L6 Flashcards
OEM/ODM
Contracts under which a good is bought from an independent manufacturer and resold under the brand of the buyer
Performance inseparability
Consumer cannot separate performance of manufacturer from that of distributor. Quality can be affected by both parties.
How to decide between integration, OEM or contracting?
controlling product quality - distributor performance - strategy: easy - easy hard - easy easy - hard hard - hard
controlling product quality - distributor performance - strategy: easy - easy = - hard - easy = distrbution contract easy - hard = OEM hard - hard = integration
requirements branding (5)
- Consistent quality
- Good service network
- Distinctive product
- Good market intelligence
- Good brand image
entry modes
types (5) + pro + con
1 exporting +curve -trade barriers
2 licensing +no cap -opportunistic behaviour
3 franchising +quick entry -lack quality control
4JV +sharing risk/costs -lose control
5 subsidiary +attract financial support -time/cost
How decide between own outlet or franchise?
costs contracting quality - costs supervisors: low - low high - low low - high high - high
costs contracting quality - costs supervisors = choice: low - low = - high - low = company-owned outlets low - high = franchising high - high = no transfer
How decide between licensing or integration?
assets MNE - local firm assets easy to acquire/sell: easy - easy easy - hard hard - easy hard - hard
assets MNE - local firm assets easy to acquire/sell = choice:
easy - easy = -
easy - hard = local firm licenses/franchises
hard - easy = MNE has wholly-owned sub
hard - hard = equity joint venture local + MNE
Green-field:
type of foreign direct investment (FDI) in which a parent company creates a subsidiary in a different country, building its operations from the ground up.
Brownfield:
When restructuring an acquired company is so extensive, that the new operation resembles a greenfield investment = hybrid mode of entry.
Factors often bundled within firm:
- Trademarks
- Customer relationships
- Government relationships
- Company culture
- Tacit know-how
How to decide between Greenfield or M&A? (7) - factors
- Match MNE and local assets
a factors valuable?
b factors hard to acquire?
c possibility to combine with MNE factors? - Integration desired?
- Growth rate target
- Managerial resources
- Risk aversion`
- Availability targets
- Legal
Corresponding mode of greenfield or M&A entry:
ownership - mode of entry: shared - greenfield shared - M&A full - greenfield full - M&A
ownership - mode of entry = type:
shared - greenfield = greenfield equity JV
shared - M&A = partical acquisition
full - greenfield = greenfield wholly-owned sub
full - M&A = full acquisition
