3616_Week 8_CWee

3616_Week 8_CWee - 13-1 Butler / Multinational...

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Unformatted text preview: 13-1 Butler / Multinational FinanceChapter 13 Foreign Market Entry and Country Risk Management WTO members 13-2 Butler / Multinational FinanceChapter 13 Foreign Market Entry and Country Risk Management FINS3616 International Business Finance Week 8 Lecturer: Claudia Wee 13-3 Butler / Multinational FinanceChapter 13 Foreign Market Entry and Country Risk Management Part IV Valuation and the Structureof Multinational Operations Ch 13 Foreign Market Entry & Country Risk Management Ch 14Cross-Border Capital Budgeting Ch 15Multinational Capital Structure and Cost of Capital Ch 16Taxes and Multinational Corporate Strategy Ch 17Real Options and Cross-Border Investment Strategy Ch 18Corporate Governance and the International Market for Corporate Control 13-4 Butler / Multinational FinanceChapter 13 Foreign Market Entry and Country Risk Management Learning objectives PForeign market entry PRecognizing and understanding country risks PStrategies for managing country risks PProtecting the firms competitive advantages Intellectual property rights Chapter 13 Foreign Market Entry and Country Risk Management 13-5 Butler / Multinational FinanceChapter 13 Foreign Market Entry and Country Risk Management Business risk Multinational business risk Domestic business risk Knowledge of the foreign market or country Familiarity with a foreign market is useful in the market entry decision Foreign market entry Recognizing and understanding country risks Strategies for managing country risks Protecting the MNCs competitive advantages Familiarity Modes Investment-based entry 13-6 Butler / Multinational FinanceChapter 13 Foreign Market Entry and Country Risk Management Hofstede Dimensions of Cultural Distance Management scholar Geert Hofstede studies national differences, and has identified 5 dimensions of cultural distance. Power Distance- extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. Individualism v collectivism - degree to which individuals are integrated into groups. Masculinityv femininity- the distribution of roles between the genders. Uncertainty Avoidance- a society's tolerance for uncertainty, ambiguity; comfort in unstructured situations. Long-termv short-termorientation- a societys time horizon http://www.geert-hofstede.com/index.shtml 13-7 Butler / Multinational FinanceChapter 13 Foreign Market Entry and Country Risk Management Modes of foreign market entry Export or import entry -Agents or distributors (foreign or domestic) -Foreign sales branches or subsidiaries -Preferred when market potential is high + significant investment risks -Preferred by small firms without international experience Contract-based entry -Licensing or franchising -Licensingis preferred when a country has investment barriers/ when political and cultural risks are high Investment-based entry -Foreign direct investments (FDI) - preferred when the MNC owns production...
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3616_Week 8_CWee - 13-1 Butler / Multinational...

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