IMH

1
IMH 11.02 - Explain the International
Market-Entry Strategies

• Goals
• Explain environment-strategy fit for
  international market
• Describe different international entry strategies.

2
ENVIRONMENT-STRATEGY FIT

• There must be a fit between environmental
  conditions and business strategies. Hence it is
  important to understand the types of environment
  for a business when it goes into international
  markets.
• placid environment
• an environment with very little change
• Easy to develop strategic plans for long term
• Not very common
• turbulent environment
• rapid and unpredictable environmental change
• Businesses must develop strategic plans for
  shorter time periods
• More common

3
ENVIRONMENT-STRATEGY FIT (continued)

• macroenvironment
• the environmental factors that influence the
  economy, governments, legal environment,
  technology, ecology, social cultural factors, and
  competition
• http//www.youtube.com/watch?v5xwyGVr51Dw
• environmental shocks
• rapid changes to the macroenvironment
• Ex The terrorist attacks Sept 2001, or the fall
  of communism in the 1990s.

4
Environmental Planning

• Most international companies operate in a
  turbulent environment.
• It is difficult to plan for every
  macroenvironmental change.
• When a company sees an increase chance of threat,
  they should be pro-active.
• E.g., adjusting inventory levels of a recession
  is anticipated
• Governments can help ensure stability by
  strengthening their resource base and their
  relationships with other countries.

5
Environmental Planning (examples)

• Asian Bird Flu
• http//live.wsj.com/video/bird-flu-variant-pandemi
  c-potential/FCCF8D56-CE49-4373-9DD1-760F4844E6CE.h
  tml!FCCF8D56-CE49-4373-9DD1-760F4844E6CE
• Businesses pulled employees out of infected
  countries
• Increased inventory levels in case foreign
  producers could not send products
• U.S. shortage of qualified employees for
  manufacturing jobs
• Federal funds to NSF for create research centers
• Goal to graduate 100,000 new scientists and
  engineers during next four years

6
IMH 11.02 - Activity Recent environmental
Shocks

• Visit a reliable source of world information like
• http//www.time.com/time/ - (time magazine)
• Or similar to research some current
  events/developments/environmental changes in the
  world
• Identify at least three factors that could result
  in environmental shocks and why?
• Briefly specify the type of business planning
  that would be needed to minimize the effect of
  these shocks.

7
INTERNATIONAL ENTRY STRATEGIES

• For the least environmental turbulences impacting
  a business it is important to adopt the right
  market entry strategies
• The strategies for international entry include
  options such as
• Exporting
• Contracting
• Joint venture
• Direct investments.

8
INTERNATIONAL ENTRY STRATEGIES

• Exporting Creating a market for a businesss
  products in the importing country to provide
  additional profits for the business as it expands
  internationally.
• Simplest and least risky means of entry
• Example US exporting commercial and small jet
  air crafts to many countries of the world.
• Exporting represents the lowest level of
  international commitment and risk as the
  business can pull out of the market relatively
  easily.

9
INTERNATIONAL ENTRY STRATEGIES

• Contracting contractual agreements enable a
  business to work with local partners in a foreign
  market.
• It is a higher level of commitment as it
  involves contractual agreements, manufacturing,
  licensing, franchising etc.
• Ex Nike entering into a manufacturing contract
  with local Chinese manufacturing firms.

10
INTERNATIONAL ENTRY STRATEGIES

• Joint venture two or more businesses create a
  new business to pursue a strategic goal.
• Partners agree to share ownership, capital, and
  revenue
• Ex. Fox broadcasting company's star TV joint
  ventures with Chinese company Quinghai Satellite.
  
• It brings in local partners but involves higher
  risk because businesses commit resources.

11
INTERNATIONAL ENTRY STRATEGIES

• Direct investments two types
• Foreign direct investment-the purchase of assets
  in a foreign country by a business
• Ex The purchase of land in Kentucky by Japan for
  its Toyota manufacturing plant
• Wholly-owned subsidiary-an independent company
  owned by a parent company
• Ex Parle products of India owned by Coca Cola

12
IMH 11.02 Activity

• Followed by a discussion with a partner, make a
  foldable listing advantages disadvantages of
  each of the foreign market entry strategies.
• Which strategy do you believe would be the best
  for the following productswhyexplain
• Anderson windows
• Lays Potato chips
• Schwinn bikes
• Press Pass Trading cards