Introduction to International Business August 4, 2008 Discussion Section Global Strategy and Entry Modes

Agenda Chapter 7, 9 and 10 in a nutshell Review of Chapter 12 Discussion questions Review of Chapter 14 Discussion questions Case: Tesco goes global

Chapter 7, 9 and 10 in a nutshell Chapter 7: FDI trends, theories, costs & benefits, and strategies Chapter 9: How does the foreign exchange market work? Chapter 10: Currency regimes, the evolution and role of the international monetary regimes

Chapter 12 Learning Goal What is “strategy”? What benefits do firms derive from expanding internationally? How do pressures for cost reductions and pressures for local responsiveness influence strategic choice? What are the different strategies for competing globally and their pros and cons.

Chapter 12: The Strategy of International Business What is strategy? How does it lead to value creation? Benefits of global expansion Expanding the market, location economics, experience effects, leveraging subsidiary skills Cost pressure vs. pressure for local responsiveness Strategy & their evolution Low Pressure for Local Responsiveness High Pressure for Local Responsiveness Low Pressure for Cost Reduction International StrategyLocalization Strategy High Pressure for Cost Reduction Global Standardization Strategy Transnational Strategy

Chapter 14 Learning Goals Explain the three basic differences that firms contemplating foreign expansion must make: which markets to enter, when to enter those markets, and on what scale. What are the different entry modes? What are their respective advantages and disadvantages? Evaluate the pros and cons of acquisitions versus greenfield ventures as an entry strategy. Evaluate the pros and cons of using strategic alliances with foreign competitors to achieve a firm’s objectives in a global market place.

Chapter 14: Entry Strategy and Strategic Alliances 3 Basic entry decisions: which market to enter, when to enter, and on what scale to enter? Entry modes: exporting, turnkey project, licensing, franchising, joint venture, wholly owned subsidiary What determines entry modes? Core competencies and pressure for cost reduction Greenfield, acquisition or strategic alliances