International Business Chapter 10
Foreign Market Entry Strategies
- exporting - licensing - joint ventures - franchising - turnkey project - wholly owned subsidiary
Large scale entry
- strategic commitments - a decision that has a long-term impact and is difficult to reverse - may cause rivals to rethink market entry - may lead to indigenous competitive response
country of origin effect
The positive or negative perception of firms and products from a certain country.
Resource-based view
Value, Rarity, Imitability, Organization
wholly owned subsidiary
foreign subsidiary that is totally owned and controlled by an organization
entry mode
institutional arrangement by which a firm gets its products, technologies, human skills, or other resources into a market
Reciprocity
mutual exchange
Institution-based view
regulatory risks, trade and investment barriers, differences in cultures, norms, and values
Liabilities of foreignness
-Nonnative status -Newness -Emergness
Linking, leverage, and learning advantages
A firm's quest of linkage (L) advantages, leverage (L) advantages, and learning (L) advantages, which are typically associated with multinationals from emerging economies
Non-Equity Modes of Entry
A mode of entry (exports and contractual agreements) that tends to reflect relatively smaller commitments to overseas markets.
Build-operate-transfer (BOT) agreement
A non-equity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm.
turnkey project
A project in which a firm agrees to set up an operating plant for a foreign client and hand over the "key" when the plant is fully operational.
Greenfield operation
Building factories and offices from scratch (on a proverbial piece of "green field" formerly used for agricultural purposes).
Equity Modes of Entry
JVs and wholly owned subsidiaries • Demonstrate strategic commitment to certain markets, local customers and suppliers • Deters potential entrants
first-mover advantage
The ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace
small scale entry
allows a firm to learn about a foreign market while limiting the firm's exposure to that market
joint venture
an agreement between two or more companies to share a business project
research and development (R&D)
a set of activities intended to identify new ideas that have the potential to result in new goods and services
institutional voids
absence of institutions that facilitate exchanges between buyers and sellers
late-mover advantage
benefits that accrue to firms that enter the market later and that early entrants do not enjoy
Co-marketing
efforts among a number of firms to jointly market their products and services