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Global MarketEntry Strateg es:
Investment, andra eg c ances
Global MarketingChapter 9
1
Chapter topics:
around the world
a strategy to enter worldmarkets
Starbucks has used
direct ownership,cens ng, an
franchising for shopsIn 2008, Starbucks had 12,000
cafes in 35 countries and sales of10.8 billion. Its oal is to reach
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40,000 units worldwide.
Investment Cost ofMarketing Entry Strategies
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Which StrategyShould Be Used?
Vision
Attitude toward risk
How much control is
desired
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A contractual agreement whereby onecompany t e censor ma es an assetavailable to another company (the licensee)n exc ange or roya t es, cense ees, orsome other form of compensation
Patent
Trade secret Brand name
Product formulations
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Provides additional profitability withe n a nves men
Provides method of circumventing
tariffs, quotas, and other export barriers
Low costs to implement cense agreemen s s ou ave cross-technology agreements to inequities
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Returns may be lost
Lack of control
Licensee may exploit company
resources
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Special LicensingArrangements
Contract manufacturing
to a subcontractor or local manufacturerAllows company to specialize in product
es gn w e con rac ors accepresponsibility for manufacturing facilities
Contract between a parent company-franchisor and a franchisee that allows the
ranc see o opera e a us ness eve opeby the franchisor in return for a fee and-
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Will local consumers buy your product? Does the government respect trademark and
Can your profits be easily repatriated?
Is commercial space available and are rents
Are your local partners financially sound and
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outside of home country
Foreign Direct Investment (FDI)
Forms
Joint ventures
Minority or majority
Outright acquisition
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, w a or a e urn ure anhousewares, spent $2 billion in Russia
Entr strate for a sin le tar et countr
in which the partners share ownership ofa newl -created business entit
Builds upon each partners strengths
,GM and Toyota, GM and Russian govt,
r csson s ce p ones an ony, or anMazda, Chrysler and BMW
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Advantages
Allows for risk sharing
Disadvantages
Requires morenanc a an po t ca
Provides opportunity to
nvestment t an alicensing agreement
Provides opportunity toachieve synergy by
well as risks
Requires strongcombining strengths of
partners
coordination
Potential for conflict ay e e on y way oenter market givenbarriers to entry
among par ners
Partner may become a
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Start-up of new operations reen e opera ons or Greenfield investment
Merger with an existing enterprise
Examples: Volkswagen, 70% stake in, ,Honda, $550 million auto assembly
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Examples of Investmentto Establish New Operations
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Possible terms:
Collaborativea reements
Strategic alliances
international
Global strategicup of twenty-seven airlines
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par ners ps
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Participants remain independento ow ng orma on o e a ance
Participants share benefits of alliance aswell as control over performance ofassi ned tasks
Participants make ongoing contributions, ,
strategic areas
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Two or more companies develop a joint long-
Relationship is reciprocal
artners v s on an e orts are g o a
Relationship is organized along horizontalno ver ca nes
When competing in markets not covered bya ance, par c pan s re a n na ona anideological identities
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Mission: Successful GSPs create win-win
,objectives on the basis of mutual need or
Strategy:A company may establish separate
be thought out up front to avoid conflicts
be the norms; partners must be viewed ase uals
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Culture: Personal chemistry is important, as is
values
designs may be needed to offset the
-
Management: Potentially divisive issues must,
lines of authority established that will result incommitment by all partners
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Product or Service Alliance
Promotional Alliance
og s cs ance
Pricing Collaboration
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Co-marketing: Formal links between two or more
E.g., computer manufacturer who puts Intel
Co-brandin : Partnershi between two or morecompanies that closely links their brand namestogether for a single product
E.g., Whirlpool appliances labeled KirklandSignature by Whirlpool made for and sold in
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Costco s Out ets
Alliances with AsianCompetitors
Four common problem areas
Each partner had a different dream
each must depend on the other to a
Differences in management philosophy,,
No corporate memory
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Cooperative Strategies inJapan: Keiretsu
Inter-business alliance or enterprise groups in
for market share
blocks of stock and by cross-ownership of
non-financial suppliers
others boards, share information, andcoordinate rices
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Cooperative Strategies inSouth Korea: Chaebol
Com osed of dozens of com aniescentered around a bank or holding
,family
amsung
LG Hyundai
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Twenty-First CenturyCooperative Strategies
Targeting the Digital Future
Alliances between com anies in several industries that
are undergoing transformation and convergence Computers
Communications
Consumer electronics
nterta nment
ex s age o evo u on o e s ra eg c a ance Super-alliance
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rtua corporat on
Companies may decide to expand by:
Seeking new country markets for already
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