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1、International Strategy,Entry Modes,Pressures for Global Integration and National Differentiation,see C.Bartlett(1986),GlobalOrganization,MultinationalOrganization,Forces for Global Integration,Forces for National Differentiation,Lo,Lo,High,High,TransnationalOrganization,InternationalOrganization,Adv
2、antages and Disadvantages,StrategyAdvantagesDisadvantagesInternational transfer distinct competencies lack local responsiveness lack location economies cant exploit exp.curveMulti-domestic customize offerings&lack location ecys(multi-national)marketing cant exploit exp.curve cant transfer distinct c
3、ompetenciesGlobal exploit experience curve lack local responsiveness exploit location economiesTransnational exploit exp.Curve&location implementation-orgnl economies,customize,global problems learning benefits,Basic Entry Decisions,Which markets to enter?When to enter the markets?What scale of entr
4、y?,14-2,Which Foreign Markets?,Favorable benefit-cost-risk-trade-off:Politically stable developed and developing nations.Free market systemsNo dramatic upsurge in inflation or private-sector debt.UnfavorablePolitically unstable developing nations with a mixed or command economy or where speculative
5、financial bubbles have led to excess borrowing.,14-3,Timing of Entry,Advantages in early market entry:First-mover advantage.Build sales volume.Move down experience curve and achieve cost advantage.Create switching costs.Disadvantages:First mover disadvantage-pioneering costs.Changes in government po
6、licy.,14-4,Scale of Entry,Large scale entryStrategic 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.,14-5,Entry Mode
7、s,ExportingTurnkey ProjectsLicensingFranchisingJoint VenturesWholly Owned Subsidiaries,14-7,Exporting,Advantages:Avoids cost of establishing manufacturing operations.May help achieve experience curve and location economies.Disadvantages:May compete with low-cost location manufacturers.Possible high
8、transportation costs.Tariff barriers.Possible lack of control over marketing reps.,14-8,Turnkey Projects,Advantages:Can earn a return on knowledge asset.Less risky than conventional FDI.Disadvantages:No long-term interest in the foreign country.May create a competitor.Selling process technology may
9、be selling competitive advantage as well.,14-9,Licensing,Advantages:Reduces costs and risks of establishing enterprise.Overcomes restrictive investment barriers.Others can develop business applications of intangible property.Disadvantages:Lack of control.Cross-border licensing may be difficult.Creat
10、ing a competitor,14-10,Franchising,Advantages:Reduces costs and risk of establishing enterprise.Disadvantages:May prohibit movement of profits from one country to support operations in another country.Quality control.,14-11,Joint Ventures,Advantages:Benefit from local partners knowledge.Shared costs
11、/risks with partner.Reduced political risk.Disadvantages:Risk giving control of technology to partner.May not realize experience curve or location economiesShared ownership can lead to conflict.,14-12,Wholly Owned Subsidiary,Advantages:No risk of losing technical competence to a competitor.Tight con
12、trol of operations.Realize learning curve and location economies.Disadvantage:Bear full cost and risk.,14-13,Advantages and Disadvantages of Entry Modes,Entry Mode,Advantage,Disadvantage,Exporting,Ability to realize location and,experience curve economies,High transport costs,Trade barriers,Problems
13、 with local marketing agents,Turnkey,contracts,Ability to earn returns from,process technology skills in,countries where FDI is,restricted,Creating efficient competitors,Lack of long-term market presence,Licensing,Low development costs and,risks,Lack of control over technology,Inability to realize l
14、ocation and,experience curve economies,Inability to engage in global strategic coordination,14-14,Advantages and Disadvantages of Entry Modes,Entry Mode,Advantage,Disadvantage,Franchising,Low development costs and,risks,Lack of control over quality,Inability to engage in global strategic,coordinatio
15、n,Joint,ventures,Access to local partners,knowledge,Sharing development costs,and risks,Politically acceptable,Lack of control over technology,Inability to engage in global strategic,coordination,Inability to realize location and,experience economies,Wholly,owned,subsidiaries,Protection of technolog
16、y,Ability to engage in global,strategic coordination,Ability to realize location and,experience economies,High costs and risks,Table 14.1b,14-15,Selecting an Entry Mode,Technological Know-How,Management Know-How,Wholly owned subsidiary,except:1.Venture is structured to reduce risk of loss of technol
17、ogy.2.Technology advantage is transitory.Then licensing or joint venture OK.,Franchising,subsidiaries(wholly owned or joint venture).,Pressure for Cost Reduction,Combination of exporting and wholly owned subsidiary.,14-16,Entry Mode and Competitive Advantage,Advantage Based on Technological Know-How
18、Exporting,Licensing,or Wholly-owned subsidiariesExamples:Honda,IntelAdvantage Based on Management Know-HowFranchising,Joint Ventures,or subsidiariesExamples:McDonalds,Marriott,Strategic Alliances,Cooperative agreements between potential or actual competitors.Advantages:Facilitate entry into market.S
19、hare fixed costs.Bring together skills and assets that neither company has or can develop.Establish industry technology standards.Disadvantage:Competitors get low cost route to technology and markets.,14-17,Alliances Are Popular,High cost of technology developmentCompany may not have skill,money or
20、people to go it aloneGood way to learnGood way to secure access to foreign marketsHost country may require some local ownership,14-18,Global Alliances,however,are different,Companies join to attain world leadershipEach partner has significant strength to bring to the allianceA true global visionRela
21、tionship is horizontal not verticalWhen competing in markets not part of alliance,they retain their own identity,14-19,Partner Selection,Get as much information as possible on the potential partnerCollect data from informed third partiesformer partnersinvestment bankersformer employeesGet to know th
22、e potential partner before committing,14-20,Structuring the Alliance to Reduce Opportunism,Opportunism by partnerreduced by:,Seeking crediblecommitments,Agreeing to swapvaluable skillsand technologies,Establishingcontractual safeguards,Walling offcritical technology,Figure 14.1,14-21,Characteristics
23、 of a Global Alliance,Players are independent prior to the creating of the alliancePlayers sharebenefits of the alliancecontrol over operationsPlayers continue to contributetechnologyproducts,14-22,Characteristics of a Strategic Alliance,Independence ofParticipants,SharedBenefits,Ongoing Contributions,Markets,Cooperation,Benefits,Control,Products,Technology,14-23,Problems with Strategic Alliances,Have to give up some authority/controlCould be strengthening a future competitorTechnology transferManagement practicesOperating procedures,14-24,
