mario glowik charts_market_entry_strategies_july_2009
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market EntryMarket Entry StrategiesStrategies
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 1
Mario Glowik, Market Entry Strategies, First Edition (2009)
Qualitative versusQualitative versus quantitative research
h dmethods
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Qualitative versus quantitative research methodsSource: modified from Bungard et al. (2000)
Research Method Advantages
Quantitative Qualitative
▪ quantified research results
▪ data comparability and transferability
▪ flexible research methods
▪ open questions approach allowsdata comparability and transferability
▪ data objectivity due to quantified methods
▪ statistical and mathematical context
open questions approach allows
background information
▪ better reflects complex realitystatistical and mathematical context
▪ reasonable in cost and time
▪ more representative due to a larger
better reflects complex reality
▪ focus on relevant research issues
▪ contextual validitymore representative due to a larger
sample
contextual validity
▪ exploration of a new topic
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Qualitative versus quantitative research methodsSource: modified from Bungard et al. (2000)
Research Method Disadvantages
Quantitative Qualitative
▪ less method flexibility
▪ fixed questions
▪ relatively expensive and time consuming
▪ interviewer’s profound expertise isfixed questions
▪ proposals allow for limited improvements
▪ lack of individual response
interviewer s profound expertise is
necessary concerning the topic of research
▪ no numerical indications possiblelack of individual response
▪ limited causation of research results
▪ highly quantified data do not reflect
no numerical indications possible
▪ subjective interpretation of results,
which depends on interviewerhighly quantified data do not reflect
specific circumstances in reality
which depends on interviewer
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Environmental analysis yof the foreign target
marketmarket
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Elements of the general external (macro) environment of a firmSource: Modified from Wheelen and Hunger (2004), and Schreyögg (2003)
Economic
•Gross domestic product (GDP) trend
•Unemployment rate
•Wage levels
•Interest rates•Interest rates
•State budget volume/surplus /deficit
•Foreign trade surplus or deficit
•Inflation rates
•Disposable income of consumers
•Stability of currency
•Debt-equity ratio
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Elements of the general external (macro) environment of a firmSource: Modified from Wheelen and Hunger (2004), and Schreyögg (2003)
Technological
•Patents outcomes
•Industry cluster
•Industry innovation and productivity
•Telecommunication (Internet ) infrastructure•Telecommunication (Internet-) infrastructure
•Government spending on R&D
•Industry expenses for R&D
•Technology transfer from laboratory to market place
•Attitudes toward new technologies, automation, and rationalization
•Country specific industry focus (i.e., electronics, automotive)
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Elements of the general external (macro) environment of a firmSource: Modified from Wheelen and Hunger (2004), and Schreyögg (2003)
Political-Legal
•Market versus central planned economy
•Democracy
•Stability of government
•Protection of capital and intellectual property rights•Protection of capital and intellectual property rights
•Corruption level
•Tax laws/ investment incentives
•Antitrust regulations
•Affiliation to political and economic organizations (WTO)
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Elements of the general external (macro) environment of a firmSource: Modified from Wheelen and Hunger (2004), and Schreyögg (2003)
Sociocultural
•Age distribution of population
•Birth/death and growth rate of population
•Rate of family formations
•Regional shifts in population•Regional shifts in population
•Life expectancies
•Changes in lifestyle
•Attitudes toward minorities
•Education/ illiteracy
•Violence potential of the society
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Elements of the general external (macro) environment of a firmSource: Modified from Wheelen and Hunger (2004), and Schreyögg (2003)
Ecological
•Environment protection laws
•Nature resources and exploitation
•Attitudes towards nuclear energy
•Consumption of bionomical productsConsumption of bionomical products
•Market penetration of genetically engineered food
•Protection of threatened species of animals
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Industry environment of a television set manufacturer located in the European Union in 2008 Source: Adopted from Porter (1999)
Industry Rivalry
Danger of new Threat of technological Supplier: Customer:
▪ Major component
Danger of new market entrants:
▪ Firms from China,
gsubstitution:
▪ Organic Light Emitting Di l (OLED)
▪ High quality
Supplier:
supplier in China,Japan, and S.Korea
▪ R&D know-how
Taiwan and India Display (OLED)consciousness and price sensitiveness
▪ Market saturation▪ R&D know-howbundled in Asia
▪ Newly upcoming
▪ Market saturationin Western Europe
▪ Upcoming new industry cluster in Poland, Slovakia, and Hungary
markets in Central and Eastern Europe
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g y p
Mario Glowik, Market Entry Strategies, First Edition (2009)
Internationalization Theories
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Relationship of the advantage categories and market entry strategies Source: Dunning (1980), Perlitz, (2004)
O hi I li i L i ifiAdvantage
Ownership specific
Internalization Location specific
Entry strategy Foreign direct investment
Available Available Available
Export Available Available Not available
International contracts Available Not available Not available
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Firm and market internationalization degreeSource: Johanson & Mattsson (1988)
Degree of internationalization of the market
Degree ofHighLow
Degree of
InternationalizationThe Early Starter
The Late Starter
Low
of the firm
The Lonely The
Starter Starter
The Lonely International
The International among Others
High
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Internationalization: conceptualization of an entrepreneurial process of behavior in timeSource: Jones and Coviello (2005)
The Entrepreneur • Level of innovativeness • Level of risk tolerance • Management
competence
Internationalization PerformanceThe Firm Internationalization Behavior (as a function of time)• Fingerprint patterns
f
Performance • Financial measures (market success) • Non-financial measures ( )
The Firm• Organizational structure
(organic vs. mechanic)
• Profiles (organizational learning)
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Dimension of time in internationalization concepts researchSource: adapted from Hurmerinta-Peltomäki (2003)
LinearEvents unrepeatable
Current research assumptions on the internationalization
Uniqueness
Subjectivity
States
Novelty and
internationalization process of firms
Positivedirection
No fixed direction
j yysurprise
Objectivity
Non-uniqueness
Rearrangement of given factors
C li l
Events Events repeatable
uniqueness
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Cyclical
Mario Glowik, Market Entry Strategies, First Edition (2009)
Typology of new ventures.Source: Di Gregorio et al. (2008)
Extensive Cross Border Combination of
III. Cross Border IV. International Resource and MarketCombination of
Resources and IndividualsResource Integration Resource and Market
Combination
Domestic Combination of Resources and Individuals I. Domestic New Venture II. Accelerated
International Sales
Domestic Market O i i P d
Extensive Cross Border M k t C bi tiOpportunities Pursued Market Combination Opportunities Pursued
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Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the international product life-cycle theory
Model Representative scholars Year of
Principal contents of the model
Major limits of the model
Publication
Inter- Vernon 1966, market entry U.S.-economy perspective enational Product Life-C l
,1972
ythrough export and FDI depends on the product life-cycle position
y p pafter WWII ignores existence on tariff and non-tariff trade barriers as well as behavioral aspectsCycle position as behavioral aspects verification and generalization difficult neglects threat of substitution gthrough upcoming nations and their industries model became almost obsolete
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 18
obsolete
Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the internalization theory
Model Representative Principal contents Major limits of the modelscholars Year ofPublication
of the model
Inter-nalization
Buckley & Casson 1976
focus on transaction costs as main impulse
disregard of ‘follow the customer’ phenomenonnalization
TheoryCasson 1976based on Coase 1937 and Williamson 1975
costs as main impulse for foreign market entry hierarchy versus market mechanism
l i MNE
phenomenon transaction costs are hard to quantify limited attention to behavioral
t ( t1975 explains MNE appearance because of organizational capabilities and market
aspects (e.g., customer preferences) ignores impact of entrepreneur and/or management on firmcapabilities and market
imperfections consideration of the ‘knowledge’ and ‘skill’ f t
and/or management on firm internationalization ignores tariff and non-tariff barriers, legal aspects, and tax
li [ b idi ] i th t t
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factors policy [e.g., subsidies] in the target country
Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the eclectic paradigm
Model Representative scholars Year ofPublication
Principal contents of the model
Major limits of the model
Publication
Eclectic Paradigm
Dunning 1979, 1980, 1983,
consideration ofownership, location,
overlapping ‘conglomeration of variables’g , ,
1988, 1993, 1994, 1995, 1999, 2000, 2001
p, ,and internalization OLI elements multi-causal
i fl
hard to make concreterecommendations for the firm’s internationalization strategy
ti f ‘h2001 reasons influence the market entry strategy of the firm
assumption of a ‘homo oeconomicus’ limitations in analyzing theinfluence of tax incentives or subsidies which influence foreign direct investment decisions
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Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the location concepts
M d l R t ti P i i l t t M j li it f th d lModel Representative scholars Year ofPublication
Principal contents of the model
Major limits of the model
ub cat o
Location Concepts
Tesch 1980Hill 1998
location and demand factors differ
empirical studies about the relative influence of location
Porter 1999 in connection with traditional international
between countries and influence the competitiveness of enterprises
factors with regards to foreign direct investment decisions are problematic to perform difficult to consider allinternational
trade theories: Heckscher-Ohlin 1952
enterprises firm’s foreign direct investment incentive depends on country
difficult to consider all relevant factors due to its high complexity pays less attention to the
A. Smith 1776 specific location factors
‘follow the customer’ phenomenon
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Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the diamond model
Model Representative scholars Year of
Principal contents of the model
Major limits of the model
Publication
Diamond Porter 1990 firm the meaning of competitive Model
competitiveness influenced by country-specific conditions
g padvantage is empirically hard to quantify some model assumptions are rather speculativeconditions
some firms have better prerequisites for successful
rather speculative lacks precise recommendations under which circumstances a firm gains competitive advantage
international business activities than others because of home market surroundings
g p g neglects other countries and their impact on the home country with respect to the firm’s competitiveness and vice versa
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market surroundings competitiveness and vice versa
Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the Uppsala model
Model Representative Principal contents Major limits of the modelModel Representative scholars Year ofPublication
Principal contents of the model
Major limits of the model
Uppsala M d l
Carlson 1966F &
due to a lack of f i k t
physical distance is perceived diff tl b tiModel Forsgren &
Johanson, Johanson & Wiedersheim
foreign market knowledge firms internationalize incrementally from
differently by operating managers panel focus on large Swedish firms restricted to the initial stages of
both 1975y
physically and culturally close foreign business market to
di t t t i
ginternationalization reactive character leaving little room for entrepreneurial choice
h d t l f ll fimore distant countries stepwise and orderly utilization of outward-going international
hard to apply for very small firms or very large MNE
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g gbusiness operations
Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the Uppsala model
Model Representative scholars Year of
Principal contents of the model
Major limits of the model
Publication
Uppsala ‘psychic distance’ internationalization is not Model is defined in terms
of factors such as differences in language culture
always linear and a continuous process, firms have the opportunity to recall their foreign engagement
Johanson & Vahlne 1977
language, culture, political systems etc. focus on
their foreign engagement the concept concentrates on experimental learning through commitment decisions but
experience, knowledge, and learning
ignores imitative learning and the phenomenon of new ventures born global
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Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the network approach
fModel Representative scholars Year ofPublication
Principal contents of the model
Major limits of the model
Publication
Network Model
Johanson & Mattson
assumption that a firm’s changing
empirically hard to test due to the complexity ofModel Mattson
1988Kogut & Zander 1993
firm s changing internationalization situation (international
to the complexity of international networks and their influencing variables need for industry-specific
Hohenthal 2001Björkman & Forsgren
business success or failure) is a result of its positioning in a network of firms
insights which is difficult to realize from an ‘outsiders perspective’
Forsgren 2000
a network of firms or institutions and their connections to each other
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Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the network approach
fModel Representative scholars Year ofPublication
Principal contents of the model
Major limits of the model
Publication
Network Model
Hakansson & Johanson
networks are a set of relationships
tends to focus on oligopoly markets and rather larger firmsModel Johanson
2001Matthews 2002
of relationships between suppliers, manufacturers, merchandisers and
markets and rather larger firms deemphasizes opportunistic behavior of the network partner
customers within long-term business relations knowledge transfer
research results (e.g., through case studies) are hard to generalize; predictions tend to be vague knowledge transfer
within the networks has particular importance
to be vague
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Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the network approach
fModel Representative scholars Year ofPublication
Principal contents of the model
Major limits of the model
Publication
Network Model
competitive advantage through
empirical research tends to supply ‘spotlights’ of network
Johanson & V hl 2003Model advantage through
dynamic capabilities fostered in
supply spotlights of network structures longitudinally fact finding research is expensive and
Vahlne 2003
networks emerging global economy as networks of
time consuming further research concerning ‘firms repositioning in the network over time’ throughnetworks of
interlinked firmsnetwork over time through longitudinally research necessary
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 27
Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the international new venture (born global), entrepreneurial, and time concepts
Model Representative scholars Year of
Principal contents of the model
Major limits of the model
Publication
Inter- Oviatt & rapid concepts tend to focus on national New Venture (Born
Mc Dougall 1994, 2000Jones & Coviello 2002
internationalization after inception fostered by the entrepreneur’s
small firms research tends to focus on the owner or key decision maker model is influenced by(Born
Global), Entrepren-eurial and
Coviello 2002, 2005Zahra et al. 2000
entrepreneur s behavior (risk awareness, innovativeness and
model is influenced by sociological, psychological and business aspects, which leads to an enormous complexity and
Time Concepts
managerial competence)
lacking systematic
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Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the international new venture (born global), entrepreneurial, and time concepts
Model Representative scholars Year of
Principal contents of the model
Major limits of the model
Publication
Inter- Sharma & internationalization empirical verification is difficult national New Venture (Born
Blomstermo 2003Bell et al. 2003
as a systems perspective of the firm, environment and entrepreneur
p hard to get a standardized and structured model length of time horizons is interpreted differently(Born
Global), Entrepren-eurial and
2003Hurmerinta-Peltomäki 2003
entrepreneur success in international business is dependent upon
interpreted differently
Time Concepts
Young et al. 2003
p pthe embedding of the entrepreneur in cross-border institutional structures
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structures
Mario Glowik, Market Entry Strategies, First Edition (2009)
A summary of principal contents and major limits of the international new venture (born global), entrepreneurial, and time concepts
Model Representative scholars Year of
Principal contents of the model
Major limits of the model
Publication
Inter-national
DiGregorio et al 2008
internationalization is not always a
impact of a particular event of time during internationalizationnational
New Venture (Born
al. 2008Gabrielsson et al. 2008
is not always a linear and forward going process but rather highly
time during internationalization process is difficult to prove role of individuals have to be analyzed in conjunction with (
Global), Entrepren-eurial and Time
g ydynamic and cyclical as a reflection of time
y jtheir networks
Time Concepts
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Mario Glowik, Market Entry Strategies, First Edition (2009)
I t ti l k tInternational market entry modes
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Mario Glowik, Market Entry Strategies, First Edition (2009)
E.P.R.G. scheme and marketing conceptsSource: adapted from Wind et al. (1973)
Phase Phasecontents
Firm focus Managementpolicy
Marketingconcepts
Ph 1 Eth t i H Eth t i E tPhase 1 Ethnocentric Homemarket
Ethnocentricstrategy
Export marketing
Phase 2 Polycentric Target Polycentric Internationaly gcountry
ystrategy marketing
Phase 3 Regiocentric Regional geographic
Regiocentricstrategy
Multinationalmarketinggeographic
focus on several target markets
strategy marketing
Phase 4 Geocentric Worldmarket Geocentricstrategy
Transnationalmarketing
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry decision process
First step: Setting strategic priorities
Four basic strategic determinants
1. Degree of hierarchical control
2. Market entry rapidity
3. Proximity to the market
4. Investment risk
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry decision process
1. Degree of hierarchical control
Are tight or loose control mechanisms for foreign operations required?
The answer should consider issues such as
• protection of intellectual property rights,
• strategic market importance,
• degree of market experience,
• local government regulation, and
• the firm‘s resources (e.g., human or financial).
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry decision process
2 Market entry rapidity2. Market entry rapidity
Fast or delayed foreign market entry?
The answer should consider issues such asThe answer should consider issues such as
• the need to follow a key customer,
• the threat of fast technological product substitutionthe threat of fast technological product substitution,
• first mover advantages through a pioneer strategy,
• latecomer advantages through delayed market entrylatecomer advantages through delayed market entry,
• intensity of competition,
• huge investment costs requiring large sales volumes andhuge investment costs requiring large sales volumes, and
• the risk of losing control due to hasty entry activity or incorrect partner selection.
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry decision process
3. Proximity to the market
Is close or distant market proximity necessary?
Th h ld id i hThe answer should consider issues such as
• similar or different product design and service expectation of local customers,customers,
• market volume and growth forecasts,
• transportation lead time and costs (e.g., bulky products),transportation lead time and costs (e.g., bulky products),
• desired local image building of the firm,
• socio-cultural issues difficult to evaluate from a distance, andsocio cultural issues difficult to evaluate from a distance, and
• foreign government rules (e.g., import tariffs and, investment incentives).
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry decision process
4. Investment risk
Is the firm able to cope with the investment risk?
Th h ld id i hThe answer should consider issues such as
• internal and external financial resources,
d t t it ti• dept to equity ratio,
• product margin,
ti h i f t d t i t t• time horizon of expected return on investment,
• expected reactions of local competitors, and
k t f t (t d i )• market forecast (turnover and margins).
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry mode categorization
S d t E l ti f k t t lt tiSecond step: Evaluation of market entry alternatives
1. Contracting (market mechanism)
2 C ti (h b id f )2. Cooperation (hybrid forms)
3. Wholly owned subsidiary (hierarchy)
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry mode categorization
1. Contracting (market mechanism)
• indirect export (goods and services),(g )
• direct export (goods and services),
• licensing (intellectual know-how and property rights),
• franchising (business concept),
• contract manufacturing (goods and services),
• management contract (intellectual, engineering and management know-how), and
• turnkey contract (intellectual, engineering and management know-how).
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 39
Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry mode categorization
2. Cooperation (hybrid forms)
• strategic alliances and
• international joint ventures.
3. Wholly owned subsidiary (hierarchy)
• overseas branch network and
• a wholly owned manufacturing subsidiary.
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
I di t d di t t• Indirect and direct export
• Overseas branches
C t t f t i• Contract manufacturing
• Licensing
F hi i• Franchising
• Strategic alliances
I t ti l j i t t• International joint ventures
• Turnkey contracts
M t t t• Management contracts
• Wholly owned subsidiary
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Indirect and direct export
• export: sale of goods or services outside the country of productionp g y p
• indirect exports: transactions to a domestic exporting company or to a domestic branch of a foreign importer
• direct exports: relation with the customer abroad.
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
LicensingLicensing
• contractual transaction
• there is an owner of knowledge assets (intellectual or industry know how)there is an owner of knowledge assets (intellectual or industry know how)
• ‘sells the right’ to use the assets
• licensor transfers, but does not give up, the ownership of the know-howlicensor transfers, but does not give up, the ownership of the know how
• the licensee
- takes entrepreneurial riskstakes entrepreneurial risks
- undertakes financial investments in facilities for material procurement,
manufacturing, marketing, sales and distribution of the goods and a u actu g, a et g, sa es a d d st but o o t e goods a d
services.
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Franchising
• contractual agreement between a franchisor and usually many franchisees
• sales of a proven business concept
• franchisees: typically small business owners
• right to commercialize goods or services under franchisor’s’ established brand name (market goodwill)
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Franchising
• franchise system combines,
- the advantages of research, and development activities
- and economy of scale potentials offered by the franchisor with the local
geographical knowledge, cultural sensitivity and entrepreneurial talents of the
franchisee
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Contract manufacturing
1. outsourcing components (pre-assembly)
2. finished products (final-assembly)
3. complete manufacturing process (full-assembly)
(original equipment manufacture (OEM))
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Management contracts
• a firm uses some of its personnel to assist a firm in a host country for a certain period of time against a specified fee
• keep the operations going until local management is trained
• an essential part of management contracts includes the qualifications of personnel in the host countrythe host country
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Mutual obligations of management contractsSource: adopted from Foscht / Podmenik (2005)
Management contract cooperation
Contractingfirm
Managedfirm
fees
know howknow-how
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Mutual obligations of management contractsSource: modified from Foscht / Podmenik (2005)
Contracting firm functions: Managed firm functions:
management responsibility
granting entrepreneurial know-how
payment of fees
take over of business risks
granting operational good-will
serving network relations
input of business objectives: financial,manufacturing, and human resources
g
share of experience learning capabilities
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
T k t tTurnkey contracts
t k ti d i t t t t j t i f i t• turnkey operation: a company designs, constructs, starts-up a project in a foreign country (e.g., building of a power plant) and qualifies local personnel
• turnkey operation: attractive for firms with specific engineering and/or complexturnkey operation: attractive for firms with specific engineering and/or complex technological process know-how
• the BOT (build, operate, transfer): variation of the turnkey operation
• the firm operates the facility for a fixed period of time
• during this operating period, the company earns back the investment, plus a profit
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Strategic alliances
• agreements between two or more participating organizations to strengthen their mutual competitive position and to fulfill business objectives that are rather long term orientedp p j g
• access of strategically relevant resources
• formal difference compared to a joint venture: a strategic alliance is typically a non-p j g yp yequity cooperation (partners do not commit equity) and partner firms remain legally independent
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Strategic alliances
Main purposes of strategic alliance building
1. strategic alliances facilitate entry into a foreign market (partnership with a local firm)firm)
2. an alliance, supposing it runs well, is a way to bring together complementary skills and assets
3. bundle access to similar customer segments
4. establish a technological industry standard
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
International joint venturesInternational joint ventures
• two or more legally independent organizations decide to undertake a common• two or more legally independent organizations decide to undertake a common business and create a new enterprise as a legal entity
• an equal joint venture: each party contributes the same amount of financial investment
• a majority joint venture secures control of strategic decisions
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
International joint venturesInternational joint ventures
• same industry and similar value-added activities (horizontal joint venture)same industry and similar value-added activities (horizontal joint venture)
• different stages of the industry value-added chain (vertical joint venture)
• diversified business activities (conglomerate joint ventures)diversified business activities (conglomerate joint ventures)
• Definition of an international joint venture:
- at least one parent organization is headquartered outside the venture‘sat least one parent organization is headquartered outside the venture s
country operation
- the venture has a significant level of operations in more than one countrythe venture has a significant level of operations in more than one country
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 54
Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Reasons for instability in international joint venturesReasons for instability in international joint ventures
1. opportunistic behavior at least of one partner1. opportunistic behavior at least of one partner
2. management redirects strategic focus or changes key objectives
3. partners renegotiate contracts (e.g., on technology transfer or management)3 pa t e s e egot ate co t acts (e g , o tec o ogy t a s e o a age e t)
4. reconfiguration of the venture‘s ownership and control structures
5. uncertain managerial roles g
6. diverse cultural backgrounds of the partners
7. relationship with each parent company (e.g., limitation of their authority)p p p y ( g , y)
8. lack of mutual trust
9. major technological product developments not noticed
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 55
j g p p
Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Overseas branches
• representative office or sales branch in the foreign target markets
• the lowest form of financial involvement in the category of foreign direct investment.
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 56
Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Wholly owned subsidiary
• describes an enterprise that owns all of the capital invested abroad such as procurement, R&D l d ti f ilitiR&D, sales, or production facilities
• the firm either sets up a new operation (start-up or greenfield) in the foreign target country or it acquires an established firmcountry or it acquires an established firm
• there are two different types of acquisitions:
- horizontal acquisition: a firm acquires another firm in the same location of thehorizontal acquisition: a firm acquires another firm in the same location of the industry chain
- vertical acquisition: a firm acquires the supplier or distributor
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 57
Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry modes
Wholly owned subsidiary
• acquisitions offer the firm the opportunity to develop capabilities and expertise by acquiring new knowledge from the acquisition partner
• in contrast to acquisitions the establishment of a firm through a greenfield investment• in contrast to acquisitions, the establishment of a firm through a greenfield investment (foreign start-up) entails building an entirely new organization
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 58
Mario Glowik, Market Entry Strategies, First Edition (2009)
Market entry mode grouping based on four decision determinants
degree of hierarchical controllow high
indirect export direct export
li /f hi i
contracting low
high
licenses/franchising
em
arke
t
apid
ity
contract manufacturing
t t i lliforeign direct
investment mity
toth
e
kete
ntry
ra management contractsturnkey contracts
overseas branch network
strategic alliancesIJV
investment
prox
im
mar
k
cooperationmanufacturing
plant high
l i t t i k hi h
low
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 59
low investment risk high
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry modes: indirect export
Market entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
Indirect export
high low low low no experience in foreign trade
dependency on agent’s expertise p g
rather simple products with rudimental after
g p commission costs divided loyalties of middleman / agentrudimental after
sales service new market potentials abroad
middleman / agent trade barriers high transportation costspotentials abroad
compensation of low seasonal sales i th h k t
transportation costs in case of bulky products
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 60
in the home markets
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry modes: direct export
Market entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
mode control market the firm if
Direct export
high low low low less experience in foreign trade
trade barriers high p g
elementary pre-and after sales service
gtransportation costs in case of bulky productsservice
new market potentials abroad
compensation of
bulky products language / cultural challenges compensation of
low seasonal sales in the home
challenges unfamiliar market
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 61
markets environment
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry modes: licensing
Market Entry Degree of Investment Proximity Strategy Potential strategicMarket entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
Licensing high low low low lack of financial or organizational resources
licensee may damage reputation risk of technology
technological fast developing industries
gycopy by licensee royalty fees lower than value ofindustries
fast market entry and penetration desired
than value of technology transfer limited experience curve/ economies ofdesired
foreign direct investment too
curve/ economies of scale effects of licensor licensee becomes
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 62
risky competitor
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry modes: franchising
Market entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
mode control market for the firm if
Franchising high low low low economies of scale realization
franchisee may harm reputation
fast market entry and penetration
p partner’s disagreements overpenetration
desired sales of a business concept
over objectives foreign partner selectionbusiness concept
instead of a single product or service
selection financial stability of the partner
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 63
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry mode: contract manufacturing
Market entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
mode control market for the firm if
Contract manufac-
medium low-medium
low-medium
medium cost-competitive
loss of manufacturing involvement and
turingp
markets saving logistics cost
control reputation damage (i e quality workinglogistics cost
expansion of capacities and product
(i.e., quality, working conditions) communication complexityand product
penetration worldwide
complexity know-how transfer to local firm
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 64
foster new competitor
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry mode: management contracts
Market entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
control market for the firm if
Management contracts
medium medium medium medium specified managerial
foster potential competitor g
and/or technological expertise
p countries with uncertain local governmentsexpertise
market entry when local government
governments policy and fragile legal environment
lack of educatedgovernment restrictions expected
lack of educated staff in the target country
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 65
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry mode: turnkey contract
M k t E t D f I t t P i it St t P t ti l t t iMarket entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
Turnkey contract
medium medium medium medium specific engineering and complex t h l i l
lack of qualified human resource
l i th t ttechnological process know-how availability (i.e.,
pool in the target country relation with host
building of an environment friendly power plant or public
governments which are usually located in politically and
water distribution and/or cleaning facilities)
economically rather fragile countries
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 66
)
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry modes: strategic alliance
Market entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
mode control market the firm if
Strategic alliance
medium low-medium
low-medium
medium bundle of strategic resources
partner selection
mutual strengthening of competitive position
know-how transfer opportunisticcompetitive position
through complementary skills
opportunistic behavior reputation damageskills
set of technological i d t t d d
damage synergy effects below
t ti
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 67
industry standards expectation
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry modes: international equity joint venture
M k t E t D f I t t P i it St t P t ti l t t i i kMarket entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
Inter-national equity
medium medium medium medium risk sharing combined market entry
partner selection know-how transfer opportunistic behavior ofequity
joint venture
market entry joint activities (e.g., R&D,
)
opportunistic behavior of the partner unclear ownership
marketing) economies of scale
structures create confusion risk of unbalanced
combination of complementary resources and
efforts of the partner firms minor synergy effects partner firm may
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 68
skills y
become competitor
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry modes: overseas branch network
M k t E t D f I t t P i it St t d d P t ti lMarket entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
Over-seas branch
low high high high experience in international business large foreign market
unfamiliar environment and marketing policiesbranch
network large foreign market complex products differentiation strategy by l l i / lti
marketing policies increased communication
dlocal service/ consulting advanced after-sales network necessary
and coordination investment
proximity to local customers and their design and communication
volume language and cultural
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 69
preferences challenges
Mario Glowik, Market Entry Strategies, First Edition (2009)
An overview of strategic decision determinants of the market entry modes: wholly owned manufacturing plant
Market entry mode
Entry rapidity
Degree of hierarchical control
Investment risk
Proximity to the market
Strategy recommended for the firm if
Potential strategic risks
mode control market firm if
Wholly-owned
low high high high advanced experience in
unfamiliar environment and
manu-facturing plant
international business local cost advantage
work ethics coordination complexity
subsidies or tax incentives large foreign
legal aspects investment volume language and a ge o e g
market potentials heavy and bulky products
a guage a dcultural challenges severe response of local firms
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 70
products of local firms
Mario Glowik, Market Entry Strategies, First Edition (2009)
Case studies
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 71
Mario Glowik, Market Entry Strategies, First Edition (2009)
European television set market 1990-2011 without Turkey and Russia (sales in million units – 2009 and 2011 are forecasts) Source: DisplaySearch (2008) and market research by the author
30
35
40
20
25
30
on T
V U
nits
hipm
ents
5
10
15
Mill
io Sh
0
CRT 28 36 37 26 10 3 0,5
PDP 0 0 0,4 2 3 5 6
1990 1998 2003 2005 2007 2009 2011
LCD 0 0 1 9 26 34 38
Projection 0 0,5 0,3 0,3 0,1 0 0
OLED 0 0 0 0 0 0,1 1
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 72
Year
Mario Glowik, Market Entry Strategies, First Edition (2009)
East European television set market volume including the non-Asian part of Turkey and Russia segmented by major technologies in million units (2007 record and 2008-2012 forecast)S Di l S h 2008Source: DisplaySearch, 2008
20Million Units
141618
81012 PDP TV
LCD TVCRT TV
246
CRT TV
02
2007 2008 2009 2010 2011 2012
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 73
Mario Glowik, Market Entry Strategies, First Edition (2009)
Conglomerate diversification structure of Samsung (status April 2008)Source: Author based on various company documents, verified by Park, N.
Samsung Group Chairman:Chairman:
Mr. Lee
Chairman Office
M hi & El t i T d & Fi i l N fit
Office
Machinery & Chemical Industries
Electronics Industries
Trade & Services
Financial Services
Nonprofit Organizations
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 74
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic business units of SamsungSource: Author based on various company documents (status April 2008)
Machinery & Chemical Industries
S S Sams ngSamsung Heavy
Industries
Samsung Techwin
Samsung Total Petrochemicals
Samsung Fine
Chemicals
Samsung Petrochemicals
Samsung BP
Chemicals
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 75
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic business units of SamsungSource: Author based on various company documents (status April 2008)
Electronics Industries
S S S S S SSamsung Electronics
Samsung SDI
Samsung Electro-
Mechanics
Samsung Networks
Samsung Corning
Precision Glass
Samsung SDS
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 76
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic business units of SamsungSource: Author based on various company documents (status April 2008)
Trade & Services
Th ShillSamsung Corporation
Samsung Engineering
Cheil Industries
Samsung Everland
The Shilla Hotel & Resorts
Cheil Communications
S1 Corporation
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 77
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic business units of SamsungSource: Author based on various company documents (status April 2008)
Financial Services
S S Fi S Sams ngSamsung Life
Insurance
Samsung Fine & Marine Insurance
Samsung Securities
Samsung Investment
Trust
Samsung Card
Samsung Venture
Investment
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 78
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic business units of SamsungSource: Author based on various company documents (status April 2008)
Nonprofit Organizations
S S SSamsung Medica Center
Samsung Economic Research Institute
Samsung Advanced Institute of Technology
Samsung HR Development
Center
Samsung Foundation of Culture
Samsung Welfare
and Ho-Am Foundation
Samsung Lions
Samsung Press
gy
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 79
Mario Glowik, Market Entry Strategies, First Edition (2009)
Samsung Group net sales 1999-2007 (2007 forecast)Source: Annual Reports
Samsung Group - Net sales
150
200
lars
100
lion
Dol
l
0
50Bill
200720062005200420032002200120001999
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 80
Mario Glowik, Market Entry Strategies, First Edition (2009)
Samsung Group net income 1999-2007 (2007 forecast)Source: Annual Reports
Samsung Group - Net income
0
15
lars
5
10
lion
Dol
l
0
5
Bil
200720062005200420032002200120001999
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 81
Mario Glowik, Market Entry Strategies, First Edition (2009)
Samsung Electronics net sales 1999-2007Source: Annual Reports
Samsung Electronics - Net sales
125
150
lars
50
75
100
llion
Dol
l
0
25
50
Bil
200720062005200420032002200120001999
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 82
Mario Glowik, Market Entry Strategies, First Edition (2009)
Samsung Electronics net income 1999-2007Source: Annual Reports
Samsung Electronics - Net income15
ars
5
10
lion
Dol
la
0
5
Bill
200720062005200420032002200120001999
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 83
Mario Glowik, Market Entry Strategies, First Edition (2009)
Organization of Samsung ElectronicsSource: Author based on various company documents (status April 2008)
Samsung Electronics
Division
S SSamsung Electro
Mechanics
Samsung Corning
Precision Glass
Samsung SDI
Samsung Electronics
Samsung Networks
Samsung SDS
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 84
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Samsung ElectronicsSource: Author based on various company documents (status April 2008)
Samsung Electro Mechanics
• Electronic ComponentsElectronic Components
Samsung Corning Precision GlassSamsung Corning Precision Glass
• Printed circuit board for TFT-LCD
• Cathode Ray Glass Tube Bulb and Colored Glass for TFT LCD• Cathode Ray Glass Tube, Bulb and Colored Glass for TFT-LCD
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 85
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Samsung ElectronicsSource: Author based on various company documents (status April 2008)
Samsung SDI
• Cathode Ray Tube
• PDP
• Secondary Cell
• Plasma DisplaysPlasma Displays
• OLED
Samsung ElectronicsSamsung Electronics
• Device Solution Network (Memory Chips, Semiconductor, TFT-LCD)
T l i ti N t k (C ll l Ph T l S t )• Telecommunication Network (Cellular Phones, Telecom System)
• Digital Media Network (CTV, Monitor, Computer, Camcorder)
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 86
• Digital Appliance Network (air-conditioner, refrigerator)
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Samsung ElectronicsSource: Author based on various company documents (status April 2008)
Samsung SDS
• Computer Software Network
• Support Activity
• System Solution
Samsung Networks
• Support Activity
• Telecommunication Service
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 87
Mario Glowik, Market Entry Strategies, First Edition (2009)
Samsung’s vertical integration of television set assemblySource: Author, based on company documents
R & DPrimary
Components Supply
TV-Display Manufacture
TV-Set Fabrication
Trading Company
Samsung Research and Development C t
Samsung Electro-Mechanics:
Samsung SDI:
C th d
Samsung Electronics:
LCD Pl
Samsung Corporation:
S lCenters
Samsung Design
Electronic Components
Cathode Ray Tube (CRT)
LCD-, Plasma-, CRT-, Projection TV
Sales Intermediates
Representative es gCenters Samsung
Corning: Screen Glass
Plasma Panel
OLED
LCD-Panel Production
Semiconductor
ep ese a eOffices e.g., Teheran, Istanbul, MGlass OLED Semiconductor
for LCD-TVMoscow
Backward Integration Worldwide Network Forward Integration
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 88
Backward Integration Worldwide Network g
Mario Glowik, Market Entry Strategies, First Edition (2009)
Expansion of Samsung Electronic’s worldwide factory network Source: collected by the author as exhibited at Samsung Electronics main entrance hall in Seoul, South Korea
Region Country Plant Establ. Products
Asia Korea Suwon, Kyonggi-do 1969 CTV, DVDP, video, microwave oven, y ggwashing machine, camcorder, MP3, air conditioner
Asia Korea K mi Comple 1 1980 PABX printerAsia Korea Kumi Complex 1, Kyongsangbuk-do
1980 PABX, printer
Asia Korea Kiheng Complex (R&D), 1980 Semiconductor, TFT-LCD, vending g p ( ),Yongin-gun, Kyonggi-Do
, , gmachine,
America Mexico Samsung Mexicana S.A. 1988 CTV, monitor, HHPde C.V. (SAMEX), Tijuana
Asia Thailand Thai Samsung Electronics Co Ltd (TSE) Sriracha
1988 CTV, washing machine, refrigerator, air conditioner microwave oven
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 89
Co., Ltd. (TSE), Sriracha air conditioner, microwave oven
Mario Glowik, Market Entry Strategies, First Edition (2009)
Expansion of Samsung Electronic’s worldwide factory network Source: collected by the author as exhibited at Samsung Electronics main entrance hall in Seoul, South Korea
Region Country Plant Establ. ProductsRegion Country Plant Establ. Products
Asia Korea Kwangju Complex 1989 refrigerator, vacuum cleaner, di hi tvending machine, motor
compressor
Asia Malaysia Samsung Electronics Malaysia 1989 Microwave oveny g y(M) SDN, Bhd (SDMA), Port Klang
E H S El t i 1989 CTV itEurope Hungary Samsung Electronics Hungarian Co., Ltd. (SEH)
1989 CTV, monitor
Asia Korea Onyang Complex, Asan-gun, 1990 SemiconductorAsia Korea Onyang Complex, Asan gun, Chungchongnam-do
1990 Semiconductor
Asia Indonesia P.T. Samsung Electronics 1991 VCR, ODD
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 90
Indonesia (SEIN), CiKarang
Mario Glowik, Market Entry Strategies, First Edition (2009)
Expansion of Samsung Electronic’s worldwide factory network Source: collected by the author as exhibited at Samsung Electronics main entrance hall in Seoul, South Korea
R i C t Pl t E t bl P d tRegion Country Plant Establ. Products
Asia China Hulzhou Samsung Electronics Co., 1992 AudioLtd., Hulzhou (SEHZ)
Asia China Tianjin Samsung Electronics Co., Ltd. (TSEC)
1993 VCR, DVDP(TSEC)
Asia China Shandong Samsung Telecommunications Co Ltd (SST)
1993 Fax, printerTelecommunications Co., Ltd. (SST), Weihai
Asia China Samsung Electronics Suzhou 1994 SemiconductorSemiconduction (SESS), Suzhou
Asia China Tianjin Tongguang Samsung Electronics Co Ltd (TTSEC)
1994 CTV
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 91
Electronics Co., Ltd. (TTSEC)
Mario Glowik, Market Entry Strategies, First Edition (2009)
Expansion of Samsung Electronic’s worldwide factory network Source: collected by the author as exhibited at Samsung Electronics main entrance hall in Seoul, South Korea
R i C t Pl t E t bl P d tRegion Country Plant Establ. Products
Asia Vietnam Samsung Vina Electronics Co., 1995 CTV, monitorLtd. (SAVINA), Ho Chi Min
America U.S.A. Samsung Austin Semiconductor L L C (SAS)
1996 DRAML.L.C. (SAS)
Asia Korea Kumi Complex 2, Kyongsangbuk-do
1996 Cellular phone, optical cable componentKyongsangbuk do cable component
Asia China Tianjin Samsung Electronics Display Co., Ltd. (TSED)
1997 Monitor
Asia Korea Chonan Complex, Chungchongnam
1997 TFT-LCD
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 92
Mario Glowik, Market Entry Strategies, First Edition (2009)
Expansion of Samsung Electronic’s worldwide factory network Source: collected by the author as exhibited at Samsung Electronics main entrance hall in Seoul, South Korea
R i C t Pl t E t bl P d tRegion Country Plant Establ. Products
Asia Korea Hwasung Complex, Hwasung, Kyonggi-do 2000 Semiconductor
Asia China Tianjin Samsung Telecommunications C (TSTC) Ti ji
2001 HHPCompany (TSTC), Tianjin
Asia Philippines Samsung Electronics Manufacturing Corporation (SEPhil) Calamba
2001 ODDCorporation (SEPhil), Calamba
Asia China Shanghai Bell, Samsung Mobile Communications Co., Ltd. (SSM), Shanghai
2002 CDMA, BSS, SYS
Asia China Samsung Electronics LCD Suzhou Co., Ltd., Suzhou
2002 LCD
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 93
Mario Glowik, Market Entry Strategies, First Edition (2009)
Expansion of Samsung Electronic’s worldwide factory network Source: collected by the author as exhibited at Samsung Electronics main entrance hall in Seoul, South Korea
Region Country Plant Establ. Products
Asia China Shenzhen Samsung Kejian Mobile Telecommunictions Technology Co., Ltd.
2002 HHP
(SSKMT)
Europe Slovakia Samsung Electronics Slovakia (SESK), Glanta
2002 CTV C/MGlanta
Asia Korea Tangjung Complex (Sony) Asan, Chungchongnam-do
2004 TFT-LCD
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 94
Mario Glowik, Market Entry Strategies, First Edition (2009)
Samsung’s worldwide network of product design unitsSource: Samsung Electronics Annual Report 2005, p. 52
Samsung Design Europe (London)
Samsung Design Milan (Milan)
Corporate Design America (San Francisco)
Corporate Design Center
(Seoul)
Samsung Design China (Shanghai)
L.A. Laboratory (Los Angeles)
Samsung Design Japan (Tokyo)
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 95
Mario Glowik, Market Entry Strategies, First Edition (2009)
Net sales of Sony Group 1999-2007 in million dollarsSource: Author based on annual reports
Sony Group - Net sales
60.000
70.000
80.000
ars
30.000
40.000
50.000
illio
n D
olla
0
10.000
20.000Mi
200720062005200420032002200120001999
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 96
Mario Glowik, Market Entry Strategies, First Edition (2009)
Net Income of Sony Group 1999-2007 in million dollarsSource: Author based on annual reports
Sony Group - Net income
1 2001.4001.6001.800
ars
6008001.0001.200
illio
n D
olla
0200400600
M
200720062005200420032002200120001999
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 97
Mario Glowik, Market Entry Strategies, First Edition (2009)
Organization of Sony Group (status January 2008)Source: Sony Corporation
Sony Groupy pChairman & CEO Howard Stringer
Fi i lElectronics Game Pictures Financial Services
Others
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 98
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sony Group (status January 2008)Source: Sony Corporation
Electronics
• Sony Electronics
- Audio
- Video
- Televisions
- Information
- Communication
- Semiconductor
- Components
- Other Products
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 99
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sony Group (status January 2008)Source: Sony Corporation
Game
• Sony Computer Entertainment
- Game Console
- SoftwarePictures
• Sony Pictures Entertainment
• Motion Pictures
• Television Programming
• Other Products
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 100
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sony Group (status January 2008)Source: Sony Corporation
Financial Services
• Sony Life InsuranceSony Life Insurance
• Sony Assurance
• Sony BankSony Bank
• Sony Finance International
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 101
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sony Group (status January 2008)Source: Sony Corporation
Others
• Sony Music Entertainment (Japan)
- Music Content
• Sony Music Entertainment
- Music Publishing
• Sony Communication Network
- Network Service
• Animation Products
• Sony Marketing
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 102
Mario Glowik, Market Entry Strategies, First Edition (2009)
Sony Electronics - net sales 1999-2007 in million dollarsSource: Sony Annual Reports
Sony Electronics - Net sales
50.000
60.000
70.000
llars
20.000
30.000
40.000
Mill
ion
Dol
0
10.000
20.000
200720062005200420032002200120001999
M
200720062005200420032002200120001999
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 103
Mario Glowik, Market Entry Strategies, First Edition (2009)
Sony Electronics - net income 1999-2007 in million dollarsSource: Sony Annual Reports
Sony Electronics - Net income
2.000
2.500
ars
500
1.000
1.500
illio
n D
olla
500
0
500
200720062005200420032002200120001999
Mi
‐500
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 104
Mario Glowik, Market Entry Strategies, First Edition (2009)
Sharp net sales 1999 to 2007Source: Sharp financial and annual reports 2003-2007
Sharp - Net sales
20 000
30.000
SD
10.000
20.000
Mill
ion
US
0
200720062005200420032002200120001999 200720062005200420032002200120001999
Year
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Sharp net income 1999 to 2007Source: Sharp financial and annual reports 2003-2007
Sharp - Net income1.000
SD
500
Mill
ion
US
0
200720062005200420032002200120001999 200720062005200420032002200120001999
Year
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Mario Glowik, Market Entry Strategies, First Edition (2009)
Sharp Organization (status January 2008)Source: Author based on firm documents
Sharp
C / I f ti P d t El t i C tConsumer/ Information Products Electronic Components
Audio/Visual and Communication
Equipment
Home Appliance
Information Equipment
LSIs LCDsOther
Electronic Components
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 107
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sharp (status January 2008)Source: Author based on firm documents
•LCD TVs •DVD Player
Audio/Visual and Communication Equipment
•Color TVs
•TV/VCR Combo
•VCRs
•Facsimiles
•Digital Broadcast Receiver
•1-Bit Digital Audio Products
•Phones
•Mobile Phones
•CD Component Systems
•MD Players
•PHS Phones
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 108
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sharp (status January 2008)Source: Author based on firm documents
Home Appliance
•Refrigerators •Air Purifiers
•Steam Ovens
•Microwave Ovens
•Dehumidifiers
•Humidifiers
•Air Conditioner
•Washing Machines
•Kerosene Heaters
•Electric Heaters
•Vacuum Cleaners •Small Cooking Appliances
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 109
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sharp (status January 2008)Source: Author based on firm documents
Information Equipment
•PCs •Electronic Cash Registers
•PDAs
•Mobile Communication Handsets
•LCD Monitors
•Information Display
•Electronic Dictionaries
•Calculators
•PC Software
•FA Equipment
•POS Systems
•Handy Data Terminals
•Ultrasonic Cleaners
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 110
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sharp (status January 2008)Source: Author based on firm documents
LSIs
•CCD/CMOS Imagers
•LSIs for LCDs
•Micro-computers
•Flash Memories
•Combination Memories
LCDs
•TFT LCD Modules
•Duty LCD Modules
•System LCD Modules
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 111
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Sharp (status January 2008)Source: Author based on firm documents
Other Electronic Components
•Solar Cells •Optical Pickups
•Components for Satellite Broadcasting
• Terrestrial Digital Broadcast Tuners
•Optical Sensors
•Optical Communication Components
•RF Modules
•Network Components
•Regulators
•Switching Power Supplies
•Laser Diodes
•LEDs
•Analog ICs
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 112
Mario Glowik, Market Entry Strategies, First Edition (2009)
Sharp’s network relations with Japanese firms in Europe (LCD TV manufacture)Source: Author, designed based on various company related business information sources
Japanese LCD-component LCD-TV final assembly in LCD-module p pmanufacturer in Poland supply cluster
Toland Tokai Okaya
yEurope demand clusterfabrication
Sharp Electronica SAToland Tokai Okaya Manufacturing (metal frames)
Tensho (plastic elements) Sharp L G
Sharp Electronica SA, Spain
Tensho (plastic elements)
Nitto Denko Corp., (polarizing films)
SharpŁysomice (Poland)
Loewe, Germany (Sharp holds 29 % of
capital)(polarizing films)
Sumika Electronic Materials (polarizing films, light Supporting industries in Poland
Orion, Poland ( g g
diffusion panels)Supporting industries in Poland,
e.g., Kimoto Co. Crystal Logistics and NYK Logistics
vertical supply chain
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 113
vertical supply chain
Mario Glowik, Market Entry Strategies, First Edition (2009)
LG.Philips LCD production network in 2007Source: LG. Philips LCD
LG Phili LCD P d tiLG.Philips LCD Production Network
Europe Asia
Wroclaw, Poland Nanjing, China
Gumi, S. Korea
Paju, S. Korea
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 114
Mario Glowik, Market Entry Strategies, First Edition (2009)
LG.Philips LCD sales network in 2007Source: LG.Philips LCD
LG.Philips LCD Sales Networkp
Europe AsiaAmerica (U.S.A.)
Tokyo, JapanPlanoSan JoseWillich, Germany o yo, Japa
Osaka, Japan
Taipei, Taiwan
a o
Glendale Heights
Cary
Sa Jose
Santa Clara
Westlake Village
, y
Istanbul, Turkey
Shanghai, China
Hong Kong, China
Sh h Chi
Lincolnshire
Clearwater
R l i h
Austin
Houston
Ol th Shenzhen, China
Singapore
Raleigh
Bohemia
Olathe
Gibsonia
Skaneateles
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 115
Skaneateles
Mario Glowik, Market Entry Strategies, First Edition (2009)
LG Phili LCD ti l i t t d l h i ti iti i E ( t t F bLG.Philips LCD vertical integrated value chain activities in Europe (status February 2008)Source: Author, based on various firm-related data
Korean LCD-component LCD-TV final assembly inLCD-moduleKorean LCD component manufacturer in Poland supply cluster
Heesung Electronics Co
LCD TV final assembly in Europe demand cluster
LCD module fabrication
LG El t iHeesung Electronics Co. Ltd. (back light units)
LG Innotek Co Ltd LG Philips LCD
LG Electronics Poland
LG Innotek. Co. Ltd. (electronic components)
D Yang Electronics
LG.Philips LCD(Kobierzyce,
Poland)Philips
Hungary
D. Yang Electronics (plastic injection)
Oh Sung Display Co. Ltd.
Toshiba Poland
g p y(case tops and cover
bottoms)
vertical supply chain
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 116
vertical supply chain
Mario Glowik, Market Entry Strategies, First Edition (2009)
Network embedment of LG.Philips LCD (status February 2008)Source: Author, based on various firm-related data
Toshiba Japan
TCL China19.9 % investment in Poland
LG.Philips LCDestablished 1999
Toshiba JapanKodak U.S.A.
Alliance
Strategy
1999
Royal Philips
NEG JapanAlliance Network
The Netherlands LG Electronics
South Korea
Skyworth China
HannStar Taiwan
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 117
Mario Glowik, Market Entry Strategies, First Edition (2009)
LG.Philips LCD net sales 2001-2007 in million dollarsSource: LG.Philips LCD Annual Reports
LG Philips LCD - Net sales
15.000
20.000
rs
10.000
Mill
ion
Dol
la
0
5.000
M
0
2007200620052004200320022001
Year
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Mario Glowik, Market Entry Strategies, First Edition (2009)
LG.Philips LCD net income 2001-2007 in million dollarsSource: LG.Philips LCD Annual Reports
LG Philips LCD - Net income
1.500
2.000
s
500
1.000
ion
Dol
lars
0
500
2007200620052004200320022001
Mill
i
‐5002007200620052004200320022001
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 119
Mario Glowik, Market Entry Strategies, First Edition (2009)
LG Phili Di l t l t i f th i d 2002 t S t bLG.Philips Displays net sales versus net income for the period 2002 to September 2005 Source: LG.Philips Displays Annual Reports
4.000
5.000
2.000
3.000
Mill
ion
Dol
lars
0
1.000
2002 2003 2004 2005 Jan-Sep
M
-2.000
-1.000
Net sales Net income
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 120
Mario Glowik, Market Entry Strategies, First Edition (2009)
TCL Corporation organization chart Source: TCL China
Board of Supervisors
Board of Directors
TCL CorporationSupervisors
TCL TCL Real Estate & Logistics TCL Home TechneTCLMultimedia
TCL Communication
Real Estate &Investment
Logistics and Service
TCL Home Appliance
TechneElectronic Group
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 121
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of TCL CorporationSource: TCL China
TCL Multimedia TCL Communication
•Digital Technology
•Global R&D
•Communication
•Alcatel Unit
•Home Network
•Strategic Purchasing and Supply
•Sales & Marketing
•Global Operation Center
•Global Supporting Departments
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 122
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of TCL CorporationSource: TCL China
Real Estate & Investment Logistics and Service
•Real Estate & Co.
•Industry Real Estate
•Information Industry
•Online Educational Technology
•Industry Holdings
•Joint Venture Enterprises
•Import & Export Co.
•Speed Distribution Platform
•Finance Corporation
•Industry Academy Management Co.
•KoYoo Online Co.
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 123
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of TCL CorporationSource: TCL China
TCL Home Appliance Techne Electronic Group
•Air Condition
•White Household
•Flat Panel Project
•Shenghua Industrial
•Small Home Appliances Division
•Lighting Division
•High Frequency Electronic
•Display Technology
•Nanyang Electrical Equipment Co.
•Refrigeration Equipment
•Optical Disk Division
•Hyper-Power Batteries
•LED Division
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 124
Mario Glowik, Market Entry Strategies, First Edition (2009)
TCL regional brand strategy Source: TCL Company Information
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 125
Mario Glowik, Market Entry Strategies, First Edition (2009)
TCL China Group. Turnover, gross profit and profit (loss) from operating activities for the period 1999- 2007 in million dollarsSource: Annual reports 2000-2008
4000
5000
3000
4000
Turnover
2000
Gros s Profit
0
1000
Profit/(Los s )
-1000
0
1999 2000 2001 2002 2003 2004 2005 2006 2007
Profit/(Los s )from operatingactiv ities
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 126
1999 2000 2001 2002 2003 2004 2005 2006 2007
Mario Glowik, Market Entry Strategies, First Edition (2009)
Television set business related market entry activities by TCL China in Europe for the period 2002-2008Source: Author, designed based on company information material
LCD TV OEM Agreement with Philips signedPhilips signed 2007 Joint Venture
TCL-Thomson Electronics (TTE)
Liquidation of TTE Europe 2007
TTE absorbed by TCL China wholly owned
TCL China
( )established 2004
2007 ysubsidiary, 2008
Acquisition of Schneider, Liquidation of
Strategic
Acquisition of Schneider, Germany, inclusive trademark, R&D and manufacture 2002
Liquidation of Schneider’s operations and transfer to China 2005
Partnership agreement with LG.Philips LCD signed 2006
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 127
signed 2006
Mario Glowik, Market Entry Strategies, First Edition (2009)
Matsushita (Panasonic) Group net sales 1999-2007 in million dollarsSource: Annual reports 2001-2008
Matsushita Group - Net sales
70.00080.00090.000
ars
30 00040.00050.00060.000
llion
Dol
la
010.00020.00030.000
Mil
200720062005200420032002200120001999
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 128
Mario Glowik, Market Entry Strategies, First Edition (2009)
Matsushita (Panasonic) Group net income 1999-2007 in million dollarsSource: Annual reports 2001-2008
Matsushita Group - Net income
2.000
3.000
s
‐1.000
0
1.000
200720062005200420032002200120001999ion
Dol
lar
‐3.000
‐2.000
1.000
Mill
i
‐4.000
Year
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 129
Mario Glowik, Market Entry Strategies, First Edition (2009)
Matsushita (Panasonic) organization in 2008Source: Matsushita
Matsushita (Panasonic)
AVC Home Components Mats shita Electric Other BusinessAVC Networks
Home Appliances
Components and Devices
Matsushita Electric Works PanaHome
Other Business Domains
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 130
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Matsushita (Panasonic) in 2008Source: Matsushita
AVC N t kAVC Networks
• AVC:- Panasonic AVC Networks Companyp y
• Fixed-line Communication: - Panasonic Communications Co., Ltd.
• Mobile Communications: - Panasonic Mobile Communications Co., Ltd.
• Automotive Electronics: - Panasonic Automotive Systems Co., Ltd.
• Systems Solutions:Systems Solutions: - Panasonic Systems Solutions Company - Panasonic Shikoku Electro. Co., Ltd.
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 131
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Matsushita (Panasonic) in 2008Source: Matsushita
Home Appliances
• Home Appliances Household and Equipment: pp q p- Home Appliances Group - Matsushita Home Appliances Company
Li h i• Lightning: - Lightning Company
• Environmental Systems:Environmental Systems: - Matsushita Ecology Systems Co., Ltd.
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 132
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Matsushita (Panasonic) in 2008Source: Matsushita
Components and Devices
• Semiconductors: - Semiconductor Company
• Batteries: - Matsushita Battery Industrial Co., Ltd.
• Electronic Components: - Panasonic Electronic Devices Co LtdPanasonic Electronic Devices Co., Ltd.
• Motor Company
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 133
Mario Glowik, Market Entry Strategies, First Edition (2009)
Strategic Business Units of Matsushita (Panasonic) in 2008Source: Matsushita
Matsushita Electric Works PanaHome
• Matsushita Electric Works, Ltd.
• PanaHome Corporation
Other Business Domains
• Panasonic Factory Solutions Co., Ltd.
• Matsushita Welding Systems Co., Ltd.
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 134
Mario Glowik, Market Entry Strategies, First Edition (2009)
IPS Alpha Technology Co., Ltd. interlinked companies and their interlocking financial investment structures (status May 2008) Source: Designed by the author based on various firm information sources
IPS Alpha Technology Co., Ltd. LCD Module Joint Venture
Development Bank Hitachi DisplayMatsushita
Canon 24.9 %5% 45% 50%
24,9%
of Japanp y
Hitachi 50.2 %75% 60%100%
Pioneer Plasma
Kenwood
Toshiba Matsushita LCD Display JV
Matsushita Plasma Display Panel
JVC
36,8%
17%Kenwood
LG.Philips LCD, PolandToshibaToray
JVC25% 40%
19,9%
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 135
Poland
Mario Glowik, Market Entry Strategies, First Edition (2009)
Network grid of major network players operating in the television set industry (research status October 2008)Source: Author
Hitachi Thomson
Samsung
Toray Matsushita TCLChina
Samsung
PhilipsJabilPioneer
LG Electronics
SkyworthToshibaBilateral Network Relation
Tohoku-Pioneer
AU Optronics
Wuxi
Fujitsu
Sharp
Sanyo
SonyStrategic component supply
Joint R&D
LoeweChungwha
Orion Shared R&D, manufacture and distribution
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 136
Others (‘exchange of information’)
Mario Glowik, Market Entry Strategies, First Edition (2009)
A comparative overview of strengths and weaknesses of Asian versus European firms operating in the television set industrySource: Interview outcomes of Korean respondents in September 2007
Resource Asian originated firm in European originated firm in the the television set industry television set industry
Strengths • cost competitiveness • located in a market with relatively high purchasing power of consumers
• technological leadership
• eagerness, firm loyalty, discipline and mutual team
high purchasing power of consumers (access to attractive distribution channels)
discipline and mutual team support of the employees
• speed in product
• strong brand awareness and marketing skills
p pcustomization
• creativeness of staff
• long experience in global business operations
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 137
operations
Mario Glowik, Market Entry Strategies, First Edition (2009)
A comparative overview of strengths and weaknesses of Asian versus European firms operating in the television set industrySource: Interview outcomes of Korean respondents in September 2007
Resource Asian originated firm in the television set industry
European originated firm in the television set yindustry
Weaknesses • oversupply capacities • manufacturing costs
• suitable marketing and access to distribution channels in overseas markets such as
• focus on individual and personal life instead of firm destinyoverseas markets such as
Europe
• English language problems of
destiny
• less firm loyalty
staff
• limited experience with other lt
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 138
cultures
Mario Glowik, Market Entry Strategies, First Edition (2009)
The joint venture lifetime of TTE Corporation (TCL China and Thomson)
1. Initial Phase 2. Mature Phase 3. Transformation Phase
Equity joint venture of Thomson and
Incremental increase of
Complete take over of jointof Thomson and
TCL China (‘partnership of equals’)
increase of strategic decision power by TCL China
over of joint venture operations by TCL China full control
2004 2007
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 139
Mario Glowik, Market Entry Strategies, First Edition (2009)
The joint venture lifetime of LG.Philips LCD (LG Electronics and Philips)
1. Initial Phase 2. Mature Phase 3. Transformation Phase
Equity joint venture of Philips
Incremental increase of shares Majority control
b LG El t iventure of Philips and LG Electronics ‘LG.Philips LCD’
increase of shares and strategic decision power by LG Electronics
by LG Electronics (JV renamed: ‘LG Display Co.’)
1999 2008
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 140
Mario Glowik, Market Entry Strategies, First Edition (2009)
The joint venture lifetime of LG.Philips Displays (LG Electronics and Philips)
1. Initial Phase 2. Mature Phase 3. Transformation Phase
Equity joint venture of Philips
Incremental increase of shares
Following joint venture bankruptcyventure of Philips
an LG Electronics ‘LG.Philips Displays’
increase of shares and strategic decision power by LG Electronics
venture bankruptcy, establishment of an independent Korean firm: ‘LP Displays’
2001 2007
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 141
Mario Glowik, Market Entry Strategies, First Edition (2009)
International vertical chain network of LG.Philips LCD
Asian originated TV assembler LCD-module TV gsupplier in Poland
in Polandmanufacturer in Poland
assembler in Europe
LG Innotek
D Y
Philips, Hungary
LG Electronics, Mława
TVP AOCD. Yang
Heesung
LG.Philips LCD, Kobierzyce
Toshiba, United Kingdom
TVP AOC, Gorzow
Toschiba, Heesung
Oh Sung
Kobierzyce
JVC, BolesławiecOh Sung
backward
Bolesławiec
I t ti l ti l l h i forward
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 142
backward International vertical supply chain forward
Mario Glowik, Market Entry Strategies, First Edition (2009)
International vertical chain network of Sharp
Asian originated TV assembler LCD-module TV gsupplier in Poland
in Polandmanufacturer in Poland
assembler in Europe
Toland Tokai
T h
Loewe AG, Germany
OrionTensho
Nitto Denko
Sharp, Łysomice
Sharp Electronica,
Spain
Orion, Łysomice
Jabil Circuit IncNitto Denko
Sumika
pJabil Circuit Inc., Kwidzyn
Sumika
backward I t ti l ti l l h i forward
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 143
backward International vertical supply chain forward
Mario Glowik, Market Entry Strategies, First Edition (2009)
Television set component manufacturing sides of Asian consumer electronics firms in Poland, Hungary, Czech Republic and Slovakia (status October 2008)Source: Author based on firm related information material
KwidzynGdańsk
Torún
y
MlawaGorzów
POLANDWarszawa
KobierzyceBoleslawiec
PrahaCZECH REP KrakówPlzń
Hranice
Nitra
HUNGARY
SLOVAKIA
REP.
JászfényszaruHUNGARY
Székesfehérvár
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany 144
Mario Glowik, Market Entry Strategies, First Edition (2009)
Thank you for considering my book.
Any comments and proposals are highly appreciatedappreciated.
Please feel free to contact:
E-mail: [email protected]
© 2009 Oldenbourg Wissenschaftsverlag Munich, Germany