ENTRY STRATEGIES AND ORGANIZATIONAL STRUCTURES

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CHAPTER 9

• ENTRY STRATEGIES AND ORGANIZATIONAL STRUCTURES

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Entry Strategies and Ownership Structures
DEVELOPED MARKETS
OF RESPONDENTS
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Entry Strategies and Ownership Structures
EMERGING MARKETS
OF RESPONDENTS
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Ownership and Entry Strategies
Joint Venture
Franchising
Fully Owned Subsidiary
Export/Import
Licensing
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Ownership and Entry Strategies
EXPORT/ IMPORT
JOINT VENTURE
LOW
HIGH
LICENSING
WHOLLY OWNED SUBSIDIARY
FRANCHISING
RISK RESOURCES REWARD
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Ownership and Entry Strategies
Import/ Export- Most businesses start their
international operations with exporting
Advantages - very little risk, instant foreign
market knowledge, no major resources Disadvantag
es - no control, product and company image may be
damaged Licensing - An agreement that allows
the licensee to use an industrial property in
exchange for payment to the other party
(licensor). Mfg based. Advantages - profitable,
gains access to markets Disadvantages - build
future competitor
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Ownership and Entry Strategies
Franchising- A business arrangement where the
franchisor allows the franchisee to operate an
enterprise using its trademark, logo, and
method of operation in return for a fee. Services
based. Advantages - use winning business
formula, limited political risk Disadvantages -
lack of control Joint Venture- An agreement in
which 2 or more partners own an overseas
business (usually in the home country of one of
the partners). Advantages - efficient, gain
access to market and skills of local
partner Disadvantages - difficult to find
right partner
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Advantages of Joint Ventures
Improvement of efficiency
Access to knowledge
Joint Ventures
Collusion or restriction of competition
Political factors
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Ownership and Entry Strategies
Wholly owned subsidiaries- An overseas
operation that is totally owned and controlled
(100) by the MNC. Advantages - Can be very
profitable, full control Disadvantages - Host
country may feel that the MNC is trying to
drive out local enterprise
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Organizational Characteristics
Centralization vs. Decentralization
US Japan Germany