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BUS 4321
International Business Management
• International Company
• Multinational Company
• Global Company
Main concerns of an Overseas
Expansion Strategy
• Which world regions or sub regions to enter?
8
Main sub-regions of the World
Concentric Overseas Expansion Strategy
Technological
Ecological
Regional Specific Factors
Which Country to enter?
Pre-entry country attractiveness
analysis needs to be carried out.
A country opportunity and treat assessment
should be carried out with regard to the
considered products, markets, businesses and
industries of the overseas corporate entity.
Technological
Ecological
Country Specific Factors
Which area or city of the
country to enter?
Pre-entry area/city attractiveness
analysis needs to be carried out.
An area/city opportunity and treat assessment
should be carried out with regard to the
considered products, markets, businesses and
industries of the overseas corporate entity.
https://www.forbes.com/best-countries-for-
business/list/2/#tab:overall
What would be the
overseas expansion path?
Overseas Expansion Paths
• City-wide path (within one country)
7
8
6
5
4
3
1
Country or Region wide Expansion Path
1
4 2
5
Oman
Kenya
What would be the mode of
entry to these Regions and
Countries?
Overseas Market/Country
Entry Strategies
Modes of entry to International Markets
• Equity Modes
International Merges
International Acquisitions
International Joint Ventures
International Strategic Alliances
International Sole Venturing (FDI – Wholly owned subsidiary)
• Non-Equity Modes
Exporting (Indirect and Direct)
Franchising
Licensing
Management Contracting
Contract Manufacturing
What is the best strategy to enter?
There are more than 220 countries in the world
– 195 are member-nations of the UN
Each country’s situation is unique and different
Hence, OCE’s entry strategy selection would depend
on:
– The firm’s objectives and philosophy
– A balance of benefits, costs, and risks attached
to each different entry strategies.
Equity mode strategies
Entry Mode Advantage Disadvantage
Wholly Enables global strategic High costs and risks
owned coordination Requires overseas
subsidiaries Protects technology management skills
Realizes (potentially) location May be slower to implement
and experience economies
International Gives access to local partner's Loss of control over
Joint knowledge technology and ma nagerial
Ventures Allows sharing of development know-how
costs and risks May impede global
May be more politically coordination
acceptable than 100% foreign May make realization of
ownership location and experience
Allows foreign parent do economies more difficult
deploy resources across more Sharing of profit "pie"
national markets at once
International Similar to international joint May be more difficult to
Strategic ventures manage than international
Alliances joint ventures
Non-equity mode strategies
Entry Mode Advantage Disadvantage
Franchising Low financial risk Lack of direct control over quality
Relatively low Successful international franchising
developmen t costs requires considerable start-up and
ongoing pre sence overseas (cost)
Is likely to impede, make global
coordination costlier than ownership
Growth may be slower depending
on franchisee's intentions
Sharing of profit "pie"
Possible loss of know-how to
potential competitor
Licensing Similar to franchising Similar to franchising
Fewer "maintenance"
costs than franchising
Exporting Ability to realize Transport costs
experience curve Trade barriers
economies Motivation of local agents a
challenge
Assessing the effectiveness of the
entry strategies
An entry strategy effectiveness assessment
should be carried out with regard to the
considered country or region.
Risk involved
Needed Investment
Time taken to realize
Agree with employees Can use a simple rating scale score
Company capabilities
Legal compliance to select the most effective entry strategy
Transaction cost
Home country policies
Host country policies
What would be the best time
to enter these countries
and regions?
When to enter? (Timing of the entry)
• 1st Mover Advantage (Before other competitors)
• At times of political stability or instability
• At festival times
• At different seasons (Winter, Summer, Autumn,
Spring)
• At times of war or peace
• At time of economic recession or boom
• At times of religious observations
What would be the best scale
to enter these countries
and regions?
On what scale to enter?
• Very small scale
• Small scale
• Medium scale
• Large scale
• Very Large scale
Scale of entry
Level of resources
– How much needed to commit for success?
– What level can firm afford to commit?
– 1st mover advantages and large scale linked
– Small scale entry allows learning at low risk
– Entry in small or large potential market may require the
same level of initial resources
Business Strength
Country Attractiveness Index
Country Attractiveness
OCE Strength Index