Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter Summary Yap Shir Ley (A14A1163) L2T1 ((Advantages (:check…
Chapter Summary
Yap Shir Ley
(A14A1163)
L2T1
Service also exported
:diamond_shape_with_a_dot_inside:Architecture
:diamond_shape_with_a_dot_inside:Education
:diamond_shape_with_a_dot_inside:Banking
:diamond_shape_with_a_dot_inside:Insurance
:diamond_shape_with_a_dot_inside:Entertainment
:diamond_shape_with_a_dot_inside: Information
What is it?
Firm’s first foreign entry strategy
Low risk
Low cost
Flexible
Include trade, trade deficits, trade surpluses
Involve merchandise
Disadvantages
:green_cross:fewer opportunities to learn about customers, competitors, and other aspects of foreign markets
:green_cross:may strain organizational resources
:green_cross:exposes the firm to tariffs ,trade barriers and fluctuating exchange rates
Advantages
:check:Generate better profit margins
:check:Diversify customer base
:check:Increase economies of scale
:check:Minimize the cost of foreign market entry
:check:Minimize risk
Approach to export (4 step)
:one:Access global market opportunity
:two: Organize for exporting
:three:Acquire needed skills and competencies
:four:Implement exporting strategy
Export Intermediation Options
:star:Indirect exporting
:star:Direct exporting
:star:Company-owned foreign subsidiary
Export Documentation
:closed_book:Quotation or pro forma invoice
:closed_book:Commercial invoice
:closed_book:Bill of lading
:closed_book:Shipper's export declaration
:closed_book:Certificate of origin
:closed_book:Insurance certificate
Payment method
:moneybag:Cash in Advance
:money_with_wings:Open Account
:money_mouth_face:Letter of Credit
What is it?
Procurement of products or services from suppliers located abroad for consumption in third country
Involve a contractual relationship between the buyer and the foreign supplier
Also called as importing
Drives of GS
:explode:Technological advances in communications, especially the Internet
:explode:Falling cost
:explode:Rapid economic transformation
2 Keys decision
:!?:Outsource or Not
:!?:Where in the World Should Value-Adding Activities Be Located?
2 major choices
:red_flag:Independent suppliers
:red_flag:Company-owned subsidiaries and affiliates.
Advantages
:check:Access to qualified personnel
:check:Increased speed to market
:check:Faster corporate growth
:check:Access to new markets
:check:Cost Efficiency
Risk
:bomb:Exchange rate fluctuations, trade barriers, and labor strikes
:bomb:Inadequate or low-skilled workers
:bomb:Risk of creating competitors
Lead to 3 major problems
:forbidden:Job losses
:forbidden:Reduced national competitiveness
:forbidden:Declining living standards
Strategies for Minimizing Risk
:checkered_flag:Go offshore for the right reasons
:checkered_flag:Get employees on board
:checkered_flag:Choose suppliers carefully
:checkered_flag:Emphasize communications and collaboration with suppliers
Transportation modes
:racing_car: Land
:airplane: Air
:ocean:Ocean
Factors to selecting FDI locations
:star:Market Factors
:star:Human Resource Factors
:star:Profit retention Factors
:star:Economic Factors
:star:Infrastructural Factors
:star:Legal and regulatory Factors
:star:Political and Governmental Factors
Motives
:+1:Efficiency seeking motives
:+1:Market seeking motives
:+1:Resources or Asset seeking motives
Types of FDI
:fire:Greenfield investment vs. mergers and acquisitions
:fire:Nature of ownership
:fire:Level of Integration
What it is
Partnership between two or more firms
Includes equity joint ventures and non-equity, project-based ventures
Also called as partnerships or strategic alliances.
Success factors
:+1::skin-tone-6:Be aware of cultural differences
:+1::skin-tone-6:Pursue common goals
:+1::skin-tone-6:
Pay attention to planning and management of the venture
:+1::skin-tone-6:Safeguard core competencies
:+1::skin-tone-6:Adjust to shifting environmental circumstances
Other types of Collaboration Ventures
:tada:Consortium
:tada:Cross licensing agreement
Barriers
:no_entry:Culture and language
:no_entry:Loyalty to Indigenous retailers
:no_entry:Legal and Regulatory
:no_entry:Develop local sources of supply
What it is?
The licensor makes its patents, trade secrets or other know-how
available to a licensee in exchange for a royalty
the owner of intellectual property grants another firm
the right to use that property for a specified period of time in exchange for royalties or other compensation.
Advantages for licensor
:check:Low investment
:check:Low involvement
:check:Low effort
:check:Low-cost initial entry strategy
Disadvantages for licensor
:green_cross:Licensor has limited control over its asset(s) abroad
:green_cross:Runs the risk of creating a future competitor
:green_cross:Performance depends on the foreign licensee
What is it?
Franchisor transfers to the franchisee a total business method – including production and marketing methods, sales systems, procedures, training, and the use of its name.
Advantages for franchiser
:check:Low investment
:check:Can internationalize quickly to many markets
:check:Low effort, once established
:check:Can leverage franchisees’ local knowledge
Disadvantages for franchiser
:green_cross:Risks creating a future competitor
:green_cross:Maintaining control over franchisees may be difficult
:green_cross:Franchiser has limited control over its assets abroad
Exporting
Global Sourcing
Foreign Direct Investment (FDI)
International Collaborative Venture
Lisencing
Franchising
