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Entry Modes, Cultural myopia - Coggle Diagram
Entry Modes
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Joint venture
Unattractive
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Lack of Control for Economies: Limited control over operations may hinder the realization of economies from experience curve or location advantages.
Conflict Potential: Shared ownership may lead to conflicts if goals diverge or power imbalances arise.
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Partnerships with local companies for shared resources and
expertise, forming a new entity jointly owned by the partners
Attractive
Local Knowledge: Gain insights into local conditions, culture, language, legal systems through the partner.
Shared Costs and Risks: Spread the expenses and uncertainties associated with entering a foreign market.
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Franchising
Unattractive
Profit Redistribution Challenge: may restrict the company's ability to transfer profits from one country to support competitive attacks in another.
Distance Challenges: Geographic and administrative distance from franchisees may hinder the detection of poor quality.
Brand Consistency Impact: Inconsistent quality at one franchise location can negatively impact the brand globally
Granting rights to use a business model for a longer time including branding, operational procedures and IP for a fee and ongoing support
Attractive
Cost and Risk Avoidance: Eliminates expenses and uncertainties associated with entering a foreign market.
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Turnkey
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Unattractive
Limited Market Growth: Contractor lacks long-term interest in foreign market, potentially limiting market expansion.
Local Competitor Creation: Contractor may inadvertently foster local competitors who could grow to compete globally.
Selling Competitive Advantage: Providing process technology or know-how through turnkey projects may inadvertently share competitive advantage with potential competitors.
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Exporting
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Unattractive
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Transport Costs and Tariffs: High transportation expenses and tariffs may render the process economically unfeasible.
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Attractive
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Experience and Location Economies: Helps in gaining advantages from experience and location factors.
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Strategic alliances
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Unattractive
Competitor Advantages: May provide competitors with a low-cost route to technologies, potentially undermining the ally's competitive advantage.
High Failure Rate: Historically, a significant portion of strategic alliances encounter financial and managerial difficulties
Attractive
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Cost and Risk Sharing: Enables sharing of fixed costs and risks associated with developing new products or processes.
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Complementary Skills and Assets: Brings together complementary skills and assets that neither partner could easily develop individually.
Licensing
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Unattractive
Lack of Control: Company lacks tight control over manufacturing, marketing, and strategy, hindering the realization of economies from experience curve and location advantages.
Intellectual Property Concerns: Lack of control over technology and IP poses potential problems, especially for technology-based companies.
Coordination Constraints: Company's ability to coordinate strategic moves across countries is limited.
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Attractive
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Overcoming Investment Barriers: Helps overcome barriers to investment, such as regulatory restrictions or government prohibitions.
Opportunity Capitalization: Allows the company to seize market opportunities without needing to build additional marketing, administrative, or operational capabilities internally.
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