FIN

S

FFOREIGN OREIGN

IINVESTMENTNVESTMENT NNEGOTIATION EGOTIATION

SSIMULATIONIMULATION

BRIEFING AGENDA Overview of FINS projectOverview of FINS project Key issuesKey issues Potential negotiation relationshipsPotential negotiation relationships Assignment / discussion of rolesAssignment / discussion of roles Negotiation processNegotiation process Graded assignmentsGraded assignments FINS ScheduleFINS Schedule

TEAM ASSIGNMENTS

MNCsMNCs Megatronics Megatronics EuroDataEuroData Tanaka Tanaka

Local FirmsLocal Firms TropimaticsTropimatics SystropSystrop ElectroParadysElectroParadys ParaInfoParaInfo

East TropicaliaEast Tropicalia West TropicaliaWest Tropicalia ParadisoParadiso

GovernmentsGovernments

MNCs: Megatronics, Tanaka, EuroData

Invest in emerging markets?Invest in emerging markets? International strategyInternational strategy Entry mode: Risk, resource, control trade-Entry mode: Risk, resource, control trade-

offsoffs Type of plant, finished product vs. Type of plant, finished product vs.

components components Bargaining power vs. local firms, govt.Bargaining power vs. local firms, govt.

LOCAL FIRMS:ParaInfo, SysTrop, TropiMatics, ElectroParadys

Enter industry?Enter industry? Industry entry mode: alone, JV, SOE?Industry entry mode: alone, JV, SOE? How to facilitate MNCs entry into countryHow to facilitate MNCs entry into country Access to technologyAccess to technology Government supportGovernment support Bargaining power vs. MNCs, govt.Bargaining power vs. MNCs, govt.

GOVERNMENTs: Paradiso, East Tropicalia, West Tropicalia

Policies for industry structure, accessPolicies for industry structure, access Economic integrationEconomic integration Favorable aspects of FDIFavorable aspects of FDI

LaborLabor High technologyHigh technology TaxesTaxes Imports vs. exportsImports vs. exports

Unfavorable aspects of FDIUnfavorable aspects of FDI DependenceDependence Low technologyLow technology

FINS Intl. Strategy and Entry Mode

North AmericaNorth America

Country of TropicaliaCountry of TropicaliaCountry of ParadisoCountry of Paradiso

TanakaTanaka EuropeEurope

Electro-Electro-ParadysParadys

ParaInfoParaInfo

SysTropSysTrop

TropiMaticsTropiMatics

Entry Mode Decision Matrix

Hi

Lo

HiLo

Str

ateg

ic I

mpo

rtan

ce

Str

ateg

ic I

mpo

rtan

ce

of C

ount

ryof

Cou

ntry

Stand-alone AttractivenessStand-alone Attractivenessof Countryof Country

Lo

Hi

Resource

s,

Resource

s,

Control,

Control,

RiskRisk

Entry Mode Decision Framework

Licensing

Exporting Intermediaries

Direct

Joint Venture

Wholly-owned Subsidiary

ControlControl ResourcesResources RiskRisk Dissem. LowLow LowLowLowLow

HighHigh HighHighHighHigh Low

High

Potential Negotiation Relationships

MNC1

Local Firma

GovernmentX

MNC2

Local Firmb

GovernmentY

INITIAL CONTACT Get Yahoo! or Hotmail e-mail account

e.g., Tanaka@yahoo.com Send e-mail address to walter.ferrier@uky.edu ASAP

Public Statements (required via MGT 610 LISTSERV)

1. Team Name/Role

2. Team Members

3. Contact Information

4. Advertisements/RFP’s (optional)

Private RFP’s and Solicitations (optional)

Direct contact between players

Written Reports and Briefs Pre-Negotiation Strategy ReportPre-Negotiation Strategy Report

Due Mon., APR 4Due Mon., APR 4 Post-Negotiation ReportsPost-Negotiation Reports

1.1. Entry Mode & Strategy ReportEntry Mode & Strategy Report

2.2. Transaction (Non-transaction) ReportTransaction (Non-transaction) Report

3.3. Negotiation Process and Outcomes ReportNegotiation Process and Outcomes Report Due Monday, APR 11Due Monday, APR 11

Pre-Negotiation Strategy Report Intended End-Game Position Intended End-Game Position (~2-3 pages)(~2-3 pages)

Details about desired Details about desired entry modeentry mode and and international international strategystrategy – or – or policy/economic objectivespolicy/economic objectives and and policy specificspolicy specifics

Negotiation Game Plan Negotiation Game Plan (~1-2 pages)(~1-2 pages) Key parties Key parties Issue prioritiesIssue priorities Process strategies/tacticsProcess strategies/tactics

Internal Decision Process Internal Decision Process (~1/2 page)(~1/2 page) Authority, information processing, decision-Authority, information processing, decision-

makingmaking Key Contingencies Key Contingencies (~1/2 page)(~1/2 page)

Alternatives, fall-backs, last resort, etc.Alternatives, fall-backs, last resort, etc.

Post-Negotiation Reports

Entry Mode & Strategy ReportEntry Mode & Strategy Report Transaction (Non-transaction) Report(s)Transaction (Non-transaction) Report(s) Negotiation Process and Outcome ReportNegotiation Process and Outcome Report

Post-Nego Strategy/Entry Report (5 pages of text MAX … unlimited appendix items)

Details of current/future situation and Details of current/future situation and actions regarding:actions regarding: Entry modeEntry mode International strategy and operationsInternational strategy and operations Organizational structureOrganizational structure (Government: Future policies package)(Government: Future policies package)

Make explicit use of these frameworksMake explicit use of these frameworks

Post-Negotiation Transaction Report(s) Agreements/Contracts Agreements/Contracts

Each multi-party “agreement” Each multi-party “agreement” (~1-3 pages) (~1-3 pages) Type and purpose of projectType and purpose of project Partners, ownership, structure, control, etc. Partners, ownership, structure, control, etc. Agreements on other key issues Agreements on other key issues

Non-Agreement Briefing Non-Agreement Briefing (~2-3 pages)(~2-3 pages)

Why no agreement?Why no agreement? Process and substantive barriers to agreementProcess and substantive barriers to agreement Future process and/or substantive alternativesFuture process and/or substantive alternatives

Post-Negotiation Process Report2-3 pages of text MAX … unlimited supporting documentation

Negotiation ProcessNegotiation Process Which parties?Which parties? TimelineTimeline

Negotiation Issues/PointsNegotiation Issues/Points What were they?What were they? Link to entry mode and/or international Link to entry mode and/or international

strategystrategy Negotiation strengths vs. weaknessesNegotiation strengths vs. weaknesses Negotiation issues won vs. lostNegotiation issues won vs. lost

Post-Negotiation Process Report (cont.)

Negotiation ContactNegotiation Contact Mode, frequency, and substanceMode, frequency, and substance Bilateral vs. multilateralBilateral vs. multilateral

DocumentationDocumentation Agenda, progress, commitments, unresolved Agenda, progress, commitments, unresolved

issues, process, etc.issues, process, etc. Use of Media/Press Use of Media/Press

Individual press releases, joint Individual press releases, joint communiqués, etc.communiqués, etc.

Negotiation Outcome Conclusions (1 page)

Governments Governments Influence of policy package on entry mode Influence of policy package on entry mode

and strategy?and strategy? MNCsMNCs

‘ ‘Intended’ versus ‘realized’ entry Intended’ versus ‘realized’ entry mode/strategy?mode/strategy?

Local FirmsLocal Firms ‘ ‘Intended’ versus ‘realized’ role in Intended’ versus ‘realized’ role in

facilitating MNCs local entry mode and facilitating MNCs local entry mode and their overall international strategy?their overall international strategy?

FINS CALENDARDate: Task:

MAR 31 (Thurs.) Negotiations Begin 8:00 a.m.

APR 4 (Mon.) Pre-Negotiation Reports Due by 5:00 p.m.

APR 11 (Mon.) Negotiations End Post-game In-class Debriefing Post-Negotiation Reports Due