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Going International: Strategic Decisions

Going International: Strategic Decisions. Multidomestic Companies their int’l subs are autonomous and self-governing Global companies operates as one single entity worldwide in reality - most companies use a combination of both approached. Global Firms. Chapter 9. Multidomestic Firms.

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Going International: Strategic Decisions

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  1. Going International: Strategic Decisions • Multidomestic Companies • their int’l subs are autonomous and self-governing • Global companies • operates as one single entity worldwide • in reality - most companies use a combination of both approached

  2. Global Firms Chapter 9

  3. MultidomesticFirms

  4. Reasons for going international • Reactive (from reaction - to receive information, then act) • the company is responding to demand it discovers in another location • it sees it competitors going to a particular place • regulations - environmental/work safety may be “easier” overseas • costs of production at home force it to cheaper areas • chance occurrence additional reasons on page 240 - 241

  5. Reactive, continued • If a companies customers go international, then it may be required to follow.eg. if an auto parts supplier to Magna sees Magna beginning to make some important component in Mexico, then it may also have to go to Mexico so it can mfg. there and continue to supply Magna - it would be too expensive to ship the parts from Canada page 242

  6. Reasons for going international • Proactive (to actively look for an opportunity) • strategically seeking out advantages • launch and offense into a new market before competitor does • power and prestige • incentives • lower costs of labour, production, energy

  7. Proactive, continued • As costs of labour have increased in North America, many assemblers and component parts mfg. have had to move offshore • Also, another reason to go international is to gain prestige which can be applied to customers at home - if a company has overseas offices, it appears to be more impressive at home ie. law firms, CA firms

  8. Ways to enter the new market(choice of entry mode) • simple export of the product • develop a joint venture to sell through an existing sales company in similar business • sell license to foreign company and collect royalties • contract a foreign company to do the business for a % of the sales • overseas office and subsidiary company set up

  9. Chapter 9

  10. Strategic Alliances is a tactic you can use with all 3 modes

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