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Forms and Ownership of Foreign Production (Types of collaborative…
Forms and Ownership of Foreign Production
Why exporting may not be Feasible ?
When production is cheaper abroad
When transportation costs to move goods and services internationally are too high
When companies lack domestic capacity
When products and services need to be altered substantially to gain sufficient consumer demand abroad
When governments inhibit the import of foreign products
When buyers prefer products originating from a particular country
Noncollaboration : FDI
Reasons for foreign direct investment
Market failure
Internalization
Appropriability
Freedom to pursue a global strategy
Acquisition versus Greenfield
Acquisition
Making Greenfiled Investments
Leasing
Why companies collaborate ?
Alliance types
General motives for collaborative arrangements
Spread and reduce costs
Specialize in competencies
Avoid or Counter competition
Secure vertical and Horizontal links
Gain knowledge
International motives for collaborative arrangements
Gain location specific Assets
Overcome governmental constraints
Diversify Geographically
Minimize risk exposure
Types of collaborative arrangements
Some considerations in collaborative arrangements
control
prior company expansion
compensation
Licensing
Major motives for licensing
payment considerations
selling to subsidiaries
Franchising
Franchise organization
operational modifications
Management contracts
Turnkey operations
Contracting to scale
making contacts
Marshaling resources
arranging payment
Joint ventures
Equity alliances
Problems with collaborative arrangements
relative importance
Divergent objectives
Questions of control
Comparative contributions and appropriations
Culture clashes
differences in country cultures
Differences in corporate cultures
Managing international collaborations
country attractiveness and operational options
Problems of switching modes
Learning from experience
Dealing with partners
Finding and evaluating potential partners
negociating the agreement : the question of Secrecy
Controlling through contracts and trust
Improving performance