International Business Strategy

Developing CoreBusiness Strategies

Country A Country B Country N

1.

2. InternationalizationOf Core Strategies

3. Globalization

International Marketing Dimensions

I. Controllable vs. Uncontrollable

II. Standardization vs. Differentiation (Customization)

III. Mode of Involvement (Function of firm’s size, skills, demand, control and risk issues)

IV. HQ vs. Subsidiary

V. The Emergence of Trading Blocks

The Global Industry

IndustryGlobalizationPotential

Market Drivers

CompetitiveDrivers

Government/Public Policy

DriversCost Drivers

Demand

The Spectrum of International Marketing Involvement

InactiveExporting

ProactiveExporting

•Franchising•Licensing (Licensee Name)

Licensing (Licensor Name)

TurnkeyContract

Joint Venture

ManagementContract

StrategicAlliance

DirectInvestment

ContractualRelations/Arrangements

MoreInvolvement

LessInvolvement

OLI – Dunning Framework and Entry Mode Choice All firms select their entry mode strategies

by CONSIDERING 3 VARIABLES: Ownership advantages which are less concerned with

control/risk issues as related to inter-firm relationships Location advantages which are concerned with the

resources commitment issue, as related to the availability and cost of resources

Internalization advantages which are primarily concerned with reducing transaction and coordination costs.

OLI – Dunning Framework and Entry Mode Choice

Data suggest that the ability to differentiate products is more important to firms in determining entry mode choice than the strength of contractual risk.

Also – investment risk is more important than market potential when assessing an entry mode.

OLI – Dunning Framework and Entry Mode Choice Recent trend -

Non equity modes• Modes that are becoming increasingly popular

among service firms for organizing overseas ventures/operations. These entry modes are essentially contractual and include leasing, licensing, franchising, and management service contracts.

Note: Entry to a large extent is driven by the strategic objectives spelled out in the company’s global mission

Licensing

A contractual transaction whereby the firm – the licensor – offers some proprietary assets to the foreign company – the licensee – in exchange for royalty fees

Assets: trademarks, technology know-how, production processes, and patents.

Royalties: typically between 1-15%

Franchising

The franchisor gives the franchisee the right to use the franchisor’s trade names, trademarks, business models, and/or know-how in a given territory for a given time period, normally 10 years.

A “package” to the franchisee might include the marketing plan, operating manuals, training and quality monitoring.

Entry Decisions: Strategic Parameters

Input Processes OutputA strategic plan including:

Motivation(s) for entryDecision rules for

site(s) selection

Mode of entry (risks control, legal issues) Operational and implementation programs

Inventory of own resource

Inventory of competitors’ resources

Market intelligence

IP protection

Market Stage

Infancy Developing Mature

1. Customers

2. Product Introduction

3. Distribution (Types of after market)

Price Competitive Strategies

Decision Criteria for Country Selection

Market Size and Growth Risk (Political & Economic; Internal & External) Government Regulations Competitive Environment Local Infrastructure Country Classification

Platform – gathering intelligence and establish a network (Singapore, Hong Kong)

Emerging Market – Vietnam, Kazakhstan Growth Markets – The Czech Republic, China, Brazil Maturing Markets – Japan, Germany