Ownership of foreign facilities wos jv adv strategic

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Ownership of foreign facilities: WOS, JV ADV Strategic coordination/ location economies Local control Protects technology/ competitive advantage DISADV Highest cost/risk Requires greater expertise/ knowledge Slower development
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Copyright    Dr. Tomasz Lenartowicz Ownership JV Partner w/ another firm -- form new entity ADV Knowledge synergies Shares risks and costs Surmount political and/or trade barriers DISADV Loss of control Limited global coordination Share profits Coordination challenge
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Copyright    Dr. Tomasz Lenartowicz Greenfield Strategy Start operation from scratch: Obtains land, constructs facilities, hires workers/managers, etc. Acquisition Strategy Buy existing company in the foreign country Integrate into operations WOS: Greenfield or Buy-out ? Which one do you prefer?
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Copyright    Dr. Tomasz Lenartowicz Trade-offs between Greenfield & Acquisition (Buy-out) Greenfield: less ‘baggage’ acclimate at own pace customize to firm’s needs Acquisition: time to begin operations country expertise new technology
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Copyright    Dr. Tomasz Lenartowicz Modes of Entry EXTERNAL (Does not involve FDI, small risk ) Exporting / Importing Licensing Franchising Strategic Alliances (non-equity partnerships) INTERNAL (These involve FDI) JV (joint ventures) (equity partnerships) WOS = wholly owned subsidiaries (100%) (Firms own 100% of shares in a foreign country) Buy-out = Acquisition Greenfield
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