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´╗┐Section 9 Market Entry and Servicing Strategies John S. Slope

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Chapter Outline Introduction: Exporting Strategies Contractual Forms of Market Entry Investment Options for Servicing Foreign Markets Matching Market Servicing Strategies to Environmental and Corporate Needs

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Chapter Outline: Market Entry and Servicing Strategies Market Entry and Servicing Strategy Exporting Strategies Indirect Exporting Direct sending out Contractual Methods of Market Entry & Servicing Licensing Franchising Contract fabricating Co-generation Investment Options International Joint-Ventures Mergers & Acquisitions Greenfield Operations Matching Market Entry and Servicing Strategies to Environmental & Corporate Needs

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Exporting Strategies Indirect Exporting and Use of Trading Companies Direct Exporting

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Export Strategies Indirect Exporting and Use of Trading Companies Indirect sending out utilizations outsider mediators US Trading Companies and Associations: ETC ( Export Trading Companies ) & WPA (Webb-Pomerene Associations ) Taiwanese Trading Companies: free makers and providers Mainland China Trading Companies: industry-focused Japanese Trading Companies, "huge nine" sogo shosha, more than 1000 abroad workplaces, yearly turnover tops $350 billion

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Export Strategies Direct Exporting For little and medium measured firms, modest and adaptable For huge worldwide firms, sending out/bringing in are crucial parts of universal operations Key components in worldwide organization supply chains for material supplies and dispersion of definite items International firms represent 2/3 world exchange

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Contractual Forms of Market Entry Three Major Types of Agreements Management Contracts Contract Manufacturing Co-creation Agreements

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Contractual Forms of Market Entry Three Types of Most Popular Agreements Licensing Allowing remote based firm utilization of creation procedures, advertising logos, trademarks or brand names for a characterized era in particular market and for a pre-indicated sovereignty charge Danisco Cultor in Asia: minimal effort fabricating after patent expiry Ferrari Motor Sports: advance brand through dress Umbro: ease way tt contend with Adidas and Nike

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Contractual Forms of Market Entry Three Major Types of Agreements Franchising Franchisees given rights for generation or promoting of the item; significant control applied over both the generation procedures and showcasing technique McDonalds, KFC and Pizza Hut Hyatt and Holiday Inn, require up to $100 million in land and capital consumptions per lodging

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Contractual Forms of Market Entry Three Major Types of Agreements Franchising Controlling Foreign Franchisees Concentrating possession by means of trusted ace franchisers Diluting proprietorship: numerous autonomous administrators

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Contractual Forms of Market Entry Three Types of Most Popular Agreements Master Franchising Individuals regulate and build up various establishments inside a nation or district HFC, a main franchiser of brand name inns (e.g., Howard Johnson, Day's Inn, Ramada), private land (Century 21, Caldwell Banker, ERA) and rental autos (Avis)

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Contractual Forms of Market Entry Dealing with Local Market Environments Archaic legitimate systems and administrations Political Unrest: conditions on nearby specialists and light neighborhood economies Cultural impediments: socially delicate nourishments enterprises where menus are adjusted

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Contractual Forms of Market Entry Other Contracts and Agreements Management Contracts, global organizations, for an expense, prepare neighborhood representatives and oversee remote based offices for an endorsed day and age (inns) Contract Manufacturing, remote firms utilizing particular materials or potentially procedures to make items or give administrations to outsider organizations. May be home-advertise or remote make; adaptability preferences however control inconveniences Co-Production Agreements, fabricating joint endeavors, with accomplices holding their autonomous promoting and conveyance rights

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Investment Options for Servicing Foreign Markets International Joint Ventures (IJVs) Mergers and Acquisitions (M&A) Greenfield Operations

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Investment Options for Servicing Foreign Markets International Joint Ventures (IJVs): Definition & Key Decision Areas I nternational organizations and nearby firms unite to share possession and administration duties in uniquely made undertakings Equity Structure, control over IJV operations Technology Transfer Arrangements , 'the best' advances v.s. those coordinating business sector needs Asset Valuation issues, esteem arrive, structures, hardware and impalpable resources (cooperative attitude, mark names, and so forth.)

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Investment Options for Servicing Foreign Markets International Joint Ventures (IJVs) Divisions of administration duty, 'who is truly in control?' Financial Policy and Strategic Objectives, profit and benefit reinvestment/repatriation strategies Blending of worldwide corporate destinations with neighborhood objectives, fabricating for different auxiliaries, dispensing send out rights, and evaluating issues Cultural issues and evolving connections

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Investment Options for Servicing Foreign Markets Mergers and Acquisitions (M&A) Over 75 percent (or over $866 billion) were M&A in the $1.2 trillion gear and administration resources more than 1999-2000; gives fast get to and affect in exceedingly focused markets Seven sorts of organizations in M&A Carnivores: M & an ordinary capacity. Settle, Unilever, Electrolux and GE Dairy Farmers: purchase and offer organizations to expand shareholder esteem. Hanson Vegetarian: rare crafty acquirers. Sony's and Matsushita's buy of Hollywood

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Investment Options for Servicing Foreign Markets Mergers and Acquisitions (M&A) Seven sorts of organizations in M&A White Hunters: often go for firms that are greater than they are. UK store trolley producer WPP's takeover of US publicizing organization monster J. Walter Thompson Gentleman Shooters: extensive takeovers after comprehensive research. BMW's takeover of British auto firm Rover Cross-Breeders, driving national organizations to frame provincial (or worldwide) powerhouses. Sweden's ASEA and Brown-Boveri of Switzerland in substantial electrical gear Global uber mergers, to assemble minimum amount and habitations in the universal markets. Renault's $5.4 billion interest in Japan's number 2 auto creator, Nissan.

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Investment Options for Servicing Foreign Markets Implementing M & A Strategies Evaluation of Prospects Financial examination Strengths-shortcomings openings dangers (SWOT) Cost and esteem chain investigation Competitive investigation

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Investment Options for Servicing Foreign Markets Implementing M & A Strategies Post Acquisition Strategies Stand-alone approaches: leave the obtained organization as it may be; little impedance Integration procedures: into parent organization operations to harvest money related, producing, advertising cooperative energies M&A Assessment: would it say it was justified, despite all the trouble and did we execute it well?

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Investment Options for Servicing Foreign Markets Greenfield Operations Build outside backups to suit their necessities Advantages Need not manage existing administrations and offices Start new with the association's own innovations, administration styles and corporate societies Complete control of auxiliary improvement and market techniques

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Investment Options for Servicing Foreign Markets Greenfield Operations Disadvantages Must form in-market associations with providers, wholesalers sans preparation Competitors have sufficient energy to modify their methodologies and get ready for another adversary The dangers of making real asset responsibilities and of financing misfortunes until offices achieve their full market potential

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Investment Options for Servicing Foreign Markets Greenfield Operations Conditions favoring: Financing needs are low Markets are growing gradually and industry rivalry levels are low Leading edge items and process advancements; can make preparations for licensed innovation robbery Global brands and notorieties are preferences Strong corporate societies are keys to corporate achievement

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Investment Options for Servicing Foreign Markets Greenfield Operations Country Selection Criteria Proven assembling abilities in the worldwide setting Market potential Competitor habitations (they are there, why aren't we?) Favorable environment: no major working issues

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Investment Options for Servicing Foreign Markets Greenfield Operations Site Location Within the Country dictated by: Government area motivating forces (undeveloped areas) Economically huge focuses (clients) Availability of qualified faculty Essential assets are accessible Transportation and frameworks must be satisfactory

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Investment Options for Servicing Foreign Markets Greenfield Operations Siting Research and Development Capabilities Historical examples: home market-based Current R&D systems Research labs in customary fields: situated in real markets or 'skill districts' (e.g. silicon valley) Development labs: item adjustments to neighborhood needs Facilities in new rising regions: Latin America, Asia Managing the R&D Site: size is imperative; and initiative (notoriety, associations)

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Matching Market Servicing Strategy to Environmental and Corporate Needs External Factors Internal Factors

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Matching Market Servicing Strategy to Environmental and Corporate Needs External Factors Global industry examinations: Countries with huge market sizes and high market development Market environment investigations: less hazardous for experienced firms; vital for newcomers Competitive

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