risk and investment Speed of entry. Maximizes scale; uses existing facilities
![Page 32: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/32.jpg)
DISADVANTAGES
Trade barriers and tariffs add to costs. Transport costs. Limited access to local information Company viewed as an outsider.
![Page 33: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/33.jpg)
LICENSING
![Page 34: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/34.jpg)
CONDITIONS FAVORING THIS MODE
Import and investment barriers Legal protection possible in target environment Low sales potential in target country Large cultural distance Licensee lacks ability to become a competitor.
![Page 35: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/35.jpg)
ADVANTAGES
Minimizes risk and investment Speed of entry. Able to circumvent trade barriers High ROI
![Page 36: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/36.jpg)
DISADVANTAGES
Disadvantages Lack of control over use of assets Licensee may become competitor. Knowledge spillovers License period is limited.
![Page 37: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/37.jpg)
JOINT VENTURES
![Page 38: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/38.jpg)
CONDITIONS FAVORING THIS MODE
Import barriers. Large cultural distance Assets cannot be fairly priced High sales potential Some political risk Government restrictions on foreign ownership Local company provide skills, resources, distribution network,, brand name,
etc.
![Page 39: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/39.jpg)
ADVANTAGES
Overcomes ownership restrictions and cultural distance Combines resources of 2 companies Potential for learning Viewed as insider Less investment required
![Page 40: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/40.jpg)
DISADVANTAGES
Difficult to manage Dilution of control Greater risk than exporting & licensing Knowledge spillovers Partner may become a competitor.
![Page 41: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/41.jpg)
DIRECT INVESTMENT
![Page 42: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/42.jpg)
CONDITIONS FAVORING THIS MODE
Import barriers Small cultural distance Assets cannot be fairly priced High sales potential Low political risk
![Page 43: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/43.jpg)
ADVANTAGES
Greater knowledge of local market Can better apply specialized skills Minimizes knowledge spillover Can be viewed as an insider
![Page 44: Foreign market entry modes](https://reader030.vdocuments.site/reader030/viewer/2022021417/58d1b3041a28ab98278b4ee9/html5/thumbnails/44.jpg)
DISADVANTAGES
Higher risk than other modes Requires more resources and commitment May be difficult to manage local resources