1. Today's Topics Why international expansion? How to select a market International market research Selecting a mode of market entry

2. Why “Go” International? Markets Resources Diversification Strategy

3. Selecting a Market Out of approximately 200 countries in the world, and thousands of states, regions, territories, or major cities how do we decide where to expand internationally? http://en.wikipedia.org/wiki/List_of_countries

5. What Data Might You Need? Demographics Economics Laws Culture Technology Literacy and education Infrastructure and logistics Rates of change in all of the above

6. Global Market Research Secondary data  Internet  International organizations  Government agencies (trade.gov)‏  Industry and trade associations  Market research companies Primary data

7. Data Challenges Availability  No data  Too expensive  Access restricted  Language barriers Comparability (cultural differences)‏ Reliability  Biased  Missing or wrong information  Outdated

8. Group Activity Select a product or service Identify three possible good choices of countries in which to expand with product or service Identify data needed to finalize choice to one country

9. (Non-Exclusive) Ways to Enter a Foreign Market Wholly-owned subsidiary Equity joint venture Strategic alliance  Equity/Cross-ownership  Marketing/Sales/Distribution  Manufacturing/Production/Design Licensing, franchising, or contract Exporting  Direct  Indirect

12. Collaboration may occur anywhere on the Value Chain

14. Challenges of Collaboration Create a competitor Antitrust Violations Loss of control  Processes or quality  Technology Conflict between partners  Culture  Relative partner contributions  Purpose of the JV

15. Group Activity Identify the best type of mode of entry for your product or service Explain your choice Identify important partner attributes

16. Degree of Export Involvement Direct exporting (sell to buyers) Indirect exporting (sell to intermediaries) Sales representatives Distributors Sales representatives Distributors Agents Export management companies Export trading companies Agents Export management companies Export trading companies

17. Export/Import Financing

18. Licensing Advantages + Finance expansion + Reduce risk + Reduce counterfeits + Upgrade technologies – Restrict licensor’s future – Reduce global consistency – Lend strategic property Disadvantages Company owning intangible property (licensor) grants another firm (licensee) the right to use it for a specified time

19. Franchising Advantages + Low cost and low risk + Rapid expansion + Local knowledge – Cumbersome – Lost flexibility Disadvantages Company (franchiser) supplies another (franchisee) with intangible property over an extended period

20. Management Contract Company supplies another with managerial expertise for a specific period of time Advantages + Few assets risked + Nations finance projects + Develops local workforce Disadvantages – Personnel at risk – Create competitor

21. Turnkey Project Advantages + Firms specialize in core competency competency + Nations obtain infrastructure projects projects – Politicized process – Create competitor Disadvantages Company designs, constructs, and tests a production facility for a client

22. Wholly Owned Subsidiary Facility entirely owned and controlled by a single parent company Advantages + Day-to-day control + Coordinate subsidiaries Disadvantages – Expensive – High risk

23. Separate company created and jointly owned by two or more independent entities to achieve a common business objective Advantages Reduce risk level Penetrate markets Access channels Protect interests Disadvantages Partner conflict Lose control Joint Venture

24. Strategic Alliances Disadvantages Create competitor Partner conflict Advantages Share project cost Tap competitors’ strengths Gain channel access Protect interests Entities cooperate (but do not form a separate company) to achieve strategic goals of each

25. Levels of Company Strategy