Reasons to “Go Global” Proactive Reasons o Exploit factor-cost differences across countries o Unique product o Technological advantage o Economies of scale o Growing foreign markets o Exclusive information o Attack rivals on home turf Reactive Reasons o Competitive pressure o Overcapacity o Declining domestic sales o Saturated home market o Under attack from foreign rivals

Going Global: Effect on Bottom Line ROI % Foreign Sales/ Total Sales

Foreign Market Entry Modes  Export  Licensing  Joint Venture  WOS  Acquisition  Greenfield

Electra  Which entry mode do you recommend?

Entry Mode Framework  Mindset  Country-market opportunity/cost analysis  Stand-alone Attractiveness  Strategic Importance  Resources-Control-Risk tradeoff

Mindset and International Activity  International  Overseas activities support / subordinate to domestic activities  Multinational  Flexibly adapting value-creating activities on country-by-country basis; nationally-responsive  Global  The world is the market; standardization  Transnational  “Glocalization” – Some value-creating activities standardized/globalized, others localized

Entry Mode Decision Matrix Hi Lo HiLo Strategic Importance of Country Stand-alone Attractiveness of Country Lo Hi Resources,Control,Risk

Country-Market Analysis F Stand-alone attractiveness: –Size –Growth –Product acceptance / segmentation –Cultural similarity –Risk –Policy incentives –Other factors? ….MNC “power”?

Country-Market Analysis F Strategic importance : –Home market of global customer –Home market of global rivals –Significant market of global rivals –Major source of innovation –Demanding/sophisticated customers –Factor-cost advantages

Resources-Control-Risks  Resources  $$, time, technology, machinery, people, organizational, strategy  Control  Operational and strategic discretion over value-creating activities  Risks  Political, F/X, economic, cultural, dissemination

Control F Extent of involvement: F Channel control / ownership: Ship Product Marketing Distribution After-sales Support Mfg. Export Agent Import Agent Regional Whsle. Local Whsle. Retail

Entry Mode Decision Framework Licensing Exporting Intermediaries Direct Joint Venture Wholly-owned Subsidiary Control Resources Risk Control Resources Risk Dissem. LowLowLow HighHighHighLow High

Entry Mode Decision Matrix Hi Lo HiLo Strategic Importance of Country Stand-alone Attractiveness of Country Lo Hi Resources,Control,Risk

General Electric and International Involvement  GE Product Divisions:  Light bulbs  Aircraft engines  Appliances  Power-generation  GE Market Opportunity:  North America  Europe  Pacific rim / Asia  Emerging markets

GE’s Markets, Entry and Strategy Choices Product Lines Country-Markets InternationalStrategy ABCD  

Entry Mode Decision Matrix Hi Lo HiLo Strategic Importance of Country Stand-alone Attractiveness of Country Lo Hi Resources,Control,Risk