chapter 12 Entering Foreign Markets Mc GrawHillIrwin Global

chapter 12 • Entering Foreign Markets Mc. Graw-Hill/Irwin Global Business Today, 5 e © 2008 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved.

Chapter 12: Entering Foreign Markets INTRODUCTION A firm expanding internationally must decide: • which markets to enter • when to enter them and on what scale • how to enter them (the choice of entry mode) 12 - 3

Chapter 12: Entering Foreign Markets There are several options including: • exporting • licensing or franchising to host country firms • setting up a joint venture with a host country firm • setting up a wholly owned subsidiary in the host country to serve that market 12 - 4

Chapter 12: Entering Foreign Markets BASIC ENTRY DECISIONS There are three basic decisions that a firm contemplating foreign expansion must make: • Which Foreign Markets? • Timing of Entry • Scale of Entry and Strategic Commitments • Summary 12 - 5

Chapter 12: Entering Foreign Markets ENTRY MODES These are six different ways to enter a foreign market. • Exporting • Turnkey Projects • Licensing • Franchising • Joint Ventures • Wholly Owned Subsidiaries 12 - 6

Chapter 12: Entering Foreign Markets SELECTING AN ENTRY MODE The optimal choice of entry mode involves trade-offs. • Core Competencies and Entry Mode • Pressures for Cost Reduction and Entry Mode 12 - 7

Chapter 12: Entering Foreign Markets GREENFIELD VENTURE OR ACQUISITION? Should a firm establish a wholly owned subsidiary in a country by building a subsidiary from the ground up (greenfield strategy), or should it acquire an established enterprise in the target market (acquisition strategy)? 12 - 8

Chapter 12: Entering Foreign Markets • Pros and Cons of Acquisitions • Pros and Cons of Greenfield Ventures • Greenfield or Acquisition 12 - 9