griffin ib7 inppt_12
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Griffin ib7 inppt_12TRANSCRIPT
Chapter 12 - 1
Chapter 12
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Strategies for Analyzing and
Entering Foreign Markets
Chapter 12 - 2
Learning Objectives
• Learn how firms analyze foreign markets• Explore how firms choose a mode for
entering a foreign market• Investigate exporting and types of
intermediaries that help export goods• Identify international licensing issues and
pros and cons of licensing
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Chapter 12 - 3
Learning Objectives
• Identify basic international franchising issues and pros and cons of franchising
• Analyze contract manufacturing, turnkey projects, and management contracts as entry modes for international business
• Describe the greenfield and acquisition forms of FDI
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Chapter 12 - 4
Foreign Market Analysis
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Chapter 12 - 5
Assessing Alternative Foreign Markets
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Market Potential
Levels of Competition
Legal and Political Environment
Sociocultural Influences
Chapter 12 - 6
Evaluating Costs, Benefits, and Risks
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Chapter 12 - 7
Potential Costs
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Start-Up Costs
Operating Costs
Forfeit Profits
Delay Profits
Direct
Opportunity
Chapter 12 - 8
Potential Benefits
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Sales and Profits
Foreclosing of Markets
New Technology
Lower Costs
Competitive Advantage
Synergy
Chapter 12 - 9
Potential Risks
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Exchange-Rate Fluctuations
Operating Complexities
Political InstabilityDirect Financial Losses
Chapter 12 - 10
Summary of Discussion
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Chapter 12 - 11
Choosing an Entry Mode
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Chapter 12 - 12
Modes of Entry
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Decision Factors•Ownership•Location•Internalization•Other Factors
1. Need for Control2. Available Resources3. Global Strategy Foreign Direct Investment
Specialized Modes
International Franchising
International Licensing
Exporting
Chapter 12 - 13
Decision Factors
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Ownership Advantages
Location Advantages
Internalization Advantages
Chapter 12 - 14
Other Factors
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Need for Control
Availability of Resources
Overall Global Strategy
Chapter 12 - 15
Summary of Discussion
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Chapter 12 - 16
Exporting to Foreign Markets
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Chapter 12 - 17Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Control Financial Exposure
Enter Markets Gradually
MotivationsProactive(Pull)
Reactive(Push)
Advantages of Exporting
Chapter 12 - 18
Forms of Exporting
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• Indirect Exporting
• Direct Exporting
• Intracorporate Transfers
Chapter 12 - 19
Additional Considerations
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Government Policies
Marketing Concerns
Distribution Issues
Logistical Considerations
Chapter 12 - 20
Export Intermediaries
Export Management Company
Webb-Pomerene Association
International Trading Company
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Chapter 12 - 21
Export Management Company
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Perform Export Department Functions
Act as Commission Agents
Take Title to Goods
Chapter 12 - 22
• Includes firms from same industry
• Coordinates export activities
• Performs promotional activities
• Oversees freight consolidation
• Engages in contract negotiations
• Exports goods for members
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Webb-Pomerene Association
Chapter 12 - 23
International Trading Company
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Research
Transportation
Marketing
Documentation
Distribution
Financing
Chapter 12 - 24
Other Intermediaries
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Manufacturers’Agents
Manufacturers’Export Agents
Export and Import Brokers
Freight Forwarders
Chapter 12 - 25
Summary of Discussion
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Chapter 12 - 26
International Licensing
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Chapter 12 - 27
Basic Issues in International Licensing
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Boundaries of the Agreement
Methods of Compensation
Rights, Privileges, and Constraints
Duration of the Agreement
Chapter 12 - 28
Advantages of International Licensing
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•Low Financial Risk•Market Assessment•Sales Opportunities
Chapter 12 - 29Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
•Limited Opportunities•Potential Litigation•Competitive Issues
Disadvantages of International Licensing
Chapter 12 - 30
Summary of Discussion
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Chapter 12 - 31
International Franchising
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Chapter 12 - 32
Franchising Issues
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•Franchise Elements•Transferability•Franchise Success•Foreign Investors
Chapter 12 - 33
International Franchises
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Opportunities Challenges
Product and System Shared Revenues
Low-Cost Expansion Increased Complexity
Learning Opportunities Quality Control
Chapter 12 - 34
Summary of Discussion
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Chapter 12 - 35
Specialized Entry Modes for International
Business
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Chapter 12 - 36
Contract Manufacturing
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Advantages Disadvantages
Reduced Costs
Distinctive Competence
Location Advantages
Loss of Control
Quality Issues
Unexpected Problems
Chapter 12 - 37Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Management Contracts
• Managerial Assistance• Technical Expertise• Other Services
Chapter 12 - 38
Specialized Strategy
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Turnkey Project B-O-T Project
Design
Construct
Equip
Build
Operate
Transfer
Chapter 12 - 39
Summary of Discussion
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Chapter 12 - 40
Foreign Direct Investment
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Chapter 12 - 41
Foreign Direct Investment (FDI)
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Opportunities Challenges
Increased Control
Profit Potential
Local Production
Complex Operations
Exchange Rates
Government Instability
Chapter 12 - 42Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
• Greenfield
• Acquisitions
• Joint Ventures
Three FDI Methods
Chapter 12 - 43
Strategic Advantages• Select the most useful site
• Construct modern facilities
• Reap economic development incentives
• Start with a clean slate
• Get acclimated to new business culture
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Greenfield Strategy
Chapter 12 - 44
Strategic Disadvantages• Implementation takes time and patience
• Location may be costly or unavailable
• Must deal with government regulations
• Must recruit and train a local workforce
• May be stigmatized as a “foreign firm”
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Greenfield Strategy
Chapter 12 - 45
Acquisition Strategy
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Strategic Advantages
Control Over the Firm’s Resources
Generates Immediate Revenues
Adds No New Capacity to the Industry
Chapter 12 - 46
Acquisition Strategy
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Strategic Disadvantages
Assumes the Firm’s Liabilities
Inherits Unresolved Problems
Requires Substantial Up-Front Spending
Chapter 12 - 47
Joint Ventures
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Joint Ownership
MutualInterests
Chapter 12 - 48
Summary of Discussion
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Chapter 12 - 49
Chapter 12
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Strategies for Analyzing and
Entering Foreign Markets
Chapter 12 - 50Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
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