IB14 - Chapter 14 Haga clic para modificar el estilo de...

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Haga clic para modificar el estilo de subtítulo del patrón Chapter 14 Entry Strategy and Strategic Alliances
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Introduction Firms expanding internationally must decide: which markets to enter when to enter them and on what scale which entry mode to use Entry modes include: exporting licensing or franchising to a company in the host nation establishing a joint venture with a local company establishing a new wholly owned subsidiary acquiring an established enterprise
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Introduction Several factors affect the choice of entry mode including: transport costs trade barriers political risks economic risks costs firm strategy The optimal mode varies by situation – what makes sense for one company might not make
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Basic Entry Decisions Firms entering foreign markets make three basic decisions: 1. which markets to enter 2. when to enter those markets 3. on what scale to enter those markets
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Which Foreign Markets? The choice of foreign markets will depend on their long run profit potential Favorable markets are politically stable developed and developing nations with free market systems and relatively low inflation rates and private sector debt Less desirable markets are politically unstable developing nations with mixed or command economies, or developing nations with excessive levels of borrowing Markets are also more attractive when the product in question is not widely available and
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Timing Of Entry Once attractive markets are identified, the firm must consider the timing of entry Entry is early when the firm enters a foreign market before other foreign firms Entry is late when the firm enters the market after firms have already established themselves in the market
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Timing Of Entry First mover advantages are the advantages associated with entering a market early First mover advantages include: the ability to pre-empt rivals and capture demand by establishing a strong brand name the ability to build up sales volume in that country and ride down the experience curve ahead of rivals and gain a cost advantage over later entrants the ability to create switching costs that tie customers into products or services making it difficult for later entrants to win business
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Timing Of Entry First mover disadvantages are disadvantages associated with entering a foreign market before other international businesses First mover disadvantages include: pioneering costs - arise when the foreign business system is so different from that in a firm’s home market that the firm must devote considerable time, effort and expense to learning the rules of the game Pioneering costs include: the costs of business failure if the firm, due to its ignorance of the foreign environment, makes some major mistakes
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Scale Of Entry And Strategic Commitments After choosing which market to enter and the timing of entry, firms need to decide on the scale of market entry Entering a foreign market on a significant scale is
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IB14 - Chapter 14 Haga clic para modificar el estilo de...

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