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Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed.

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Presentation on theme: "Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed."— Presentation transcript:

1 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

2 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. What We Are Striving To Accomplish 1.To understand ways in which changes in the global environment encourage globalization of businesses and consider why firms begin international activities 2.To examine external and internal factors that determine global strategy formulation and resources allocation 3.To gain an understanding of the need for international research and learn how information is gathered and interpreted 4.To evaluate the various modes of entering the international market without setting up local operations, including importing/exporting, management contracts, licensing, and franchising 5.To explore the implications of various levels of ownership in overseas operations

3 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Marketplace Development External and internal drivers of the global marketplace: Market factors - single global strategies can be developed for multiple countries that have similar demand conditions. Cost factors - avoiding cost inefficiencies and duplication. Environmental factors - the falling of government and fiscal barriers to trade; rapid technological advances. Competitive factors - prevention of competitors gaining undue advantage.

4 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Motivators PROACTIVE (want) Profit advantage Unique products Technological advantage Exclusive information Tax benefit Economies of scale REACTIVE (need) Competitive pressures Overproduction Declining domestic sales Excess capacity Saturated domestic markets Proximity to customers and parts Motivators for International Business

5 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Strategic Planning for Global Expansion Managerial commitment? Financial commitment? Human resources? Competitive strategies: Cost leadership Differentiation Focus

6 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. International Business Research Research identifies new global opportunities and exposes risk. Total and per capita GNP, mortality rates, population figures. Rate of growth, governmental or other restrictions, demand trends within target industry. Does demand exist or can it be stimulated?

7 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. International Business Research - Secondary Use of data already collected by other organizations, such as governments, international institutions, service organizations, trade associations, directories, and other firms - requires interpretation, analysis, and cross-checking of the results. Critical International Information Economic Intelligence Unit

8 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. International Business Research - Primary The collection and analysis of data for a specific research purpose to obtain specific answers to specific questions. Ways to obtain primary research data: Interviews - useful when very narrow questions can be used Focus groups - 7 to 10 knowledgeable people used; hidden issues may arise Observation - researcher is nonparticipating observer of activity and behavior Surveys - questionnaires Experimentation - rarely used; hard to create constant or comparable variables

9 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. International Business Research - Ongoing An information system is developed to collect and centralize timely, accurate, and accessible information on specific markets or specific international activities; provides the decision maker with basic data for most ongoing decisions. Building an information system requires the use of one or a combination of these three mechanisms: Environmental Scanning Delphi Studies Scenario Analyses

10 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Targets and Global Programs A country is targeted based on firms competitive strategy and whether it wants to diversification or to concentrate on a small number of markets Bases for Global Market Segmentation Parameters for a global program: Degree of standardization in the product offering Marketing program Value-added activities Competitive strategy Market segmentation will group consumers based on common characteristics

11 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Market Entry Strategies Typical entry strategies include: Exporting and importing Licensing Franchising Expansion through alliances Joint ventures Foreign direct investment

12 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Exporting and Importing Exporters and Importers Direct Firm works with and develops a relationship with foreign customers, suppliers, intermediaries, and markets Indirect Firm works only through intermediaries and does not deal with foreign customers or firms Markets Suppliers Foreign customer EMCs and trading companies

13 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Market Development Strategies Strategic alliance - a collaboration among firms, often similar to joint ventures, but does not necessarily involve joint capital investment; can be informal alliances or contractual agreements. Management contracts - a firm sells its expertise in running a business avoiding the risks or benefits of ownership; turnkey operations are a specialized form. Joint venture - formal, long-term, participation of two or more firms in an enterprise in which each party contributes assets, has some equity, and shares risk.

14 Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. A Comprehensive View of International Expansion All of the processes and decisions involved in developing the commitment to go international are linked to each other.


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