International Business, 8th Edition Griffin & Pustay COPYRIGHT © 2015 PEARSON EDUCATION, INC....
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Internationa l Business, 8th Edition Griffin & Pustay COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 12-1
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Transcript of International Business, 8th Edition Griffin & Pustay COPYRIGHT © 2015 PEARSON EDUCATION, INC....
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
International Business, 8th EditionGriffin & Pustay
Chapter 12-1
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Learning Objectives
Discuss how firms analyze foreign markets Outline the process by which firms choose
their mode of entry into a foreign market Describe forms of exporting and the types
of intermediaries available to assist firms in exporting their goods
Identify the basic issues in international licensing and discuss the advantages and disadvantages of licensing
Chapter 12-2
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Learning Objectives (Cont.)
Identify the basic issues in international franchising and discuss the advantages and disadvantages of franchising
Analyze contract manufacturing, management contracts, and turnkey projects as specialized entry modes for international business
Characterize the greenfield and acquisition forms of foreign direct investment (FDI)
Chapter 12-3
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Foreign Market Analysis
Assessment
Evaluation
Selection
Chapter 12-4
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Assessing Alternative Foreign MarketsA
ssessm
en
t
Market Potential
Levels of Competition
Legal and Political Environment
Sociocultural Influences
Chapter 12-5
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Evaluating Costs, Benefits, and Risks
Chapter 12-6
Cost
s Direct Costs
Opportunity Costs
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Evaluating Costs, Benefits, and Risks
Chapter 12-7
Benefits
Sales and Profits
Lower Costs
Foreclosing of Markets
Competitive Advantage
New Technology
Synergy
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Evaluating Costs, Benefits, and Risks
Chapter 12-8
Ris
ks
Exchange-Rate Fluctuations
Operating Complexity
Direct Financial Losses
Political Risks
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Choosing an Entry Mode
Chapter 12-9
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Choosing an Entry Mode
Chapter 12-10
Decision Factors
Ownership Advantages
Location Advantages
Internalization Advantages
Other Factors
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Exporting to Foreign Markets
PRIMARY ADVANTAGES OF EXPORTING
Relatively low financial exposurePermit gradual market entryAcquire knowledge about local marketAvoid restrictions on foreign investment
PRIMARY DISADVANTAGES OF EXPORTING
Vulnerability to tariffs and nontariff barriersLogistical complexitiesPotential conflicts with distributors
Chapter 12-11
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Exporting to Foreign Markets (Cont.)
Chapter 12-12
Exporting
Proactive Motivations
Reactive Motivations
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Forms of Exporting: Indirect Exporting
Chapter 12-13
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Forms of Exporting: Direct Exporting
Chapter 12-14
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Forms of Exporting: : Intracorporate Transfers
Chapter 12-15
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Additional Considerations
Government Policies Marketing Concerns Logistical Considerations Distribution Issues
Chapter 12-16
Export Intermediaries
COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 12-17
Export Management Company Webb-Pomerene Association International Trading Company
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Export Management Company (EMC)
Chapter 12-18
EMCs
Commission Agents
for Exporters
Take Title to Goods
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Webb-Pomerene Association
Includes firms from same industry Coordinates export activities Performs promotional activities Oversees freight consolidation Engages in contract negotiations Exports goods for members
Chapter 12-19
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International Trading Company
Market Research Customs
Documentation International
Transportation Host Country
Distribution Marketing Financing
Japan’s sogo shosha
Chapter 12-20
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Other Intermediaries
Manufacturers’ Agents Manufacturers’ Export Agents Export and Import Brokers Freight Forwarders
Chapter 12-21
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International Licensing
Chapter 12-22
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Basic Issues in International Licensing
Boundaries of the Agreement Methods of Compensation Rights, Privileges, and Constraints Duration of the Agreement
Chapter 12-23
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Advantages and Disadvantages of International Licensing
ADVANTAGES
Low Financial RiskMarket AssessmentSales Opportunities
DISADVANTAGES
Limited Market OpportunitiesPotential LitigationCompetitive Issues
Chapter 12-24
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International Franchising
Franchisor
Trademarks, Process, Product Reputations, Services
Franchisee
Fee
Chapter 12-25
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Basic Issues in International Franchising
Franchise Unique Products and Advantageous Operating Procedures
Transferability to Foreign Locations Franchise Domestic Success Foreign Investors
Chapter 12-26
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Advantages and Disadvantages of International Franchising
ADVANTAGES
Product and SystemLow-Cost ExpansionLearning Opportunities
DISADVANTAGES
Shared RevenuesIncreased ComplexityQuality Control
Chapter 12-27
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Specialized Entry Modes for International Business
Contract Manufacturing Management Contracts Turnkey Projects
Chapter 12-28
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Foreign Direct Investment
The Greenfield Strategy The Acquisition Strategy Joint Ventures
Chapter 12-29
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Foreign Direct Investment (FDI)
BENEFITS
Increased ControlProfit PotentialLocal Factories
CHALLENGES
Economic Risks Political RisksOperating ComplexityGovernment Policies
Chapter 12-30
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Greenfield Strategy
AdvantagesSelect the most useful siteConstruct modern facilitiesReap economic development incentivesStart with a clean slateGet acclimated to new business culture
Chapter 12-31
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Greenfield Strategy
DisadvantagesImplementation takes time and patienceLocation may be costly or unavailableMust deal with government regulationsMust recruit and train a local workforceMay be stigmatized as a “foreign firm”
Chapter 12-32
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Acquisition Strategy
ADVANTAGES
Control Over the Firm’s ResourcesGenerates Immediate RevenuesAdds No New Capacity to the Industry
DISADVANTAGES
Assumes the Firm’s LiabilitiesInherits Unresolved ProblemsRequires Substantial Up-Front Spending
Chapter 12-33
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Joint Ventures
Jointly-Owned Separate Firm Promote Mutual Interest
Chapter 12-34
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Review Questions
What are the steps in conducting a foreign market analysis?
What are some of the basic issues a firm must confront when choosing an entry mode for a new foreign market?
What is exporting? Why has it increased so dramatically in recent years?
What are the primary advantages and disadvantages of exporting?
What are three forms of exporting?
Chapter 12-35
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Review Questions (Cont.)
What is an export intermediary? What is its role? What are the various types of export intermediaries?
What is international licensing? What are its advantages and disadvantages?
What is international franchising? What are its advantages and disadvantages?
What are three specialized entry modes for international business, and how do they work?
What is FDI? What are its three basic forms? What are the relative advantages and disadvantages of each?
Chapter 12-36
