Entry mode

Presentation on International Marketing : 

Presentation on International Marketing Strategy T K Ghosh

Slide 2: 

Chapter 3 Internal Environment Chapter 2 External Environment The Strategic Management Process Strategic Intent Strategic Mission Strategic Competitiveness Above Average Returns Feedback Strategy Formulation Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 6 Corporate-Level Strategy Chapter 8 International Strategy Chapter 9 Cooperative Strategies Chapter 7 Acquisitions & Restructuring Strategy Implementation Chapter 10 Corporate Governance Chapter 11 Structure & Control Chapter 12 Strategic Leadership Chapter 13 Entrepreneurship & Innovation Strategic Actions

Opportunities and Outcomes : 

Exporting Licensing Strategic alliances Acquisitions Establishment of a new subsidiary International business-level strategy Multidomestic strategy Global strategy Transnational strategy Opportunities and Outcomes Increased market size Return on investment Economies of scale and learning Advantage in location Identify International Opportunities Explore Resources and Capabilities Use Core Competence International Strategies Modes of Entry

Starbucks international : 

Starbucks international Japan 486 China 116 Taiwan 113 ROK 75 Philippines 54 Canada 53 Malaysia 37 New Zealand 35 Singapore 35 Saudi Arabia 29 UAE 27 Germany 25 Kuwait 20 Mexico 17

International strategy (example 1) : 

International strategy (example 1)

Waterford strategy : 

Waterford strategy market size national advantage related industries differentiation strategy choice of entry mode into international markets?

International strategy (example 2) : 

International strategy (example 2)

General Dynamics- M1A2 MBT : 

General Dynamics- M1A2 MBT Nuclear, Biological, Chemical (NBC) System Position/Navigation System Digital Terrain Map Digital Command, Control, and Communications Capability Second Generation Thermal Imaging System Day/Night Fire on the Move Capability Advanced Suspension - Torsion Bars/Rotary Shock Absorbers Gas Turbine Engine - Multi-fuel/High Power to Weight Ratio Digital Engine Controls

Slide 9: 

Selling Products or Services Outside a Firm’s Domestic Market International Product Lifecycle

Slide 10: 

Example: General Dynamics main battle tank Example: Waterford Crystal Motivations for International Expansion

Slide 11: 

Motivations for International Expansion Economies of Scale or Learning Expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, R & D or distribution

Slide 12: 

International Differentiation Countries with advanced or specialized factor conditions most likely to use this strategy Example: Japan, Germany, U.S. International Low Cost Business-Level International Strategies

Slide 13: 

International Focus Strategies International Integrated Low Cost/Differentiation Business-Level International Strategies

Slide 14: 

Porter’s Determinants of National Advantage Home Country of Origin Is Crucial to International Success

Determinants of National Advantage : 

Determinants of National Advantage Factors of production: the inputs necessary to compete in any industry labor land natural resources capital infrastructure basic factors include natural and labor resources advanced factors include digital communication systems and educated workforce

Determinants of National Advantage : 

Determinants of National Advantage Demand conditions: characterized by the nature and size of buyers’ needs in the home market for the industry’s goods or services size of market segment can lead to scale-efficient facilities efficiency can lead to domination of the industry in other countries specialized demand may create opportunities beyond national boundaries

Determinants of National Advantage : 

Determinants of National Advantage Related and supporting industries: supporting services, facilities, suppliers and so on support in design support in distribution related industries as suppliers and buyers

Choice of Entry Mode : 

Type of Entry Characteristics Exporting High cost, low control Licensing Low cost, low risk, little control, low returns Strategic alliances Shared costs, shared resources, shared risks, problems of integration Acquisition Quick access to new market, high cost, complex negotiations, problems of merging with domestic operations New wholly owned subsidiary Complex, often costly, time consuming, high risk, maximum control, potential above-average returns Choice of Entry Mode

Slide 19: 

Common way to enter new international markets No need to establish operations in other countries May have high transportation costs May have less control on marketing and distribution May encounter high import tariffs Difficult to customize products Establish distribution channels through contractual relationships Choice of International Entry Mode Exporting

Slide 20: 

Choice of International Entry Mode Licensing

Slide 21: 

Choice of International Entry Mode Strategic Alliances

Slide 22: 

Choice of International Entry Mode Acquisitions

Slide 23: 

New Wholly-Owned Subsidiary Choice of International Entry Mode

Slide 24: 

Global Strategy Transnational Strategy Multi-Domestic Strategy Corporate-Level International Strategies

Slide 25: 

Business units in each country are independent of each other Assumes markets differ by country or regions Focus on competition in each market Prominent strategy among European firms due to broad variety of cultures and markets in Europe Strategy and operating decisions are decentralized to strategic business units (SBU) in each country Products and services are tailored to local markets Corporate-Level International Strategies

Slide 26: 

Products are standardized across national markets Decisions regarding business-level strategies are centralized in the home office Strategic business units (SBU) are assumed to be interdependent Emphasizes economies of scale Often lacks responsiveness to local markets Requires resource sharing and coordination across borders (which also makes it difficult to manage) Corporate-Level International Strategies

Slide 27: 

Strategic Competitiveness Outcomes

Slide 28: 

International Strategy Opportunities and Outcomes Identify International Opportunities Explore Resources and Capabilities Use Core Competence Strategic Competitiveness Outcomes International Strategies Modes of Entry Increased Market Size Return on Investment Economies of Scale and Learning Location Advantage International Business-Level Strategy Multidomestic Strategy Global Strategy Transnational Strategy Exporting Establishment of New Subsidiary Exporting Strategic Alliances Acquisition Management Problems and Risk Management Problems and Risk Higher Performance Returns Innovation

Political Risks : 

Political Risks Political Risks Economic Risks Political risks include instability in national governments war, both civil and international potential nationalization of a firm’s resources becoming a political issue at home (“outsourcing”) Political Risks

Economic Risks : 

Economic Risks Economic Risks Economic risks are interdependent with political risks and include differences and fluctuations in the value of different currencies- building BMWs in Germany for sale in U.S. differences in prevailing wage rates- Kathie Lee example difficulties in enforcing property rights- e.g. China Political Risks

Slide 31: 

Management Problems Limits To International Expansion