Slide MGT 212 Slide 5

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Chapter 10

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_{Managerial commitment}

_{Market and competitive analysis}

_{Internal Analysis}

_{Competitive Strategy Formulation}

STRATEGIC PLANNING FOR GLOBAL

EXPANSION

Starts with overview of different regions, further splits into analysis by country.

South-East Asia: Indonesia, Malaysia,

the Philippines, Singapore, Thailan,

and Vietnam

Cost Leadership Strategy Offers identical product or

service at lower cost than competitors

Differentiation Strategy

Take advantage of brand, name,

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

_{Research spotlights on new}

opportunities, exposes potential risk,

vital in strategy development

(identifying all requirements of market

entry, penetration and expansion)



_{Secondary and primary research}

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_{Exporting and Importing}

 _{Indirect Involvement}  _{Direct Involvement}

 _{International Intermediaries}

ENTRY AND DEVELOPMENT

STRATEGIES

Can assist with troublesome yet important details such as

documentation, financing and transportation

• Export Management companies -Domestic companies that specialise in performing international business

services as commision representatives or as distributors

Expansion of Trading Companies Export Trading Company (ETC) Private Sector Facilitators

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_Licensing

 _{Licensing Agreement: patent,}

trademarks, copyrights, business skills

 _Royalty

_Franchising

 _{Allows distributors or retailer exclusive}

rights to sell a product or service in a specified area

ENTRY AND DEVELOPMENT

STRATEGIES

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LICENSING AND FRANCHISING

Advantages of licensing

 _{Capital investment or knowledge or marketing strength}

is not required.

 _{Additional return on R&D investments already incurred.}  _{Reduces the risk of R&D failures}

 _{Ongoing licensing cooperation and support enables the}

Licensee benefits from new developments.

 _{Allows a firm to test a foreign market without major}

investment of capital or management time.

 _{Preempts a market for competition, especially if the}

licensor’s resources permit full-scale involvement only in selected markets.

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LICENSING AND FRANCHISING



_{Disadvantages of licensing}



_{Licensor gets limited expertise.}



_{Licensor creates its own}

competitor.



_{Allows multinational corporations}

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FOREIGN DIRECT INVESTMENT



_{Types of ownership -}

_{Joint ventures}



_{Collaborations of two or more}

organizations for more than a transitory

period.



_{Partners share assets, risks, and profits}

in proportion to ownership.

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FOREIGN DIRECT INVESTMENT

Advantages of joint

ventures



_{Pooling of resources.}



_{Better relationships}

with local

organizations.



_{The partner’s}

knowledge of the

local market.



_{Minimize exposure}

to political risk.



_{Tap local capital}

markets

.

Disadvantages of

joint ventures



_{Different levels of}

control are

required.



_{Diffi culty in}

maintaining the

relationship.



_{Disagreements over}

business decisions.



_{Disagreements over}

profit accumulation

and distribution

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_{Firms are categorized as:}



_{Resource seekers}

_{- Search for natural}

and human resources.



_{Market seekers}

_{- Search for better}

opportunities to enter and expand

within markets.



_{Effi ciency seekers}

_{- Attempt to obtain}

the most economic sources of

production.

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

_{Bring in capital, economic activity, and}

employment.



_{Transfer technology and managerial skills.}



_{Encourage competition, market choice, and}

competitiveness.

But, they:



_{Drain resources from host countries.}



_{Starve smaller capital markets.}



_{Discourage local technology development.}



_{Bring in outmoded technology.}



_{Create new competition for local firms.}

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