4 - penetration in foreign markets Flashcards

Question

alternatives depending on risk - JOINT VENTURE RISKS

Answer 1

1. Not finding the right partner 2. The local partner might gain the know-how to produce its own competitive product 3. Lack of clarity regarding the obligations and responsibilities of each of the partners 4. Clash in the management styles and techniques of different partners, leading to frequent conflict 5. Imbalance of the capital and the resources invested by the partners 6. Ineffective resolution of conflicts

Answer 2

1. The transfer risk 2. The impossibility of converting currencies 3. The exchange rate risk 4. The risk of war or political violence 5. The sovereign risk 6. Confiscation, Expropriation and Nationalisation risk

Answer 3

Recognising the similarities between international markets and integrating them into the overall global strategy

Answer 4

1. removal of trade barriers 2. global accounts/customers 3. relationship management/network organisation: As we move towards global markets it is becoming increasingly necessary to rely on a network of relationships with external organisations 4. standardised worldwide technology 5. worldwide markets 6. 'global village': The term ‘global village’ refers to the phenomenon in which the world’s population shares commonly recognized cultural symbols. 7. worldwide communication 8. global cost drivers: These are categorized as ‘economies of scale’ and ‘economies of scope’.

Answer 5

1. NOT HAVING A STRATEGY/PLAN 2. NOT DOING ENOUGH RESEARCH ON YOUR TARGET MARKET 3. UNDERESTIMATING THE IMPORTANCE OF CULTURAL DIFFERENCES 4. GOING AT IT ALONE (& ignoring key local players) 5. EXPECTING A ROI TO SOON

Answer 6

- COMPANY: Is our company ready to expand to foreign markets? Is our business stable enough? What are our main weaknesses? Is there demand for our good/service in this country? - TARGET MARKET What elements make a foreign market attractive for our company? Which markets should we target? Are we capable of entering several markets at once? - ORGANIZATION What kind of organizational and operational processes do we need to put in practice? Do we have the necessary managerial skills? - FINANCING How will we finance our expansion? Do we have the required resources to manage our international and domestic activities?

Answer 7

✦LOCAL INDUSTRY TRENDS ✦KEY PLAYERS: competitors, suppliers and partners ✦MARKET DYNAMICS: distribution channels, marketing channels ✦CULTURE & traditions ✦REGULATIONS: taxes, legal customs

Answer 8

assume that your business model can be duplicated across international markets without adapting to local marketing channels, consumer behaviour and product references

Answer 9

LONG TERM STRATEGY expanding to new markets involves adapting to the new country, building new relationships and reputation, as well as analyzing and understanding the dynamics of the local business environment

Answer 10

``` Direct exporting Indirect exporting Licensing Franchising Partnering Joint ventures Buying a company ```

Answer 11

Indirect exporting involves an organization sells to an intermediary in its own country. This intermediary then sells the goods to the international market and takes on the responsibility of organizing paperwork and permits, organizing shipping and arranging marketing.

Answer 12

Direct exporting involves an organization selling goods directly to a customer in an international market. Organizations can sell to a wide range of customers, some of whom act as intermediaries in the target market.

Answer 13

This chapter is best exemplified through the McDonald's chain, which in some parts of the world acts as a franchise while in some parts of the world, someone else sells their brand under their license. This is also the case in Croatia, where McDonald’s gave his license to a company claiming to be their brand in Croatia. In that way, they have less authority, less cost, less profit, but also less risk. While in some countries they independently represent their franchise, they depend entirely on themselves and all the risk of doing business is on them, positive or negative.

Answer 14

The basic definition of trademark licensing is rather straightforward, if somewhat legalistic. A license is an agreement through which a licensee leases the rights to a legally protected piece of intellectual property from a licensor — the entity which owns or represents the property — for use in conjunction with a product or service.

Answer 15

Franchising is the practice of using another firm’s successful business model. For the franchiser, the franchise is an alternative to building “chain stores” to distribute goods that avoids the investments and liability of a chain. The franchiser’s success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Answer 16

Under contract manufacturing, a company doing international marketing contracts with firms in foreign countries to manufacture or assemble the products while retaining the responsibility of marketing the product.

Answer 17

Business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task

Answer 18

FDI in which parent company creates a subsidiary in a different country, building its operations from the ground up

Answer 19

Corporate transaction where one company purchases a portion or all of another company’s shares or assets - horizontal (Disney-Pixar) - vertical (Ikea) - concentric (Sony) - conglomerate