Lecture - Entering Foreign Markets

Lecture - Entering Foreign Markets - Lecture Entering...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture Entering Foreign Markets
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Businesses go overseas to seek 1. New markets to grow their sales through geographic expansion 1. Resources to lower their costs (e.g. raw materials, manufacturing, labor, technology, etc.) 2. Knowledge and newly emerging ideas, concepts and technologies
Background image of page 2
Basic entry decisions Firms considering international expansion need first to determine which markets to enter when to enter them and on what scale Which markets? “national attractiveness” from a political economy perspective firms need to balance benefits, costs and risks the most attractive countries are usually developed or developing; are politically stable (note – not necessarily democratic, example China!); have a free (and transparent) market; and are not facing potential upsurges in either inflation or public debt (oops! Where does that put the U.S. today?) “market attractiveness” Market size (demographics); current purchasing power; and future purchasing power A market need/fit for the firm’s products – e.g. limited competition for the firm’s products and a need/value for the firm’s offerings
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Basic entry decisions (continued) Timing Firm’s can sometimes attain “ first mover advantages They pre-empt rivals and develop strong brand recognition They drive down costs by building sales and share And introduce “switching costs” for future entrants But in many cases, being first can be a disadvantage and lead to “ pioneering costs Developmental costs that later rivals can avoid The greater risk associated with being first Scale of entry This is in essence a risk-management decision The larger the scale (investment), the greater the strategic (i.e. long-run) commitment to the country and its markets; the greater the opportunity for the firm to capture first mover advantages and market share that crowds out competition; but the greater the risk and stakes in case of failure Smaller scale entry is less risky but less competitively advantageous Patience is also essential; international business rarely develops overnight (why?)
Background image of page 4
Having chosen a foreign market to enter, a firm needs to determine how to enter There are six entry modes
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 9

Lecture - Entering Foreign Markets - Lecture Entering...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online