Chapter 8, entering global markets. The main contents of this chapter include all of the following: Reasons for internationalizing, factors in the mode of entry decision, methods of entry to international markets. | Chapter 8 – Entering Global Markets “ some foreign companies have tired of waiting and retreated from China, hoping to return at a more opportune moment the Chinese may well consider such a retreat as typical of self-interested outsiders and never let them back.” Andrew Williamson, The Chinese Business Puzzle McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Outline Reasons for Internationalizing Factors in the Mode of Entry Decision Methods of Entry to International Markets Direct or Indirect exporting Licensing Franchising Contract Manufacturing Turnkey Operations Management Contracts International Joint Ventures International Business Alliances Wholly Owned Subsidiaries Summary 2 Reasons for Internationalizing Expand beyond a saturated domestic market Find new source of profits Add to the firm’s competitive edge Diversify and enlarge markets to hedge against economic crises Follow customers who are going abroad Factors that Influence the Mode of Entry Decision Management goes through a successive decision making process that includes answering the following questions: Which markets have the greatest potential for our products? Do we have excess production capacity? What are the characteristics of our target market? What are the international capabilities of the firm? Can our product be marketed abroad? What the key success factors for our products? Is secondary data available for those markets/products? What additional data is needed and how can we get it? Which of our products have the highest potential abroad? Internal Factors Encompass the firm’s resources, strategy, management mindset, time commitment and products considered for international markets. Specifically: Financial Resources Human Resources Type of Product and/or Service Time Horizons Risk Tolerance External Factors Target country factors Market Production conditions Environmental condition Domestic country factors Market size Growth opportunities . | Chapter 8 – Entering Global Markets “ some foreign companies have tired of waiting and retreated from China, hoping to return at a more opportune moment the Chinese may well consider such a retreat as typical of self-interested outsiders and never let them back.” Andrew Williamson, The Chinese Business Puzzle McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Outline Reasons for Internationalizing Factors in the Mode of Entry Decision Methods of Entry to International Markets Direct or Indirect exporting Licensing Franchising Contract Manufacturing Turnkey Operations Management Contracts International Joint Ventures International Business Alliances Wholly Owned Subsidiaries Summary 2 Reasons for Internationalizing Expand beyond a saturated domestic market Find new source of profits Add to the firm’s competitive edge Diversify and enlarge markets to hedge against economic crises Follow customers who are going abroad Factors that Influence the .
