Chap 13 - Entering Foreign Markets.docx - 6606 Chap 13 Page...

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6606 Chap 13 Page 1 of 3 CHAPTER 13 – ENTERING FOREIGN MARKETS A. BASIC ENTRY DECISIONS MNE expanding internationally must decide: I. Which Markets to Enter Factors to consider: 1. Country’s long-run revenue potential as influenced by: a. Political and economic factors i. Type of government (i.e., democracy vs. totalitarian) ii. Type of economic system (i.e., free market vs. planned economy; advanced vs. emerging vs. developing economy) b. Market conditions i. Market size ii. Demographics iii. Consumers’ current and future wealth/purchasing power iv. Nature of local competition v. Suitability of MNE’s products/services in foreign market (e.g., is product needed?) II. Timing of Entry into Foreign Market 1. First-mover advantages include: a. Strong brand recognition – the ability to preempt rivals and capture demand by establishing a strong brand name (e.g., TiVo). b. Gain cost advantage through sales volume – gaining cost advantage (e.g., by lowering production costs) by building up sales volume and going down the experience curve.

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