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ENTERING FOREIGN MARKETS - Coggle Diagram

- - - - Cost of business failure
      - Cost of promoting and establishing a product offering
- - - - Avoids barriers to investment
      - Can capitalize on market opportunities without developing those applications itself
      - Avoids development costs & risks associated with opening a foreign market
    - - Ability to coordinate strategic moves across countries is limited
      - Proprietary (or intangible) assets could be lost
      - Doesn't have the tight control required for realizing experience curve & location economies
    - - Low development costs & risks
    - - Inability to realize location & experience curve economies
      - Inability to engage in global strategic coordination
      - Lack of control over technology
  - - - Inhibits the firm's ability to take profits out of one country to support competitive attacks in another
      - Geographic distance of the firm from franchisees can make it difficult to detect poor quality
    - - Avoids the costs & risks of opening up a foreign market
      - Can quickly build a global presence
    - - Low development costs & risks
    - - Lack of control over quality
      - Inability to engage in global strategic coordination
  - - - Earning economic returns from the know-how required to assemble
      - Less risky than conventional FDI
    - - Create a competitor
      - Selling competitive advantage to potential and/or actual competitors
      - No long-term interest in the foreign country
    - - Ability to earn returns from process technology skills in countries where FDI is restricted
    - - Creating efficient competitors
      - Lack of long-term market presence
  - - - Satisfy political considerations for market entry
      - Costs & risks of opening a foreign market are shared
      - Benefit from a local partner's knowledge of
        
        culture
        
        language
        
        local conditions
        
        political systems
        
        business systems
    - - May not have the tight control to realize experience curve or location economies
      - Shared ownership can lead to conflicts & battles for control if goals & objectives differ or change over time
      - Risks giving control of its technology to its partner
    - - Access to local partner's knowledge
      - Sharing development costs & risks
      - Politically acceptable
    - - Inability to engage in global strategic coordination
      - Inability to realize location & experience economies
      - Lack of control over technology
  - - - Avoid the costs of establishing local manufacturing operations
      - Helps the firm achieve experience curve & location economies
    - - High transport costs & tariffs can make it uneconomical
      - Agents in a foreign country may not act in exporter's best interest
      - Lower-cost manufacturing locations
    - - Ability to realize location & experience curve economies
    - - Trade barries
      - Problems with local marketing agents
      - High transport costs
  - - - Firms bears the full cost & risk of setting up overseas operations
    - - Give a firm the tight control over operations in different countries that is necessary for engaging in global strategic coordination
      - Required in order to realize location & experience curve economies
      - Reduce the risk of losing control over core compentencies
    - - Ability to engage in global strategic coordination
      - Ability to realize location & experience economies
      - Protection of technology
    - - High costs & risks