OPENING CASE: The Business of Luxury: Be prepared for questions from any case in any chapter, especially the opening cases. This case describes the history and organizational strategies of the conglomerate Louis Vuitton Moĕt Hennessy SA (LVMH) It is controlled by a family owned group (Arnault)). LVMH is in the p wines and spirits, perfumes, watches and jewelry
FOREIGN MARKET ANALYSIS: To successfully increase foreign market share, firms must assess alternative markets; evaluate the respective costs, benefits, and risks of entering each; and select those that hold the most potential for entry or expansion. Assessing Alternative Foreign Markets: 1. Factors to consider: Review Table 12.1 2. Information on some of the factors is easily obtainable from published sources in the firm’s home country. Other information may be subjective and difficult to obtain … may be necessary to visit the foreign location to get needed info. 3. Market Potential. The first step in foreign market selection is assessing market potential. Variables a firm might wish to consider include population, GDP, per capita GDP, public infrastructure, and ownership of goods such as automobiles and televisions. 4. Levels of Competition. Firms must also consider the current and future level of competition in foreign markets. Firms assessing their competitive environment should identify the number and size of firms already competing in the potential market, their relative market shares, their pricing and distribution strategies, and their relative strengths and weaknesses. 5. Legal and Political Environment. It is important that a firm understand the host country’s policies toward trade, as well as its general legal and political environment, prior to making an investment. Trade barriers, for example, might induce a firm to enter a market via FDI as opposed to exporting. In some countries, legal and political issues will impact both entry methods and the repatriation of profits. A country’s tax policies and government stability may also affect a firm’s strategy 6. Sociocultural Influences. Sociocultural influences should also be considered when assessing foreign market opportunities. In many cases, firms will attempt to minimize the potential impact of sociocultural differences by initially focusing on countries that are culturally similar to their home markets. Depending on the proposed type of internationalization effort, certain sociocultural variables may be more important than others. For example, if the proposed strategy is to export goods to a new market, the sociocultural factors of most importance are those that relate to consumers. In contrast, if a firm is considering establishing a factory or distribution center in a foreign country, the firm should evaluate sociocultural factors associated with its potential employees.
- Fall '07
- International Trade