2. International Business Strategy LON301BUS Entering and Operating in International Markets Unit: 9 Knowledgecast: 2

3. Integrate and apply strategic approaches to practical situations in various types of organisations Assess current developments in the organisational environment and alternative responses related to strategy Resolve management problems in the area of strategic management by evaluating alternative outcomes Module Learning Outcomes

4. Foreign Direct Investment (FDI) “An internationalisation strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, land, labour, plant and equipment.” (Cavusgil 2007:418)

5. Motives for FDI Market seeking Resource or asset seeking Efficiency seeking

6. Control Strategies StrategyLevel of Control Exporting and CountertradeLow Global SourcingLow Licensing, franchising and other contractual strategies Moderate Project based (non-equity) collaborative ventures Moderate Minority owned equity joint venturesHigh Majority owned equity joint venturesHigh Wholly owned subsidiary (FDI)High

7. Selecting FDI Locations Factors Human Resource Infrastructural Profit Retention Economic Legal and Regulatory Political and Governmental Market

8. Types of FDI Greenfield Mergers Acquisitions

9. Types of Collaborative Ventures Equity Joint Ventures Project based, Nonequity Ventures Consortium Cross-Licensing Agreements

10. Licensing, Franchising and Other Contractual Strategies Unique Aspects  Moderate level of control  Exchange of intangibles  Can be pursued independently or in conjunction with other strategies  Dynamic and flexible  Reduces perception of ‘foreign’ firm  Generate predictable earning level

11. Other Contractual Strategies Turnkey Contracting Build Operate Transfer Arrangements(BOT) Management Contracts Leasing

12. Integrate and apply strategic approaches to practical situations in various types of organisations  There are a variety of market entry strategies available to businesses who seek to internationalise. Assess current developments in the organisational environment and alternative responses related to strategy  Joint ventures are commonly the only method of entry into markets such as China. Resolve management problems in the area of strategic management by evaluating alternative outcomes  Businesses who seek to internationalise for growth may consider the range of market entry strategies available to them. Knowledgecast Summary

14. Managerial Challenge The task of choosing the best export market is complex. Discuss the following questions in your seminar and consider the strategy undertaken by your case study organisation (or other as selected by your Module Tutor). i)What makes an ideal market? ii)What market potential indicators should a manager consider? iii)What are the challenges of taking an ‘indicator led’ approach? Seminar

15. End of Module Assessment – Evaluating Strategy (Management Brief) (Unit 10) Preparation – Preparing the Final Draft This session will provide you with the opportunity to discuss your final draft with your module tutor and ensure all your questions are answered as you finalise your submission. Although this is an independent piece of work giving and receiving feedback from your peers is an essential skill, which will be of great value in the workplace. Be prepared to provide constructive feedback on other’s work and receive feedback which can inform your progress. Group Activity