Forms and Ownership of Foreign Production (WHY EXPORTING MAY NOT BE…
Forms and Ownership of Foreign Production
WHY EXPORTING MAY NOT BE FEASIBLE?
WHEN IT’S CHEAPER TO PRODUCE ABROAD
Producing in their home markets may be too expensive,
WHEN TRANSPORTATION COSTS TOO MUCH
Generally, the more distant the market, the higher the transportation costs
WHEN DOMESTIC CAPACITY ISN’T ENOUGH
WHEN PRODUCTS AND SERVICES NEED ALTERING
Fims must make an additional investment
Company lose some of the economies from large-scale production
WHEN TRADE RESTRICTIONS HINDER IMPORTS
Governments have been reducing import barriers, they still restrict many imports
WHEN COUNTRY OF ORIGIN BECOMES AN ISSUE
Freedom to Pursue a Global Strategy
WHY COMPANIES COLLABORATE
Scale alliances aim to provide efficiency by pooling similar assets so that partners can carry out business activities in which they already have experience.
Link alliances use complementary resources so that participating companies can expand into new business areas
Vertical alliance is the link between a food franchiser with a franchisee because they each operate in a different segment of the value chain.
GENERAL MOTIVES FOR COLLABORATIVE ARRANGEMENTS
To Spread and Reduce Costs
To Specialize in Competencies
To Avoid or Counter Competition
To Secure Vertical and Horizontal Links
To Gain Knowledge
INTERNATIONAL MOTIVES FOR COLLABORATIVE ARRANGEMENTS
To Gain Location-Specific Assets
To Overcome Governmental Constraints
To Diversify Geographically
To Minimize Risk Exposure
TYPES OF COLLABORATIVE ARRANGEMENTS
Prior Company Expansion
Major Motives for Licensing
Selling to Subsidiaries
Contracting to Scale
PROBLEMS WITH COLLABORATIVE
One partner may give more management attention than the other to a collaborative arrange- ment.
A partner may no longer perceive collaboration to be in its best interest.
QUESTIONS OF CONTROL
Sharing assets with another company may generate confusion over control
COMPARATIVE CONTRIBUTIONS AND APPROPRIATIONS
Differences in Country Cultures
Differences in Corporate Cultures
MANAGING INTERNATIONAL COLLABORATIONS
COUNTRY ATTRACTIVENESS AND OPERATIONAL OPTIONS
PROBLEMS OF SWITCHING MODES
As companies switch from one mode of international operations to another, some individ- uals gain and others lose responsibilities.
LEARNING FROM EXPERIENCE
Ccompanies gain experience by entering more collaborative arrangements, they perform better within them.
DEALING WITH PARTNERS
Finding and Evaluating Potential Partners
Negotiating the Arrangement: The Question of Secrecy
Controlling Through Contracts and Trust