Operation modes in international markets Without investments Without

Operation modes in international markets Without investments Without local production Trading houses Sales subsidiary Distributors/importers Storage facility Agents Service unit Directly to final customer With local production Licensing and franchising Contract manufacturing Management contracts Based on Ruijo Luostarinen 1979. © 2018 Taylor & Francis Production unit

Entry/operation modes Internal factors External factors Objectives Customers - Sales volume - Market share - Sales growth/pace - Control - Structure - Behaviour Resources Competition - Financial - Management - Capacity - Structure - SW - Competetive climate Competitive advantage Other factors - Product - Patent/competencies - Cost position - Raw material - Culture - Legal - Political risk © 2018 Taylor & Francis- Infrastructure/technology

Foreign vendor Incumbent vendor Buyer Incumbent vendor Before introduction Buyer At introduction How to break into existing relationships? © 2018 Taylor & Francis

Second wholesaler Retailers Exporter Japanese importer/ trader Wholesaler at fish markets Restaurants Processor Fish distribution in Japan: how to enter the market? © 2018 Taylor & Francis

Control Objectives Resources Performance* Risk The trade-offs their effects * Learning, market and financial performance © 2018 Taylor & Francis

Exporter Trading house Exporter Export agent Border Kunde Kunde Customers Trading house and export agent © 2018 Taylor & Francis

Exporter Border Importer/ distributor Agent Kunde Kunde Customers Agent and distributor/importer © 2018 Taylor & Francis

Exporter Border Sales office Kunde Kunde Customers Direct exports of wholly owned sales office © 2018 Taylor & Francis

Channel costs Distributor mark-up Agent commission Degressive commission Price reductions Sales office Expansion A B C Volume Channel selection and costs © 2018 Taylor & Francis

Exporter Licensor Border Manufacturing contractee Licensee Kunde Kunde Customers Contract manufacturing and licensing © 2018 Taylor & Francis

Licensing Installation Equipment Management R&D follow-up Know-how /patent Training © 2018 Taylor & Francis Design Patent protection

Licensing contract Border Licensor Gradually increasing control Cooperation agreement Partner Licensee Capital, local knowledge and management Kunde Customers © 2018 Taylor & Francis Licensing ++

Franchising Installation Marketing campaigns Equipment Interior Management Systems/ routines Brand New products Design Training Branding Trademark protection © 2018 Taylor & Francis

Project and component deliveries Management contract Licensing contract Partner A Cooperation agreement Shares and dividends Border Joint venture company Customer sales Kunde through local Kunde Partner B’s network Partner B Capital, local knowledge and management Customer sales Kunde through foreign Kunde Partner A’s network Joint ventures (=blend of different entry modes) © 2018 Taylor & Francis

How strategic is your alliance? ? Traditional cooperation Strategic alliances Partners I-country/d-country I-country/I-country Market area One market area Involves the Triad Transfer of resources and knowledge Technology/capital in exchange of market access R&D against R&D Market access against market access Consequences of failure Limited to local market Reduced global competitiveness © 2018 Taylor & Francis

Preparedness for internationalisation Adult The multinational player FDI, sales subsidiaries and (in lesser markets) distributors Child The global market leader Global supply system (FDI, J/V, licensing, franchising, sales subs, subcontractors, etc. ) exploiting factor conditions in host countries The careful newcomer The bold newcomer Piggybacking, Distributors, agents Direct to customers, Trading houses Piggybacking, OEM, PB, Licensing, franchising Direct to customers, Multilocal Global Industry globality Entry modes in different strategic positions © 2018 Taylor & Francis

Global supply system Foreign direct investments in production capacity and sales subsidiaries Component subcontracting Regional hubs (with assembly and/or marketing) R&D in hi-tech centres Licensing/cross-licensing Strategic alliances (also with competitors) © 2018 Taylor & Francis, Coordination (marketing, global account mgt, cost, quality, taxes etc)

Resources 100% owned local production Distri. Licen- butor Trading house Sales subsidiary Franchising Strategic Agent alliances Management contracts sing Operational control Control and resources of operation modes © 2018 Taylor & Francis