全球化GlobalisationWK11---Foreign-Market-Entry-Strate

ForeignMarketEntryStrategy/Mode(2)LearningObjectives•Analysecontractualagreementasspecialisedentrymodes•Internationalinvestmentandcollaboration•MotivesforFDIandcollaborativeventures•Characteristicsofforeigndirectinvestment•TypesofforeigndirectinvestmentChoosingaModeofEntrySpecialisedContractualEntryModesContractManufacturingTurnkeyProjectManagementContractOtherContractualArrangements•Turnkeycontracting:Arrangementwhereafirmplans,finances,organizes,manages,andimplementsallphasesofaprojectabroad,andhandsitovertoaforeigncountryaftertraininglocalpersonnel.Typicalintheconstructionandengineeringservicesindustries.•Managementcontract:Acontractorsuppliesmanagerialknow-howtooperateahotel,resort,airport,hospital,orotherfacilityinexchangeforcompensation.•Internationalleasing:Thelessorrentsoutmachineryorequipmenttoclientsabroad,oftenforseveralyearsatatime.E.g.,airlinesleaseaircraft.6TurnkeyProjects:Examples•Themostpopularprojectsareextensionsandupgradestometrosystems,suchasbridges,roadways,andrailways.Otherprojectsincludeairports,oilrefineries,andhospitals.•Oneoftheworld'slargestpublicly-fundedturnkeyprojectsisinDelhi,India.The$2.3billionprojectwascommissionedbyDelhiMetrotobuildroadsandtunnelsthatrunthroughthecity.•TheconsortiumincludeslocalfirmsandSkanska,oneofthelargestconstructionfirmsintheworld,basedinSweden.7TurnkeyProjectsAdvantages•Focusfirm’sresourcesonitsareaofexpertise•Avoidalllong-termoperationalrisksDisadvantages•Financialrisks–Costoverruns•Constructionrisks–Delays–ProblemswithsuppliersContractManufacturingAdvantages•Lowfinancialrisks•Minimizeresourcesdevotedtomanufacturing•Focusfirm’sresourcesonotherelementsofthevaluechainDisadvantages•Reducedcontrol(mayaffectquality,deliveryschedules,etc.)•Reducelearningpotential•PotentialpublicrelationsproblemsManagementContractsAdvantages•Focusfirm’sresourcesonitsareaofexpertise•MinimalfinancialexposureDisadvantages•Potentialreturnslimitedbycontractexpertise•MayunintentionallytransferproprietaryknowledgeandtechniquestocontracteeFDIandCollaborativeVentures•Foreigndirectinvestment(FDI):aninternationalisationstrategyinwhichthefirmestablishesaphysicalpresenceabroadbyacquiringproductiveassetssuchascapital,technology,labor,land,plant,andequipment.•Internationalcollaborativeventure:across-borderbusinessallianceinwhichpartneringfirmspooltheirresourcesandsharecostsandrisksofaventure.–Jointventure(JV):aformofcollaborationbetweentwoormorefirmstocreateajointly-ownedenterprise.NatureofFDI•Themostadvanced,expensive,complex,andriskyentrystrategy,involvingtheestablishmentofmanufacturingplants,marketingsubsidiaries,orotherfacilitiesabroad.•Undertakenbyfirmsfrombothadvancedeconomiesandemergingmarkets.•Targetcountriesarebothadvancedeconomiesandemergingmarkets.•Occasionallyraisespatrioticsentimentsamongcitizens(e.g.,HaierandMaytag;DubaiPorts).12MotivesforFDIMarket-seekingmotives•Gainaccesstonewmarketsoropportunities•Followkeycustomers•CompetewithkeyrivalsintheirownmarketsResource-orasset-seekingmotives•Accessrawmaterials•Gainaccesstoknowledgeorotherassets•Accesstechnologicalandmanagerialknow-howavailableinakeymarketEfficiency-seekingmotives•Reducesourcingandproductioncosts•Locateproductionnearcustomers•Takeadvantageofgovernmentincentives•Avoidtradebarriers13Market-SeekingMotives•Gainaccesstonewmarketsoropportunities•Theexistenceofalargemarketmotivatesmanyfirmstoproducegoodsatornearcustomerlocations.Boeing,Coca-Cola,IBM,McDonald's,andToyotaallgeneratemoresalesabroadthantheydoathome.•Followkeycustomers•Firmsoftenfollowtheirkeycustomersabroadtopreemptothervendorsfromservicingthem.•E.g.,TradegarIndustriessuppliestheplasticthatitscustomer,Procter&Gamble,usestomakedisposablediapers.WhenP&GbuiltaplantinChina,Tradegarestablishedproductiontheretoo.14Market-SeekingMotives•Competewithkeyrivalsintheirownmarkets.SomeMNEschoosetocompetewithcompetitorsdirectlyintheirhomemarkets.Thepurposeistoweakenandforcetherivaltoexpendresourcesdefendingitsownmarket.•E.g.,CaterpillarenteredJapantohamperrivalKomatsu’sabilitytoexpanditsactivitiesintheU.S.15Resource-orAsset-SeekingMotives•Accessrawmaterialsneededinextractiveandagriculturalindustries•E.g.,firmsintheminingandoilindustriesmustgowheretherawmaterialsarelocated.•Gainaccesstoknowledgeorotherassets•WhenWhirlpoolenteredEurope,itpartneredwithPhilipstoaccessawell-knownbrandnameanddistributionnetwork.•Accesstechnologicalandmanagerialknow-howavailableinakeymarket•Thefirmmaybenefitbyestablishingapresenceinakeyindustrialcluster,suchasroboticsinJapan,chemicalsinGermany,fashioninItaly,andsoftwareintheU.S.16Efficiency-SeekingMotives•Reducesourcingandproductioncostsbyaccessinginexpensivelaborandothercheapinputstotheproductionprocess•ThismotiveaccountsforthemassivedevelopmentofmanufacturingfacilitiesinChina,Mexico,EasternEurope,andIndia.•Locateproductionnearcustomers•Inthefashionindustry,Spain’sZaraandSweden’sH&MlocatemuchoftheirgarmentproductioninkeymarketssuchasSpainandTurkey.H&M17Efficiency-SeekingMotives•Takeadvantageofgovernmentincentives•Inadditiontorestrictingimports,