Entry strategies Flashcards
1
Q
Entry strategies
A
- Indirect export
- Sales agent or distributor
- Licensing/franchising
- Alliance/joint ventures
- Local sales office
- Foreign subsidiary
2
Q
Entry Strategies Vary on Two Levels
A
- Size of Investment
- Control over Business Decisions
(How we enter market, how product is positioned/promoted, distribution, prices…)
3
Q
Indirect export
A
- selling to a third-party export merchant in own company; export company identifies where to sell & takes care of shipping
- No additional cost, market knowledge, export experience, new infrastructure needed
- No risk from foreign market political volatility
4
Q
Indirect export risks/costs
A
- No customer contact
- No control over destination or pricing
- Promotion or foreign distribution strategy
5
Q
Sales Agent or Distributor
A
- hire an agent or distributor to sell your product using their local network & you manufacture domestically & ship abroad
- When you’re not familiar or have network resources to easily tap into foreign market
- When you have limited understanding of foreign market
6
Q
Sales Agent or Distributor risks/costs
A
- Share attention with other organizations
- Limited marketing control
- Subject to trade barriers, tariffs
7
Q
Licensing & Franchising
A
- Giving a company in another country rights and control in exchange for royalties
8
Q
Licensing & Franchising risks/costs
A
Damage to intellectual property
9
Q
Joint Venture
A
- partner w/ local firm for mutual benefit; partnership can take many forms → mutual distribution, sharing of knowledge, investment
- Used when there are political or trade barriers
- Overcome market barriers w/ lower investment or risk, production constraints, tariffs
10
Q
Joint ventures risks/costs
A
- Time, personnel, money
- Partnership doesn’t work (partner doesn’t deliver/deliver as expected, difficult work w/)
- Not easy to break up
11
Q
Sales Office
A
- establish own sales office but manufacture in your domestic market & ship abroad
- Retains marketing control; don’t want to take risk (yet)
- If you have insufficient volume to justify facility
- If you have excess capacity in domestic facility
- If you don’t have resources to build foreign facility
- Consider hiring country natives as employees who have greater knowledge
12
Q
Sales office risks/costs
A
Trade barriers, market knowledge, investment to establish foreign sales capabilities
13
Q
Foreign Subsidiary
A
- manufacture & sell in foreign market; developing local supply chain
- Overcome trade barriers (production, distribution, sale, after-sale support)
- Maintain control of intellectual property & marketing
14
Q
Foreign Subsidiary risks/costs
A
- Cost of facility & establishment of operations (largest investment of all)
- Permission of foreign government (sometimes)
15
Q
Foreign Subsidiary Capabilities & Resources Needed:
A
- Sales volume justifies investment, distribution capabilities
- Understanding of foreign market & access
