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Agenda

1Facultad de Negocios, UPCCarrera de Administracin y Negocios Internacionales

Caso Burberry: Decisiones sobre nuevas adquisiciones Debate Burberry & Angela Ahrendts Anlisis y Seleccin de MercadosModos de Entrada (1era parte)

Conclusiones

Semana 6

Logro

El alumno identifica las razones paraentrar en mercados extranjeros yexplica los modos de entrada amercados internacionales

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Nuestro Mapa de Direccin

2Facultad de Negocios, UPCCarrera de Administracin y Marketing

Globalizacin vs Internacionalizacin The World is Flat

El Entorno Global

Estrategias de Internacionalizacin

Factores para el comercio y la inversin, Las

Multinacionales.

Planeamiento yEstrategias de

Internacionalizacin

Joint ventures, Alianzas Estratgicas, IED

Plan de Marketing InternacionalEntry Modes + EstrategiaMarketing Internacional

Organizacin de la Multinacional, Produccin ,Logstica, RRHH, Tecnologa de la Informacin

Organizacin y Control deOperaciones Empresa

Internacional

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Conocen Burberry?

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Burberry

Burberry es una casa britnica de moda de lujo, fabrica ropa y otros complementos. Sudistintivo es un caballero ingls montado en un corcel y el monograma de enrejado. Laempresa tiene tiendas propias en el mundo entero, y tambin se vende en almacenesde prestigio.La marca tambin controla un negocio por catlogo y tiene una lnea de fragancias.Tanto la Reina Isabel II como elPrncipe de Gales han concedido a la marca el ttuloProveedor Real. El Director de Diseo actual es Christopher Bailey.

Fundacin Basingstoke, Reino Unido en 1856, Sede Londres (Reino Unido)mbito Mundial, Industria ModaIngresos 1,279.9 millones (2010)Beneficio de explotacin 171.1 millones (2010)Beneficio neto 82.2 millones (2010)Empleados 6,681 (2010)Fuerte presencia de marca en mercados desarrollados
http://es.wikipedia.org/wiki/Isabel_II_del_Reino_Unidohttp://es.wikipedia.org/wiki/Pr%C3%ADncipe_de_Galeshttp://es.wikipedia.org/w/index.php?title=Christopher_Bailey&action=edit&redlink=1http://es.wikipedia.org/wiki/Basingstokehttp://es.wikipedia.org/wiki/Reino_Unidohttp://es.wikipedia.org/wiki/Industriahttp://es.wikipedia.org/wiki/Libra_esterlinahttp://es.wikipedia.org/wiki/Libra_esterlinahttp://es.wikipedia.org/wiki/Libra_esterlinahttp://es.wikipedia.org/wiki/Libra_esterlinahttp://es.wikipedia.org/wiki/Libra_esterlinahttp://es.wikipedia.org/wiki/Libra_esterlinahttp://es.wikipedia.org/wiki/Industriahttp://es.wikipedia.org/wiki/Reino_Unidohttp://es.wikipedia.org/wiki/Reino_Unidohttp://es.wikipedia.org/wiki/Reino_Unidohttp://es.wikipedia.org/wiki/Basingstokehttp://es.wikipedia.org/w/index.php?title=Christopher_Bailey&action=edit&redlink=1http://es.wikipedia.org/w/index.php?title=Christopher_Bailey&action=edit&redlink=1http://es.wikipedia.org/w/index.php?title=Christopher_Bailey&action=edit&redlink=1http://es.wikipedia.org/wiki/Pr%C3%ADncipe_de_Galeshttp://es.wikipedia.org/wiki/Pr%C3%ADncipe_de_Galeshttp://es.wikipedia.org/wiki/Pr%C3%ADncipe_de_Galeshttp://es.wikipedia.org/wiki/Pr%C3%ADncipe_de_Galeshttp://es.wikipedia.org/wiki/Pr%C3%ADncipe_de_Galeshttp://es.wikipedia.org/wiki/Isabel_II_del_Reino_Unidohttp://es.wikipedia.org/wiki/Isabel_II_del_Reino_Unidohttp://es.wikipedia.org/wiki/Isabel_II_del_Reino_Unido

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Debate Burberry 1:

Cul es la estrategia global demarca que tiene Burberry?Por qu mercadosemergentes?

Cules son los diversos modode entrada de Burberryidentificable en el discurso de

Ahrendts?
http://www.youtube.com/watch?v=A3sz2CzJ7Oo&feature=share&list=PLpYAc35Xdv2pKk8gCgmHmkv6H0PvBK2H7

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Important issues when going into internationalization

Selection of Foreign Market(s)

Which one(s) and to which extent?

Selection of the Entry Mode

Export, Representative Office,

JV, Franchising, Licensing, Subsidiary, etc

6

Firms expanding internationally must decide

Which markets to enter

When to enter and on what scale

Which entry mode to use

Those who enter late can still be

succesful against consolidated

global competition but they have

to apply the appropriate

strategy of entry to do so

Factors affecting the decisions

may include transport costs,trade barriers, political and

economic risks, and firm

strategy

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The choice must be based on an assessment

of a nations long-run profit potential

The attractiveness of a country depends upon

balancing the benefits, costs, and risks

associated with doing business in that country

Benefits include:

Size of market

Present wealth of the consumers in the market Likely future wealth of consumers

Economic growth rates

Which Foreign Market?

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Advantages frequently associated with

entering a market early are commonly knownas first-mover advantages:

The ability to preempt rivals and capture demand by establishinga strong brand name

Ability to build sales volume

Ability of early entrants to create switching costs

Disadvantages associated with entering aforeign market before other internationalbusinesses are referred to as first-mover

disadvantages:

Pioneering costs are costs that an early entrant has to bear

Possibility that regulations may change

Timing of the Entry

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Large scale entry Strategic Commitments - a decision that has

a long-term impact and is difficult to reverse

May cause rivals to rethink market entry

May lead to indigenous competitive response

Small scale entry

Time to learn about market

Reduces exposure risk

Scale of Entry

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Analyzing

&Selecting a Market

The important questions about internationalization

10

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Which Market (s)?

Assessing the potential gain(s) of the country(ies) in the long run

Equilibrium of Benefits vs.

lossesCosts & Risks

Depending on the size(s) as well as the present & future potentalities

Thinking out of the Box

Lets get think about and discussAbout Risks vs. Profits for each

block of countries afterwards

Analyzing & Selecting a Market (1)

11

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Analyzing & Selecting a Market (3)

LatinAmerica

12

Central America &

Mexico

USA

WESTERN EUROPE EASTERN EUROPE FAR EAST

MIDDLE

EAST

AFRICA

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Debate Burberry 2:

Cuals son los factoresrelevantes en su decisin deingresar a China?

que inputs le da el mercadochino?

qu capacidades internastiene Burberry para

aventurarse en el mercadochino?
http://www.youtube.com/watch?v=A3sz2CzJ7Oo&feature=share&list=PLpYAc35Xdv2pKk8gCgmHmkv6H0PvBK2H7

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Matriz de seleccin de mercados(Macrosegmentacin) 1

Desde el producto(A travs de una valoracin cualitativa de variables e indicadores, testear losmercados potenciales, la red ms adecuada y las mejores opciones para laempresa)

Seleccionar el Mercado Objetivo

1. Oportunidades segn la demanda

2. Importaciones y competencia

3. Disponibilidad de Transporte4. Tratamiento Preferencial

5. Informacin de Mercado (Cualitativa)

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Matriz de seleccin de mercados(Macrosegmentacin) 2

Tomando en cuenta la Empresa Internacional(A travs de una valoracin cualitativa de variables e indicadores, testear elentorno cultural, econmico, politico y legal de los potenciales mercadosdestino)

Analizar el entorno global

1. Afinidad Cultural y Comercial

2. Resea geogrfica, econmica, poltica y legal

3. Marketing Mix y tendencias

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Selection

of anEntry Mode

The important questions about internationalization

16

d

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Selecting a Market according to a Product

Thinking out

of the Box

Selecting a Market

Where and to which extent?

Selecting a Entry Mode

Export, - JV, - Subsidiary

Representative Office. etc

Industrialshoes

Babygarments

Sugar Cane

Animationsfor Computers

Computerprogramming

Soft drinksbottling

Car assembly/ manufacturing

Gold Jewelry

17

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To which extent?

A large scale entry needs

significant resources

but is faster to implement

A large scale entry means a

strategic commitment which

is difficult to reverse

Modifying the game field

while entering is also difficult

to reverse

Selecting an Entry Mode (1)

A tactical decision

based on3 concerns

18

l d

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When?

2 questions

The first to enter the market

incur higher costs & takehigher risks of failure

Selecting an Entry Mode (2)

Are there any advantage(s)

to an early entry in themarket(s)?

19

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Thinking out

of the Box

Select a foreign market

Which one, When and to which extent?

Select an Entry Mode

Export, JV, subsidiary etc.

AJE Group

Alicorp

RANSA

SupermercadosPeruanos

Camposol

BCP Gloria Group

NewspaperEl Comercio

Selecting a Market acording to a Company

20

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1

Turnkey project / Management Contracts

Licencing (Industrial)

Export (Direct or through Importer / Distributor)

Franchising (Commercial)

Joint Venture

Subsidiary with majority equity (Greenfield /

merger or acquisition)

Entry Modes

2

45

3

6

Representative Office (Commercial)

7

8 Strategic Alliance

21

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(1) EXPORT

Advantages

Avoid cost of establishingoperations

Economies of location based on thecurb of experience

Economes of cale due to the

standadization of products withsome customization

Disavantages

Difficulties for identifying andlocating the related costs

Cost of logistic

Custom barriers

Lack of loyalty from the distributionnetwork (except in th case ofexclusive contracts)

22

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(2) REPRESENTATIVE OFFICE

Advantages

Limit costs and risks of establishingoperations

Better control of the activitieswithin the country where therepresemtative office is established

Surveillance of the countryevolution prior to other type ofoperations

Disavantages

Not possible to invoice

In some countries, such type of

implementation is not permitted

23

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Franchising is a specialized form of licensing and used

primarily by service firms in which the franchisor not onlysells intangible property to the franchisee, but also insiststhat the franchisee agree to abide by strict rules as tohow it does business

Franchising is attractive because firms can quickly build aglobal presence by avoiding many costs and risks ofopening up a foreign market

Franchising is unattractive because the geographicdistance of the firm from its foreign franchisees can makepoor quality difficult for the franchisor to detect

(3) FRANCHISING

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(3) & (4) A CHISI G & LIC SI G

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Advantages

There is neither cost nor riskrelated to the starting of theoperations

Very benefitial to companies lackingof investment capacity

Possibility to overcome the barriersrelated to investment

Franchising

Implies a longer term relationship and requires strict rules

and procedure for conducting he business

(3) & (4) FRANCHISING & LICENSING

Disadvantages

No strict control over themanufacturing & marketingprocesses as well the strategies ofdevelopment in both cases

Limit the possibility of crossedsubsidies apart from the royalties

May be a source of competitiveadvantage for the beneficiary

26

(5) JOINT VENTURE

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A joint venture (JV) is the establishment of a separate

firm that is jointly owned by two or more firms andmost JVs are 50:50 partnerships

JVs are attractive because the firm may benefitfrom a partner's local knowledge, the shared costs

and risks, and political regulations

JVs are unattractive because:

The firm risks losing its technology to its partner

It may not have the tight control over subsidiaries to realizeexperience curve or location economies Shared ownership can lead to conflicts and battles for control

if goals and objectives differ or change over time

(5) JOINT VENTURE

(5) JOINT VENTURE

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Advantages

Knowledge of the local partner

Sharing of costs and risks

Reduced political risks: Good

against political considerationswhich may prevent other types ofprojects

(5) JOINT VENTURE

Disadvantages

Risk of losing control of the processes and therelated technologies and know-how

No strict control over the subsidiaries

Complicate the rules of the game of worldcompetition

May not realize experience curve orlocation economies operations

28

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Conclusiones

que debemos tomar en cuenta al analizar unmercado internacional?

cules son esos factores clave que no debenfaltar en la construccin de lamacrosegmentacin?

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Agenda


Debate sobre la IED China en Alatina Entry Modes (2da parte) Conclusiones Presentaciones de Company Profile + Executive Summary (8 min

presentacin)

Semana 7

Logro El alumno identifica las

razones para entrar enmercados extranjeros yexplica los modos de entradaa mercados internacionales.

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Nuestro Mapa de Direccin

31Facultad de Negocios, UPCCarrera de Administracin y Marketing

Globalizacin vs Internacionalizacin The World is Flat

El Entorno Global

Estrategias de Internacionalizacin

Factores para el comercio y la inversin, Las

Multinacionales.

Planeamiento yEstrategias de

Internacionalizacin

Joint ventures, Alianzas Estratgicas, IED

Plan de Marketing InternacionalEntry Modes + EstrategiaMarketing Internacional

Organizacin de la Multinacional, Produccin ,Logstica, RRHH, Tecnologa de la Informacin

Organizacin y Control deOperaciones Empresa

Internacional

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Pero como va la IED China en el mundo,sobretodo en Latinoamrica???

Nueva era de la poltica china enAmrica Latina (2008 - )

Estrategias de competitividad de lasEMN chinas

La financiacin china en ALC comoapoyo a la penetracin de sus EMN

Implicancias para las empresaslatinoamericanas.

La IED en China est cayendo.

E t M d

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1

Turnkey project / Management Contracts

Licencing (Industrial)

Export (Direct or through Importer / Distributor)

Franchising (Commercial)

Joint Venture

Subsidiary with majority equity (Greenfield /

merger or acquisition)

Entry Modes

2

4

5

3

6

Representative Office (Commercial)

7

8 Strategic Alliance

33

WHOLLY OWNED SUBSIDIARY

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In a Wholly Owned Subsidiary (WOS), the firm has100% ownership; it can be established by settingup a new operation (i.e., green-field investment) orby merging and acquiring (M&A) an establishedfirm.

WOSs are attractive because they: Reduce the risk of losing control over core competencies

Give a firm the tight control over operations in differentcountries necessary for global strategic coordination

Realize location and experience curve economies

WOSs are unattractive because of the full cost andrisk of setting up overseas operations

WHOLLY OWNED SUBSIDIARY

(6) S b idi ith j it it

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Advantages

When the competitive advantage isthe know-how and/or technologicalcompetence

Tight control over the operations

May allow economies of location

Greenfield

Mergers & Acquisitions

(6) Subsidiary with majority equity

(Greenfield / Merger or Acquisition)

Disadvantages

It is the most expensive & riskyentry mode

Supporting all the risks of learningfrom the operations

Necessity to mix and adaptdifferent company or corporatecultures (merger & acquisition)

35

(6A) GREENFIELD OPERATION

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Advantages

Build up p the subsidiary according toyour needs and wants

Building up the company culture fromzero.

Establishing the operating proceduresas per your concepts

Lincoln ElectricWelding Tools & Equipment

(6A) GREENFIELD OPERATION

Disadvantages

Time necessary for the establishment

= Long lasting procedure

Uncertainty about the future inputsand earnings

May be invalidated by agressive and

adquiring minded global competitors

36

(6B) MERGERS & ACQUISITIONS

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Advantages

Easy to execute.

Eliminate reduce the impact of yourcompetitors.

The management and shareholdershavethe feeling it is less risky than a

greenfield operation.

(6B) MERGERS & ACQUISITIONS

Disadvantages

The price of the operation may be very

high

Differences in company or corporatecultures.

Not easy to work out synergies.

Discrepancies and lack of informationwhen analyzing the aquisition

37

(7) TURNKEY PROJECTS

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At completion of a turnkey project, the foreign

client is handed the "key" to a plant that is readyfor full operation. The Contractor agrees to handle every

detail of the project to the foreign client

Turnkey projects are common in the chemical, pharmaceutical, petroleumrefining,and metal refining industries



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Advantages

Necessary know-how to starttechnological complicated processes.

Useful for exporting know-how andtechnology and get a return from them

Minor risk due to to th advantage ofposessing the know-how.

Less risky than FDI


Disadvantages

Short & Mid-term spot businesses. Nolong term interest in the foreign country

Possibility to facilitate the introduction ofa competitor

The transferred of know how &technology may be a source ofcompetitive advantage for thosebenefiting from it.

39

Advantages & Disadvantages of Entry Modes

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Advantages & Disadvantages of Entry Modes

(8) STRATEGIC ALLIANCE

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Strategic alliances refer to cooperative agreements between potentialor actual competitors and range from formal JVs to short-term

contractual agreements.

There is an increasing tendency for strategic alliances


The success of an alliance is a function of:

Partner selection

Alliance structure

The manner in which the alliance is managed

A good partner Helps the firm achieve its strategic goals and has the capabilities the firm lacks and

that it values Shares the firms vision for the purpose of the alliance

Is unlikely to try to opportunistically exploit the alliance for its own ends


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Advantages

Facilitate the introduction to a

foreign market

Opportunity to share fixed costsresulting from new products orprocesses

Join complementary capacities or

assetsMean to reach technologicalstandardization

Boeing Roll Royce


Disadvantages

May lead competitors to an easyaccess to kmow-how andtechnology

Risks links to the fact of sharinginformation

42

Characteristics of a Strategic Alliance

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Independence ofParticipants

SharedBenefits

OngoingContributions

Markets

Benefits

Control Products

Technology

14-23

Characteristics of a Strategic Alliance

Global Strategic Alliance

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Firms join to attain world leadership

Each partner has significant strength to

bring to the Alliance

A true global vision

Relationship is horizontal not vertical

When competing in markets not part of

alliance, they retain their own identity

Global Strategic Alliance

How to make Strategic Alliances work?

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After selecting the partner and structuringthe alliance, the alliance must be managed

Successfully managing an alliance requires

managers from both companies to buildinterpersonal relationships

A major determinant of how much a

company gains from an alliance is its abilityto learn from its alliance partners


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Strategic Decisions in terms of

Implementation Processes

47


Core Competences vs. Entry Mode (1)

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The optimal entry mode depends to some degree on

the nature of a firms core competencies

When a firms competitive advantage is based onproprietary technological know-how, the firm shouldavoid licensing and JV arrangements unless it believes

its technological advantage is only transitory, or that itcan establish its technology as the dominant design inthe industry

When a firms competitive advantage is based onmanagement know-how and brand name, the risk oflosing control over the management skills is not high.Such firms (e.g., McDonalds) may favor a combinationof franchising and subsidiaries (either WOS or JV)

How to make Strategic Alliances work?Core Competences vs. Entry Mode (1)


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The optimal entry mode for firms depends to somedegree on the nature of their core competencies.

A distinction can be drawn between firms whose core

competency is: Technological know-how

Management know-how

The greater the pressures for cost reductions are, the

more likely a firm will want to pursue somecombination of exporting and wholly ownedsubsidiaries



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Licensing and joint-venturearrangements should beavoided if possible

Should probably use a whollyowned subsidiary

Exceptions include

An arrangement can be

structured to reduce the riskof licensees

If the technological

advantage is only transitory

The firms valuable assetis normally a brandname

The result is thatfranchising andsubsidiaries are veryattractive

Often times a jointventure is politicallymore acceptable


Technological Know-How Management Know-How

Pressure for Cost vs. Entry Mode

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Pressure for Cost vs. Entry Mode

When pressure for cost reductions is high, firms are more likely to

pursue some combination of exporting and WOSs

This will allow the firm to achievelocation and scale economies as well asretain some degree of control over itsworldwide product manufacturing anddistribution

So, firms pursuing globalstandardization ortransnational strategiesprefer WOSs

Greenfield vs. Acquisition (1)

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Firms can establish a WOS by greenfield or acquisition

strategyThe main advantage of a greenfield venture is that itgives the firm a greater ability to build the kind ofsubsidiary company that it wants. However, greenfieldventures are slower to establish and are also risky

Acquisitions are attractive because they:

are quick to execute

enable firms to preempt their competitors

may be less risky than greenfield ventures



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Pro: Can build subsidiary it

wants

Easy to establish

operating routines Quick to execute

Preempt competitors

Possibly less risky

Con: Slow to establish

Risky

Preemption by

aggressive competitors Disappointing results

Overpay for firm

Optimism about valuecreation (hubris)

Culture clash Problems with proposed

synergies

q ( )


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Acquisitions areattractive if: There are well

established firms alreadyin operation

Competitors want to

enter the region

Greenfield ventures areattractive if: There are no

competitors

Competitors have a

competitive advantage

that consists of

embeddedcompetencies, skills,

routines, and culture

q ( )

Risk, Control & Experience (4)

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Risk ,Control, and Experience

, p ( )

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F l d d N i UPC

Conclusiones

1. Es la IED la mejor alternativa frente a losobstculos al comercio?

2. Pueden las pymes exportadoras apostar por

otros modos de entrada adems de laexportacin.que deben hacer?

dni _06 y 07 2013

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