today's topics why international expansion? how to select a market international market...
Post on 22-Dec-2015
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Today's Topics
Why international expansion? How to select a market International market research Selecting a mode of market entry
Why “Go” International?
Markets Resources Diversification Strategy
Selecting a Market
Out of approximately 200 countries in the world, and thousands of states, regions, territories, or major cities how do we decide where to expand internationally?
http://en.wikipedia.org/wiki/List_of_countries
What Data Might You Need?
Demographics Economics Laws Culture Technology Literacy and education Infrastructure and logistics Rates of change in all of the above
Global Market Research
Secondary data Internet International organizations Government agencies (trade.gov) Industry and trade associations Market research companies
Primary data
Data Challenges
Availability No data Too expensive Access restricted Language barriers
Comparability (cultural differences) Reliability
Biased Missing or wrong information Outdated
Group Activity
Select a product or service Identify three possible good choices of
countries in which to expand with product or service
Identify data needed to finalize choice to one country
(Non-Exclusive) Ways to Enter a Foreign Market
Wholly-owned subsidiary Equity joint venture Strategic alliance
Equity/Cross-ownership Marketing/Sales/Distribution Manufacturing/Production/Design
Licensing, franchising, or contract Exporting
Direct Indirect
Collaboration may occur anywhere on the Value Chain
Challenges of Collaboration
Create a competitor Antitrust Violations Loss of control
Processes or quality Technology
Conflict between partners Culture Relative partner contributions Purpose of the JV
Group Activity
Identify the best type of mode of entry for your product or service
Explain your choice Identify important partner attributes
Degree of Export Involvement
Direct exportingDirect exporting(sell to buyers)(sell to buyers)
Indirect exportingIndirect exporting(sell to intermediaries)(sell to intermediaries)
• Sales representatives
• Distributors
• Sales representatives
• Distributors
• Agents• Export management companies• Export trading companies
• Agents• Export management companies• Export trading companies
Export/Import Financing
Licensing
AdvantagesAdvantages
+ Finance expansionFinance expansion+ Reduce riskReduce risk+ Reduce counterfeitsReduce counterfeits+ Upgrade technologiesUpgrade technologies
– Restrict licensor’s futureRestrict licensor’s future– Reduce global consistencyReduce global consistency– Lend strategic propertyLend strategic property
DisadvantagesDisadvantages
Company owning intangible property (licensor) grantsCompany owning intangible property (licensor) grantsanother firm (licensee) the right to use it for a specified timeanother firm (licensee) the right to use it for a specified time
Franchising
AdvantagesAdvantages+ Low cost and low riskLow cost and low risk+ Rapid expansionRapid expansion+ Local knowledgeLocal knowledge
– CumbersomeCumbersome– Lost flexibilityLost flexibilityDisadvantagesDisadvantages
Company (franchiser) supplies another (franchisee)Company (franchiser) supplies another (franchisee)with intangible property over an extended periodwith intangible property over an extended period
Management Contract
Company supplies another withCompany supplies another withmanagerial expertise for amanagerial expertise for a
specific period of timespecific period of time
AdvantagesAdvantages+ Few assets riskedFew assets risked+ Nations finance projectsNations finance projects+ Develops local workforceDevelops local workforce
DisadvantagesDisadvantages– Personnel at riskPersonnel at risk– Create competitorCreate competitor
Turnkey Project
AdvantagesAdvantages
+ Firms specialize in coreFirms specialize in core competencycompetency
+ Nations obtain infrastructureNations obtain infrastructure projectsprojects
– Politicized processPoliticized process– Create competitorCreate competitor
DisadvantagesDisadvantages
Company designs, constructs, and testsCompany designs, constructs, and testsa production facility for a clienta production facility for a client
Wholly Owned Subsidiary
Facility entirelyFacility entirelyowned and controlledowned and controlled
by a single parent companyby a single parent company
AdvantagesAdvantages
+ Day-to-day controlDay-to-day control+ Coordinate subsidiariesCoordinate subsidiaries
DisadvantagesDisadvantages
– Expensive– High risk
Separate company created and jointly owned by two or more Separate company created and jointly owned by two or more independent entities to achieve a common business objective independent entities to achieve a common business objective
Advantages
• Reduce risk level• Penetrate markets• Access channels• Protect interests
Disadvantages
• Partner conflict• Lose control
Joint Venture
Strategic Alliances
DisadvantagesCreate competitor
Partner conflict
Advantages Share project cost
Tap competitors’ strengths Gain channel access
Protect interests
Entities cooperate (but do not form a separate Entities cooperate (but do not form a separate company) to achieve strategic goals of eachcompany) to achieve strategic goals of each
Levels of Company Strategy