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10 Entry Mode 3600 RCDC

Risk return commitment expertise copyright dr tomasz

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RISK RETURN COMMITMENT / EXPERTISE
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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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Copyright    Dr. Tomasz Lenartowicz Exporting Goods transferred from one country to another. Direct / Indirect ADV Least complex Enables incremental growth Experience curve & EOS DISADV Political/Legal barriers Costs (transportation, tariffs) Limited local control
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Copyright    Dr. Tomasz Lenartowicz Licensing Transfer of rights of manufacturing for fee ADV Low risk Low cost High speed to market DISADV Limited local control Loss of IP Diminishes global coordination Create competitor
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Copyright    Dr. Tomasz Lenartowicz Franchising: A special form of licensing Franchisee operates business under name of franchisor Pays fee, and receives supplies, training, & technical support Includes brand name, operating system, advertising, reputation, quality control, etc.
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Copyright    Dr. Tomasz Lenartowicz Franchising ADV Low risk Fairly high speed to market Improved “control” over licensing Some global coordination DISADV Dependence on partner Long-term commitment Higher start-up costs and maintenance expense
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Copyright    Dr. Tomasz Lenartowicz Foreign Direct Investment Ownership of foreign facilities Enables greater control, coordination Greenfield, Buy-Out (Acquisition), Joint Venture
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Copyright    Dr. Tomasz Lenartowicz FDI: More Control and Coordination
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