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Windsperger > Market Entry > Flashcards

Market Entry Flashcards

1
Q

Equity Modes of ME

A

Greenfield
Brownfield
Acquisitions
Joint Ventures

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2
Q

Non-Equity Modes of ME

A 
Franchising
Licensing
Leasing
Management Service Contracts
Alliances
Export
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3
Q

Communication between HQs and subsidiaries refers to:

A

transfer knowledge
coordinate the activities
monitor the subsidiaries
socialize their employees

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4
Q

Decision criteria between GR and BR

A 
Firm specific knowledge
Human capital
Financial resources
Plant and equipment
Excess resources
Cultural distance 
Integration & Adaptation
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5
Q

Determinants (Einflussfaktoren) of the Transaction Cost (TC) View

A

Uncertainty and Opportunism

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6
Q

Determinants of Agency Theory

A

Residual loss
monitoring costs
incentive costs
bonding cost

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7
Q

What is the goal conflict in the Agency Theory?

A

Principal (Exporter) - Agency (Intermediary) > 0 –> residual loss (Restverlust)

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8
Q

What is the opportunism risk in the Agency Theory?

A

Asymmetric information between the principal (exporter) and the agent (intermediary)

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9
Q

Determinants of Resource-based View

A

Specific, non-imitable resources and capabilities of the export intermediaries:

  • Knowledge of foreign market / institutional environment and the local transaction partners
  • Cost advantages through economies of scale + scope
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10
Q

Indirect Exporting - Advantages

A
  • limited commitment and investment
  • minimal risk
  • no export experience required
  • use intermediaries’ experience for market diversification
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11
Q

Indirect Exporting - Disadvantages

A
  • less control over market mix elements
  • lack of contact with the market
  • TC + AC (small profit to intermediary)
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12
Q

Direct Exporting - Advantages

A
  • access to local market experience
  • contact with potential customers
  • shorter distribution chain
  • acquisition of market knowledge
  • higher control over marketing mix elements
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13
Q

Direct Exporting - Disadvantages

A
  • investment in sales organisation required (for contact with distributers, agents from home base)
  • cultural differences can lead to communication problems and higher TC
  • possible trade restrictions
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14
Q

Export intermediary performance

A

ability to lower clients search costs
ability to lower clients negotiation costs
ability to lower clients monitoring/enforcement costs

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15
Q

Strategical Factors / Global Strategic Variables on which ME mode decision is based

A

Global Concentration
Global Synergies
Global Strategic Motivations

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16
Q

MNC strategic behavior variables

A

Host country competition –> WOS
Host country growth –>JV
Assets seeking motivation (Vorteil, Vermögen) –> WOS
Global strategic motivation –> WOS

17
Q

MNC control variables

A 
Firm size
Country risk
Cultural barrier
Establishment method
State-owned enterprise
Industrial sector
18
Q

Cultural Characteristics/Dimensions (Geert Hofstede)

A

Individualism - Collectivism
Masculinity - Femininity
Uncertainty avoidance (tolerance for ambiguity)
Power distance (extent to which individuals tolerate inequality in relationships)
(Long- vs. short-term orientation
Indulgence vs. restraint)

19
Q

National culture Paradox (within the cultural distance view)

A

Positive relation between cultural distance and low-control modes (dominant view) –> high = JV or GR (not A)

Negative relation between cultural distance and low-control modes

20
Q

Explain the separation of ownership of control

A

Owner: residual claimants and decision control

–> between them: potential goal conflict

Manager: decision management and initiation + implementation of decisions

21
Q

Two components of the property rights theory / Governance structure of JV consists of two components:

A

Decision rights:

  • right to use the good
  • right to change the good

Ownership rights:

  • right to capture the profit or to bear the loss
  • right to sell the good and to receive the payment
22
Q

Name the 3 steps of acquisition of local market knowledge

A

Internationalization strategy –> foreign market experience* –> resource commitment

*(market uncertainty reduction through experiential learning)

23
Q

Name the establishment chain (Uppsala Model)

A
  1. no regular export activity
  2. selling via an agent
  3. sales subsidiary in foreign country
  4. production subsidiary in foreign country

First choose markets with less physic distance, afterwards, markets with increasing physic distance are successively selected

24
Q

Organizational Learning

A
  1. Core competence-oriented strategy: start with FDI in core business
  2. Diversification strategy: experience and learning enable FDI in less related areas and finally in unsealed areas (non-core business)
25
Q

Organizational Capabilities

A
  1. Sequentially enter a foreign market from strong competitive advantage of business lines over local firms to less competitive ones
  2. Sequentially enter a foreign market, moving from core business to non-core business
  3. accumulate investments in a foreign market and invest further in that market
26
Q

Factors influencing internationalization of SMEs

A
  1. Domestic market is too small
  2. Commitment by the management to internationalize
  3. Personal networks that support partnerships
  4. Unique technology + know-how that creates competitive advantage (mostly Born Globals)
  5. Commitment to grow through alliances with suppliers and distribution partners
27
Q

Characteristics of emerging economies

A 
weak legal infrastructure
unclear rules of law (weak enforcement)
capital scarcity
bureaucracy
rapid population growth rate
increased urbanization
economic reforms
rapid economic growth
28
Q

Distances in emerging economies

A

Institutional distances (legal, regulatory, political, social rules) –> extent of diff. btw. MNC home + host country
Cultural distance
Sectoral distance

29
Q

Characteristics partial acquisitions

A

Higher flexibility
lower investment costs
lower control

30
Q

Determinants of Market Entry Choice

A 
Geographic distance
Cultural distance
Political risk
Market volume and growth
Resources of the partner
Brand name assets
International experience
Financial situation of the franchisor

Windsperger (1 decks)

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