Market Entry Strategies
Contents ' •:': • • • v ^ ^ ' S H
About the Author
5
Introduction
7
Acknowledgements
9
Contents
11
Structure of this Book
19
Chapter 1 Introduction to International Strategy
23
What is an International Strategy?
Global Efficiencies of International Companies
,
23
26
Location Efficiencies
26
Economies of Scale
26
Economies of Scope
26
International Flexibility
27
Worldwide Learning
27
Information Technology & Global Strategies
27
Possible Problems in Multinational Companies
28
Strategic Exploration
29
Home Replication Strategy
29
Multidomestic Strategy
30
Global Strategy
30
Transnational Strategy
31
Components of an International Strategy
32
Distinctive Competence
32
Resource Deployment
33
Scope of Operations
33
Synergy
33
Developing an International Strategy
34
Mission Statement
34
Environmental Scanning and the SWOT Analysis
35
11
Market Entry Strategies
The TOWS Matrix
38
Strategic Goals
39
Tactics
39
Control Framework
39
Levels of International Strategy
40
Corporate Strategy
40
The Single Business Strategy
40
Related Diversification
41
Unrelated Diversification
42
Business Strategy
43
Diversification Strategy
Cost Leadership
43
,
Focus Strategy
44
Functional Strategies
44
Chapter 2 Strategies for Analysing and Entering Foreign Markets
Foreign Market Analysis
12
43
49
49
Market Potential
49
Levels of Competition
50
Legal and Political Environment
50
Sociocultural Influences
51
Evaluating Costs, Benefits and Risks
51
Market Selection
53
Market Attractiveness
53
Market Barriers
54
Targeted Market Selection
56
The Importance of Basis Strategies
57
Ethnocentric Orientation
57
Polycentric Orientation
57
Geocentric Orientation
57
Market Entry Strategies
Regiocentric Orientation
,
58
Timing of the Market Entry
59
Waterfall Strategy
59
Benefits of the Waterfall Strategy
59
Disadvantages of the Waterfall Strategy
59
Sprinkler Strategy
,
,
60
Benefits of the Sprinkler Strategy
,
Disadvantages of the Sprinkler Strategy
,
Wave Strategy
60
61
61
Benefits of the Wave Strategy
62
Disadvantage of the Wave Strategy
62
Chapter 3: Market Entry Strategies
Choosing a Mode of Entry
,
67
67
Foreign Direct Investments
67
Ownership Advantage
67
Location Advantage
68
Internationalisation Advantage
68
Exporting to Foreign Markets
Forms of Exporting
71
72
Indirect Exporting
72
Direct Exporting
73
Intra-Corporate Transfers
73
Additional Considerations
73
Government Policies
74
Marketing Concerns
74
Distribution Issues
74
Export Intermediaries
75
Export Management Company
75
Webb Pomerene Association
76
13
Market Entry Strategies
International Trading Company
76
Other Intermediaries
77
Advantages of Exporting
77
Disadvantages of Exporting
78
International Licensing
79
Compensation
79
Establishing Rights, Privileges and Constraints
80
When does Licensing make sense?
80
Duration of the Agreement
82
Costs of Licensing
82
Advantages of International Licensing
82
Disadvantages of International Licensing
83
Case Study: Calvin Klein, Inc. v, Warnaco Group, Inc
International Franchising
115
Advantages of Franchising
,
118
Disadvantages of Franchising
118
Example: McDonald's t141)
119
Case Study: Michael Bregman-
122
Specialised Entry Modes for International Businesses
147
Contract Manufacturing
147
Example of Contract Manufacturing: Pepsi Cola in Iraq
Management Contracts
147
148
Example of a Management Contract: Virgin Media and BT
Turnkey Projects
149
150
Advantages of Turnkey Projects
150
Disadvantages of Turnkey Projects
150
Example of a Turnkey Project: Athens International Airport C147)
151
Foreign Direct Investments
154
Why do firms go abroad?
155
The Ground Up strategy
14
84
,
157
Market Entry Strategies
Advantages of the Ground Up strategy
157
Disadvantages of the Ground Up strategy
158
The Acquisition Strategy
158
Advantages of the Acquisition Strategy
159
Disadvantages of the Acquisition Strategy
159
Reading: The East India Company
160
Case Study: Mannesmann / Vodafone
172
joint Ventures
178
Advantages of Joint Ventures
178
Disadvantages of joint Ventures
179
Case Study: Milkpak Limited
180
Joint Venture Partners
196
Joint Venture Negotiations
199
Strategic Alliances
203
Internationa] Corporate Cooperation
203
Example: Star Alliance - "The way the Earth connects" P73)
204
Benefits of Strategic Alliances
207
Ease of Market Entry
207
Shared Risk
,
Shared Knowledge and Expertise
207
-
Synergy and Competitive Advantage
208
208
Scope of Alliances
209
Comprehensive Alliances
209
Functional Alliances
209
Implementation of Strategic Alliances
Selection of Partners
,
211
211
Alliance Structure
213
Form of Ownership
214
Public Private Venture
215
15
Market Entry Strategies
Joint Management Considerations
216
Shared Management Agreement
216
Assigned Agreement
216
Delegated Arrangement
216
Pitfalls of Strategic Alliances
217
Incompatibility of Partners
217
Access to Information
218
Conflict over Distributing Earnings
218
Loss of Autonomy
218
Changing Circumstances
,
Case Study: FreeMove
220
Case Study: Budweiser in Japan
250
Chapter 4: The Influence of Culture on Market Entries
285
Individual Behaviour in International Businesses
285
Culture
285
High and Low Context
286
High Context Cultures
287
Low Context Cultures
288
Problems between high and low context cultures
288
The Perception of Space between Cultures
Problems that can arise because of differences in space
The Perception of Time between Cultures
16
219
289
290
290
Monochrome Time
291
Polychronic Time
291
Appointments and Meetings
292
The Importance of Print Media
293
Problems that can arise between Polychronic and Monochronic Cultures
293
Power Distance
295
Uncertainty Avoidance
299
Market Entry Strategies
Individualism and Collectivism
Masculinity and Femininity
303
,
308
Long-Versus Short-Term-Orientation
312
Conclusion
314
International Encounters and Important Considerations
316
The language
Culture Shock
316
,
318
Negotiations
320
Internationa] Acquisitions, Mergers, and Joint Ventures
320
Ethics and Social Responsibility in International Business
324
Country Profiles
331
Australia
331
China
,
335
France
343
Germany
349
Hong Kong
355
Hungary
361
India
367
Japan
375
Mexico
383
Singapore
389
USA
397
Recommended Reading List
Works Cited
,
403
405
17