1. Entering International Markets: Organization and Strategy Chapter 7

2. Objectives Describe the two elements of a master plan for expansion into markets abroad Differentiate between exporting, licensing, franchising, management contracts and joint ventures Discuss the importance of choosing a market- entry strategy that is appropriate for the company and the market Present three organizational structures that companies use to serve their international markets

3. Developing a Master Expansion Strategy Geographic Factors Domestic Expansion Limited-Cross Border Expansion Regional Expansion Multinational Expansion Global Expansion Product Line Factors Single product line at a time Differing product lines in different markets

4. Market-Entry Strategies Exporting – the process of selling and shipping domestically produced products across borders to host-country clients. Advantages Quick, less risk Disadvantages Depend on exchange rates, lost opportunities Host Country Distributors Government Assistance for Exporting

5. Licensing Licensing permits a foreign company to use trademarks, patents, copyrights, technical knowledge, and manufacturing or service processes that belong to a domestic company

6. Franchising Franchise agreement – franchiser provides standardized products or services, a planned operating system and management assistance Franchisee provides capital, management personnel, and knowledge about local markets

7. Management Contracts One partner provides managerial skills and knowledge of operations and the other provides capital, physical facility, raw materials and so on

8. Joint Venture A legal agreement between two or more companies to conduct business together

9. Wholly-Owned Subsidiary The domestic company makes a foreign direct investment for 100% of the cost of the foreign business.

10. Which Entry Strategy is Best? It depends! The possibilities are from low-risk, low- investment to high-risk, high investment. Most companies start with exporting and then work their way up. The choice needs to be based on the capabilities and needs of both the domestic company and the host country in which the expansion would take place.

11. Organizing International Markets Adding an International Division A special portion dedicated to international activities Organizing by Product Line Skilled personnel can focus on individual products and product lines, increasing the likelihood of maximizing each product’s potential in both domestic and international markets Organizing by Region Allows concentration of marketing research efforts on the needs of clients in the geographical area.