Global Marketing Management, 5e Chapter 9 Copyright (c) 2009 John Wiley & Sons,

Global Marketing Management, 5e Chapter 9 Copyright (c) 2009 John Wiley & Sons, www.phwiki.com

Global Marketing Management, 5e Chapter 9 Copyright (c) 2009 John Wiley & Sons,

Bernstein, Josh, Investigative Reporter has reference to this Academic Journal, PHwiki organized this Journal Global Marketing Management, 5e Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. Chapter 9 Global Market Entry Strategies Chapter Overview 1. Target Market Selection 2. Choosing the Mode of Entry 3. Exporting 4. Licensing 5. Franchising 6. Contract Manufacturing (Outsourcing) 7. Exp in addition to ing through Joint Ventures 8. Wholly Owned Subsidiaries 9. Strategic Alliances 10. Timing of Entry 11. Exit Strategies Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. Introduction The need as long as a solid market entry decision is an integral part of a global market entry strategy. Entry decisions will heavily influence the firm’s other marketing-mix decisions. Global marketers have to make a multitude of decisions regarding the entry mode which may include: (1) the target product/market (2) the goals of the target markets (3) the mode of entry (4) The time of entry (5) A marketing-mix plan (6) A control system to check the per as long as mance in the entered markets Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc.

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1. Target Market Selection A crucial step in developing a global expansion strategy is the selection of potential target markets (Exhibit 9-1). A four-step procedure as long as the initial screening process: 1. Select indicators in addition to collect data 2. Determine importance of country indicators 3. Rate the countries in the pool on each indicator 4. Compute overall score as long as each country Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. Exhibit 9-1: Logical Flowchart of the Entry Decision Process Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 2. Choosing the Mode of Entry Decision Criteria as long as Mode of Entry: Market Size in addition to Growth Risk Government Regulations Competitive Environment/Cultural Distance Local Infrastructure (See Exhibits 9-2 in addition to 9-3.) Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc.

Chapter 9 Copyright (c) 2007 John Wiley & Sons, Inc. Exhibit 9-2: Method as long as Prescreening Market Opportunities Exhibit 9-3: Opportunity Matrix as long as Henkel in Asia Pacific Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 2. Choosing the Mode of Entry Classification of Markets: Plat as long as m Countries (Singapore & Hong Kong) Emerging Countries (Vietnam & the Philippines) Growth Countries (China & India) Maturing in addition to established countries (examples: South Korea, Taiwan & Japan) Company Objectives Need as long as Control Internal Resources, Assets in addition to Capabilities Flexibility (See Exhibit 9-4.) Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc.

Exhibit 9-4: Entry Modes in addition to Market Development Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 2. Choosing the Mode of Entry Mode of Entry Choice: A Transaction Cost Explanation Regarding entry modes, companies normally face a tradeoff between the benefits of increased control in addition to the costs of resource commitment in addition to risk. Transaction Cost Analysis (TCA) perspective Transaction-Specific Assets (assets valuable as long as a very narrow range of applications) Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 3. Exporting Indirect Exporting Export merchants Export agents Export management companies (EMC) Cooperative Exporting Piggyback Exporting Direct Exporting Firms set up their own exporting departments Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc.

4. Licensing Licensor in addition to the licensee Benefits: Appealing to small companies that lack resources Faster access to the market Rapid penetration of the global markets Caveats: Other entry mode choices may be affected Licensee may not be committed Lack of enthusiasm on the part of a licensee Biggest danger is the risk of opportunism Licensee may become a future competitor Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 4. Licensing How to seek a good licensing agreement: Seek patent or trademark protection Thorough profitability analysis Careful selection of prospective licensees Contract parameter (technology package, use conditions, compensation, in addition to provisions as long as the settlement of disputes) Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 5. Franchising Franchisor in addition to the franchisee Master franchising Benefits: Overseas expansion with a minimum investment Franchisees’ profits tied to their ef as long as ts Availability of local franchisees’ knowledge Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. Caveats: Revenues may not be adequate Availability of a master franchisee Limited franchising opportunities overseas Lack of control over the franchisees’ operations Problem in per as long as mance st in addition to ards Cultural problems Physical proximity

Exhibit 9-5: International Ef as long as ts of Ten Well-Known Franchise Companies Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. Chapter 9 Copyright (c) 2007 John Wiley & Sons, Inc. Exhibit 9-6: International Franchising with Papa John’s 6. Contract Manufacturing (Outsourcing) Benefits: Labor cost advantages Savings via taxation, lower energy costs, raw materials, in addition to overheads Lower political in addition to economic risk Quicker access to markets Caveats: Contract manufacturer may become a future competitor Lower productivity st in addition to ards Backlash from the company’s home-market employees regarding HR in addition to labor issues Issues of quality in addition to production st in addition to ards Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc.

6. Contract Manufacturing (Outsourcing) Qualities of An Ideal Subcontractor: Flexible/geared toward just-in-time delivery Able to meet quality st in addition to ards Solid financial footings Able to integrate with company’s business Must have contingency plans Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 7. Joint Ventures Cooperative joint venture Equity joint venture Benefits: Higher rate of return in addition to more control over the operations Creation of synergy Sharing of resources Access to distribution network Contact with local suppliers in addition to government officials Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 7. Joint Ventures Caveats: Lack of control Lack of trust Conflicts arising over matters such as strategies, resource allocation, transfer pricing, ownership of critical assets like technologies in addition to br in addition to names (Exhibit 9-7) Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc.

Chapter 9 Copyright (c) 2007 John Wiley & Sons, Inc. Exhibit 9-7: Conflicting Objective in Chinese Joint Ventures 7. Joint Ventures Drivers Behind Successful International Joint Ventures Pick the right partner Establish clear objectives from the beginning Bridge cultural gaps Gain top managerial commitment in addition to respect Use incremental approach Create a launch team during the launch phase: (1) Build in addition to maintain strategic alignment (2) Create a governance system (3) Manage the economic interdependencies (4) Build the organization as long as the joint venture Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. Chapter 9 Copyright (c) 2007 John Wiley & Sons, Inc. Exhibit 9-8: Starbuck’s Coffee’s Criteria in Selecting Partners

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8. Wholly Owned Subsidiaries Acquisitions in addition to Mergers Quick access to the local market Good way to get access to the local br in addition to s Greenfield Operations Offer the company more flexibility than acquisitions in the areas of human resources, suppliers, logistics, plant layout, in addition to manufacturing technology. Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. Chapter 9 Copyright (c) 2007 John Wiley & Sons, Inc. 8. Wholly Owned Subsidiaries Benefits: Greater control in addition to higher profits Strong commitment to the local market on the part of companies Allows the investor to manage in addition to control marketing, production, in addition to sourcing decisions 8. Wholly Owned Subsidiaries Caveats: Risks of full ownership Developing a as long as eign presence without the support of a third part Risk of nationalization Issues of cultural in addition to economic sovereignty of the host country Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc.

9. Strategic Alliances Types of Strategic Alliances Simple licensing agreements between two partners Market-based alliances Operations in addition to logistics alliances Operations-based alliances Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. 9. Strategic Alliances The Logic Behind Strategic Alliances Defend Catch-Up Remain Restructure Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc. Exhibit 9-9: Generic Motives as long as Strategic Alliances Chapter 9 Copyright (c) 2009 John Wiley & Sons, Inc.

Chapter 9 Copyright (c) 2007 John Wiley & Sons, Inc. Exhibit 9-11: Advantages in addition to Disadvantages of Different Modes of Entry

Bernstein, Josh Investigative Reporter

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