International Business Strategy Developing Core Business Strategies Country ACountry BCountry N 1. 2.Internationalization Of Core Strategies 3.Globalization

International Marketing Dimensions I. Controllable vs. Uncontrollable II. Standardization vs. Differentiation (Customization) III. Mode of Involvement (Function of firm’s size, skills, demand, control and risk issues) IV. HQ vs. Subsidiary V. The Emergence of Trading Blocks

The Global Industry Industry Globalization Potential Market Drivers Competitive Drivers Government/ Public Policy Drivers Cost Drivers Demand

The Spectrum of International Marketing Involvement Inactive Exporting Proactive Exporting Franchising Licensing (Licensee Name) Licensing (Licensor Name) Turnkey Contract Joint Venture Management Contract Strategic Alliance Direct Investment Contractual Relations/Arrangements More Involvement Less Involvement

OLI – Dunning Framework and Entry Mode Choice All firms select their entry mode strategies by CONSIDERING 3 VARIABLES: Ownership advantages which are less concerned with control/risk issues as related to inter-firm relationships Location advantages which are concerned with the resources commitment issue, as related to the availability and cost of resources Internalization advantages which are primarily concerned with reducing transaction and coordination costs.

OLI – Dunning Framework and Entry Mode Choice Data suggest that the ability to differentiate products is more important to firms in determining entry mode choice than the strength of contractual risk. Also – investment risk is more important than market potential when assessing an entry mode.

OLI – Dunning Framework and Entry Mode Choice Recent trend - Non equity modes Modes that are becoming increasingly popular among service firms for organizing overseas ventures/operations. These entry modes are essentially contractual and include leasing, licensing, franchising, and management service contracts. Note: Entry to a large extent is driven by the strategic objectives spelled out in the company’s global mission

Licensing A contractual transaction whereby the firm – the licensor – offers some proprietary assets to the foreign company – the licensee – in exchange for royalty fees Assets: trademarks, technology know- how, production processes, and patents. Royalties: typically between 1-15%

Franchising The franchisor gives the franchisee the right to use the franchisor’s trade names, trademarks, business models, and/or know- how in a given territory for a given time period, normally 10 years. A “package” to the franchisee might include the marketing plan, operating manuals, training and quality monitoring.

Entry Decisions: Strategic Parameters InputProcessesOutput A strategic plan including: Motivation(s) for entry Decision rules for site(s) selection Mode of entry (risks control, legal issues) Operational and implementation programs Inventory of own resource Inventory of competitors’ resources Market intelligence IP protection

Market Stage InfancyDevelopingMature 1. Customers 2. Product Introduction 3. Distribution (Types of after market) Price Competitive Strategies

Decision Criteria for Country Selection Market Size and Growth Risk (Political & Economic; Internal & External) Government Regulations Competitive Environment Local Infrastructure Country Classification Platform – gathering intelligence and establish a network (Singapore, Hong Kong) Emerging Market – Vietnam, Kazakhstan Growth Markets – The Czech Republic, China, Brazil Maturing Markets – Japan, Germany