1 / 21

Chapter 7 Entry and Competing In Foreign Markets

Chapter 7 Entry and Competing In Foreign Markets. The foreign markets entry decision-making. COUNTRY OPPORTUNITIES. 1. COUNTRY RISK ANALYSIS. Analysis (Assessing Country Attractiveness). 2. External Internal. COMPETITIVE ANALYSIS. 3. 4. ENTRY MODE. Implementation. 5.

jory
Download Presentation

Chapter 7 Entry and Competing In Foreign Markets

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 7 Entry and Competing In Foreign Markets

  2. The foreign markets entry decision-making COUNTRY OPPORTUNITIES 1 COUNTRY RISK ANALYSIS Analysis (Assessing Country Attractiveness) 2 • External • Internal COMPETITIVE ANALYSIS 3 4 ENTRY MODE Implementation 5 DEVELOPMENT PATHS 6 ORGANISATION:CONTROL

  3. Entry and Development

  4. Objectives Market Driven Resources Driven Capture resources (natural, human, knowledge) for global competitiveness Capture growth opportunities of the region to expand global sales Global Innovation Regional Production and Innovation Global Production and back offices Local Production Local marketing Export Processing Factories Sourcing base Export

  5. First Mover Advantages Acquirers advantages Window of Opportunity Followers advantage First movers advantages • Pre-empt key resources • Establish standards • Blocks brands and distribution • Learn • Benefit from mistakes of first movers • Capitalize on blind spots • Ride on efforts of first movers

  6. Chinese entry in the car industry

  7. Three Dimensions Of Global Competitive Positioning Global Standardisation Multiple Segments Single Segment Local Adaptation Compete on Costs/price Advantages Compete on Differentiated/value Advantages

  8. Standardised or Localized ? High MODULAR GLOBAL (Global Scale) STANDARDISATION And MULTIBRANDS STANDARDISATION Aircraft Elevators IT Services Handphones Microprocessors BasicChemicals Pulp and paper Minimun Size of Production E.g. : Otis, Nokia Electronic Componernts E.g. : Intel, Dell PROCESS LOCAL STANDARDISATION ADAPTATION Consumer Banking Low Cement Consulting Services Mobile telephony Services (Local Scale) Example: Cemex Example: HSBC Little Difference across the World Countries specific (Global Segments) (Local Segments) Customers Requirements and Competitive Contexts

  9. Positioning: Value Proposition Adaptive Usage Adaptive Product Fully Adaptive Pure Global Same Same Different Different Product Same Different Same Different Message Customer Group Different Same Different Same Usage Same Different Same Different Distribution Different Same Different Same Same Different Same Brand Different Price Same Different Different Different

  10. Positioning: Segmentation Luxurious and top-of-the-line products and services. Global brands are well entrenched Rich Mainly increasing urban markets. Mix of global focus and local brands and products and services Middle Class Still important in term of numbers. Product and services adaptation and simplification are needed Bottom of the Pyramid

  11. Competing • Technological Performances • Superior Quality • Superior Service • Image • Customization • Timeliness and Responsiveness • Relationships • Risk Reduction Differentiation ? Customer Value Price Industry Average Profit Costs Internal Costs • Economies of Scale due to size • Economie of Scope due to shared costs • Low cost of factors ( labor, materials..) • Installed base • Superior productivity in processes Supplies Cost Leadership ?

  12. Sources of Competitive Advantages Marketing Sales and Distribution General Management R & D Procurement Manufacturing • Better suppliers • Larger suppliers’ base • Cheaper sources of supplies • Higher quality supplies • Higher quality scientists and technologists • Better data base • Higher amount of funding for R&D • More creative designers • Better locationand infrastructure • Higher qualification of work force • Lower labor costs? • Good qualitychannel partners • Superior strategicand marketing intelligence • Higher quality marketing and sales personnel • Higher quality managerial personnel • Cheaper cost of capital • Strong “sponsors” • Privileged access to licenses from authorities Resources based • More effective warehousing • and inventories management • Electronic data purchasing • Economies of scale due to high volume of purchase • Better electronic data mgt and transmissionnetwork Asset based • Superior existing products line • Patents • More efficient CAD • Economies of scale due to volume • Better quality/costprocesses • More advanced CAM • Proprietary equipment • Well established brand/reputation • Density and scope • of distribution • Better financial mgt • Better HR mgt • Superiority in strategizing • More effective, • timely, responsive • organisational mechanisms • “Better” corporate culture • Proprietary scientific/ • technological know-how • Superior and faster product development • Superior research techniques Competencies based • Superior product andbrand management • Superior customer relationship management • Better management of : plant quality processes and time • More effective supply chain mgt (JIT) • More effective supplier relationships management

  13. Building a Business System in a Foreign Environment Product Service Design Innovation General Management Sourcing Production Marketing • Skill base of the workforce • Production managers • Availability • of scientists • Availability • of suppliers • Sales force • Information • Local Financing • Local Skills Resources What is required ? • Infrastructure: Transport, telecom • IT infrastructure • Support & maintenance • of equipment Assets • Transfer of production technology • Distribution network • Branding – global/local • Logistics • Working capital management • Partnership management • Ability to adapt • Appropriate Technology • Negotiation skills • Quality management • Quality management • Process control Competencies • Relationship management ▪ What do we transfer without adaptation? ▪ What do we need to adapt or create? ▪ How?

  14. How do firms’ capabilities fit to regional/local markets? The Transfer, Adapt, Create model General Management R & D Procurement Manufacturing Marketing What capabilities are needed to compete? What capabilities do we bring and can transfer? What capabilities do we bring but need to adapt? What capabilities do we not bring and need to create?

  15. Transferability of Competitive Advantages Whatis the value of our existing advantages on local markets? • To what extent do we need to adapt our products and management approaches? • What new capabilities need to be acquired and how? Technological Transfer Adapt Competitive Advantages Adaptation through learning Replicate Social Global (Same across the world) Local Consumer Behavior

  16. Entry Modes License Franchise Agent Distributor Wholly-Owned Subsidiary Acquisition Joint-Venture Office Benefits? Costs? Feasibility? Risks?

  17. Entry Modes Wholly-owned subsidiary Acquisition Joint Venture License Market Attractiveness Relevant for both attractive markets and less attractive markets Relevant for attractive markets Costs High investments High Medium Low Time Horizon Medium-term if properly managed Long pay-off Medium-term Short-term Risks High exposure High Shared risks but risks of conflicts Low risks Internal Requirements Acquisition skills Local insights Partnership management Local know-how Technology transfer Competitive Advantages Can be high for early entrants Can be high if properly managed Leveraged with partner Limited but testing base

  18. HIGH JOINT VENTURE JOINT VENTURE MARKETING SUBS WHOLLY OWNED ACQUISITION JOINT VENTURE ACQUISITION WHOLLY OWNED MARKETINGSUBSIDIARY OPPORTUNITIES REP OFFICE DISTRIBUTORAGENT LICENSE LOW DISTRIBUTOR JOINT VENTURE HIGH LOW HIGH LOW PRESSURE FOR LOCALISATION RISKS

  19. Business development and managerial skills ESTABLISHING DEVELOPING COUPLING PIONEERING Create a small team with mandate to gather information, establish contacts, initiate first move - Develop people - Expand networks - Broaden scope - Internal networking - Interdependencies Critical Task - Invest - Create JV - Logistical base • Educationalleadership • Political • - Relational • - Technical • Leadership • Technical • - Relational • Leadership • Technical • - Relational Individual Skills - Cultural - Relational

  20. Organizational Capabilities - Recruitment - Socialisation - Career - Training - Managing expatriates LOCAL HUMAN RESOURCES MANAGEMENT - Business practices - Business and social cultures - Local sources of innovation LEARNING - Transferring technology - Adapting “best practices” - Creating global base out of local resources INNOVATING

  21. Linkages - Citizenship - Public relations - Suppliers/distributors/retailers - Local communities - Local education institutions - Partners - Business associations LOCAL LINKAGES - Role in corporate portfolio - Reporting - Integration in global value chain CORPORATE LINKAGES

More Related