1. Global Market Entry Strategies
Operational reasons for setting up overseas manufacture
Strategic reasons for investing in local operations
Methods of overseas production
Exporting options
Joint Ventures and Strategic Alliances

2. Operational reasons for setting-up overseas manufacture
reduced costs of transportation
reduced barriers/ quota handicap e.g. Nissan
some governments demand investment with market entry e.g. China
Customers sometimes prefer local manufacture e.g. Heinz ‘British’?
Government contracts prefer firms contributing to the local economy

3. Improved local market information
local manufacture ensures greater commitment to international markets
Faster response and Just-in-time delivery
Doole, Phillips and Lowe (1994)

4. Strategic reasons for investing in local operations
Gain new business
demonstrates strong commitment
persuades customers to change suppliers
provides better service and more reliability
Defend existing business
avoid market restrictions as sales increase, particularly in single market

5. Move with established customer
component suppliers follow customers to compete with local component suppliers
Save costs
labour, raw materials and transport
Avoid government restrictions to import certain goods
Doole, Phillips and Lowe (1994)

6. Exporting Indirect Direct Degree of involvement v control?
export houses
UK buying offices of foreign stores or governments
complementary exporting
Direct
sales to final user
overseas agencies
distributors and stockists
company branch offices abroad
Degree of involvement v control?

7. Methods of overseas production
Licensing
Companies with strong brand or know-how
e.g. Coca-Cola, Disney
Franchising
more of a ‘whole’ package
e.g.Body Shop, KFC
Contract manufacture
bulk items e.g. Nike
components

8. Wholly owned overseas subsidiaries Organic growth
Joint ventures -
e.g. Burmah Castrol in S.Korea
Wholly owned overseas subsidiaries
Organic growth

9. Strategic Alliances
Strategic alliances can range from loose networking relationships to very tight contractual relationships such as joint ventures.
e.g. ‘code share’ where airlines of a similar type sell each other’s tickets. There is no co-ownership.
Types
technology swaps
R&D exchanges
distribution relationships
Driving forces
insufficient resources
High R&D costs
Concentration of firms in mature markets
Market access

10. Joint ventures e.g European Airbus.
Orgs can remain separate, but have a tight legal relationship.
Reasons for setting up
overcome foreign ownership restrictions
increase speed of entry
exploit new opportunities, complementary technologies and management skills
achieve worldwide presence at lower cost
Disadvantages
differences in partner aims and objectives
equal ownership and different options can slow decision making
dominance by one partner can lead to resentment in the other
Large time commitment for education, negotiation and agreement with partner

11. Mergers
The identity of each of the merging companies is subordinated into the identity of the newly merged organisation, or disappears.
Benefits include:
Cutting cost
Eliminate competition
Synergy augments mutual strengths
Case study – Chrysler and Mercedes.