PRESENTED BY LAKSHMI CHANDER 09MBAAA27

Which market to enter When to enter On what scale

Exporting  Turnkey projects  Franchising  Joint ventures  Wholly owned subsidiaries 

Common mode of global expansion in the beginning stages ADVANTAGES  cost cutter  helps in achieving experience curve and location economies E.g.: Sony, Samsung, Japanese automakers
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DISADVANTAGES  High transport costs
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Which can be overcome by manufacturing bulky products regionally  Tariff Barriers (E.g. Japanese Automakers in US) 

Marketing, sales and service issues (Divided
loyalties among local agents)

A contractor in the host country handles all the details of a project for the foreign company  means of exporting process technology  E.g. Petroleum refining, Chemicals, Pharmaceutical 

Advantages  Know how required to carry out a technologically complex process  useful where FDI is limited by host government regulations  useful in countries where economic conditions are not stable Disadvantages  no long term interests in the foreign country  Inadvertent creation of competitor (E.g. Western firms and oil refining technology)  Possibility of selling their competitive advantage to potential competitors 



Tata Motors and Fiat Mahindra and Renault Tata AIG ,ICICI Lombard, Bajaj Allianz Bharti -Walmart  

Changes in partner¶s strategy Eg: Ford-Mahindra JV Ford wanted to go for expansion where as Mahindra wanted to concentrate on SUV market ` Control issues ` Government regulations ` Cultural integration issues ` Access to technology (eg: TVS-Suzuki ,Victor)
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Lower risk option (ability to hire best talent, knowledge of local markets, connection with local govt, already established distribution network) ` Provides an opportunity for both partners to leverage each other¶s strengths ` Provides a learning opportunity for both parties ` Technology(mutual rights over exclusive technology) ` Access to capital(infuse capital to local operation)
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Licensor grants rights to intangible properties to licensee for a specified period Licensor receives a royalty fee in return Intangible property: patents, inventions, formula etc E.g. Fuji-Xerox Coca cola

Advantages  Firm does not have to bear development costs  Helps overcome barriers to investment(E.g.Fuji-Xerox)  Used when firm possesses intangible property but does not want to patent the product itself Disadvantages  No tight control  No coordination of strategic moves  Risky (E.g. RCA brand and Sony)

Specialized form of licensing ` Used in service sectors ` Long term association ` E.g. Mc Donald¶s Advantages Low cost, low risk Disadvantages Quality control ( overcome by appointing master franchisees)
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Green Field Venture  more liberty More risky Uncertainty factor Threat of preemption

Acquisition Quick to execute Preempt competitors Less risky 

Overpaying for assets Hubris hypothesis Conflicting cultures resulting in employee turn over Slow integration of operations Inadequate pre acquisition screening

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Co operative agreements between actual or potential competitors E.g. Motorola and Toshiba (microprocessors) Allows firms to share fixed costs Brings together complementary sets of skills and assets E.g. Microsoft and Toshiba(embedded microprocessors) Disadvantage: giving away more than they receive Research shows Japanese companies have benefitted from strategic alliance with US.

Alliance structure

Partner selection

Managing alliance

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Under JV two firms join and form a separate legal entity and operate as per partnership Act. The JV can be between individuals or corporations. While Strategic Alliance is mutual Coordination of strategic planning and management in order to achieve long term objectives between two organisations. under this , each organisation will work independently and no separate entity is formed. SA is considered less risky due to less legalities.

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Docomo and Tata TCS and Cisco

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Reliance Communication and Getjar

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