Marketing bán hàng - Chapter 9: Foreign market entry strategies

Chapter 9Foreign Market Entry Strategies Chapter Outline Foreign Direct Investment (FDI)ExportingLicensingManagement ContractJoint VentureManufacturingChapter Outline Assembly OperationsTurnkey OperationsAcquisitionStrategic AlliancesAnalysis of Entry StrategiesFree Trade Zones (FTZs)Foreign Market Entry Strategies Indirect Strategies- Exporting- Licensing- Management Contract - Turnkey OperationsForeign Market Entry Strategies Foreign Direct Investment (FDI) Strategies- Acquisition vs. Greenfield - Assembly vs. Manufacturing- Sole Venture vs. Joint VentureExporting Advantages- simple - low riskDisadvantages- low profit- trade barriers- difficult when home currency is strongLicensing Advantages- quick expansion (entry) when capital is scarce- very low risk- allowing host country to gain technology and create jobs- allowing host country and licensee to keep most profit - circumventing trade barriersLicensing Disadvantages- very low profit- licensee becoming future competitor- licensee's poor performance- difficulty in terminating licensing agreement Management Contract Advantages- minimum investment- minimum political and economic risksDisadvantages- low profit (management fee as compensation)Joint Venture Advantages- maximizing profit while minimizing risk- sharing of resources- allowing host country to gain technology and create jobs- circumventing trade barriers- local partner's market knowledge- local partner's political connectionsJoint Venture Disadvantages- conflict with partner- sharing of profit- loss of control- difficulty in terminating relationshipLocal Manufacturing Advantages- job creation for host country- host country gaining resources (capital and technology)- low trade barriers- higher profit- utilization of local labor- host country's economic incentivesLocal Manufacturing Disadvantages- expropriation risk- large capital investment Assembly Operations Advantages- circumventing trade barriers- utilization of local laborDisadvantages- local product-content laws Acquisition Advantages- quick market penetration- synergyDisadvantages- host country's resentment- high acquisition costs- unforeseen problemsStrategic Alliances Mergers and AcquisitionsLicensing AgreementsJoint Ventures- all joint ventures are strategic alliances- not all strategic alliances are joint ventures- not necessary for strategic alliances to have equity investment- not necessary for strategic alliances to form a new business entity Free Trade Zones (FTZs)secured domestic area in international commercelegally outside a country's customs territoryarea designated by a government for duty-free entry of goods Free Trade Zones (FTZs) not used basically for warehousingfuture: benefit derived from manufacturing, not storing. Advantages- job retention and creation- facilitating imports- facilitating exports