international business strategy developing core business strategies country acountry bcountry n 1....
TRANSCRIPT
International Business Strategy
Developing CoreBusiness Strategies
Country A Country B Country N
1.
2. InternationalizationOf Core Strategies
3. Globalization
International Marketing Dimensions
I. Controllable vs. Uncontrollable
II. Standardization vs. Differentiation (Customization)
III. Mode of Involvement (Function of firm’s size, skills, demand, control and risk issues)
IV. HQ vs. Subsidiary
V. The Emergence of Trading Blocks
The Global Industry
IndustryGlobalizationPotential
Market Drivers
CompetitiveDrivers
Government/Public Policy
DriversCost Drivers
Demand
The Spectrum of International Marketing Involvement
InactiveExporting
ProactiveExporting
•Franchising•Licensing (Licensee Name)
Licensing (Licensor Name)
TurnkeyContract
Joint Venture
ManagementContract
StrategicAlliance
DirectInvestment
ContractualRelations/Arrangements
MoreInvolvement
LessInvolvement
OLI – Dunning Framework and Entry Mode Choice All firms select their entry mode strategies
by CONSIDERING 3 VARIABLES: Ownership advantages which are less concerned with
control/risk issues as related to inter-firm relationships Location advantages which are concerned with the
resources commitment issue, as related to the availability and cost of resources
Internalization advantages which are primarily concerned with reducing transaction and coordination costs.
OLI – Dunning Framework and Entry Mode Choice
Data suggest that the ability to differentiate products is more important to firms in determining entry mode choice than the strength of contractual risk.
Also – investment risk is more important than market potential when assessing an entry mode.
OLI – Dunning Framework and Entry Mode Choice Recent trend -
Non equity modes• Modes that are becoming increasingly popular
among service firms for organizing overseas ventures/operations. These entry modes are essentially contractual and include leasing, licensing, franchising, and management service contracts.
Note: Entry to a large extent is driven by the strategic objectives spelled out in the company’s global mission
Licensing
A contractual transaction whereby the firm – the licensor – offers some proprietary assets to the foreign company – the licensee – in exchange for royalty fees
Assets: trademarks, technology know-how, production processes, and patents.
Royalties: typically between 1-15%
Franchising
The franchisor gives the franchisee the right to use the franchisor’s trade names, trademarks, business models, and/or know-how in a given territory for a given time period, normally 10 years.
A “package” to the franchisee might include the marketing plan, operating manuals, training and quality monitoring.
Entry Decisions: Strategic Parameters
Input Processes OutputA strategic plan including:
Motivation(s) for entryDecision rules for
site(s) selection
Mode of entry (risks control, legal issues) Operational and implementation programs
Inventory of own resource
Inventory of competitors’ resources
Market intelligence
IP protection
Market Stage
Infancy Developing Mature
1. Customers
2. Product Introduction
3. Distribution (Types of after market)
Price Competitive Strategies
Decision Criteria for Country Selection
Market Size and Growth Risk (Political & Economic; Internal & External) Government Regulations Competitive Environment Local Infrastructure Country Classification
Platform – gathering intelligence and establish a network (Singapore, Hong Kong)
Emerging Market – Vietnam, Kazakhstan Growth Markets – The Czech Republic, China, Brazil Maturing Markets – Japan, Germany