This document discusses various global entry strategies (GES) that companies can use to enter foreign markets. It defines GES and lists factors that affect a company's choice of strategy, such as size, experience, risk tolerance, and industry characteristics. It also discusses the relevance of market entry barriers and sources of such barriers. Finally, it outlines specific GES options like exporting, foreign direct investment, strategic alliances, mergers and acquisitions, turnkey projects, and piggybacking.
Rice Manufacturers in India | Shree Krishna Exports
Global Entry Strategy
1. GLOBAL
Dr. Syed Ferhat Anwar
Course Instructor
International Business
Environment (L301)
Group 11
Fariha Islam RH-1
Moumita Shabur RH-17
Fableeha Bushra Choudhury RH-19
Sayeda Shifat Nazmee RH-63
3. FACTORS AFFECTING THE GES
Company size and resources
Experience in using market entry modes (MEMs)
Management risk attitudes
Profit targets
Industry feasibility and viability of MEMs
Market growth rate
4. RELEVANCE OF MARKET ENTRY BARRIERS IN GES
‘Low entry and exit barriers reduce the risk in
entering a new market, and may make the
opportunity more attractive financially.’
8. BENEFITS TO PIONEER:
Brand Image
Customer Loyalty
Technological Barriers
LIMITATIONS TO PIONEER:
Advantage limited in
case of high tech
products
Example: Pictured phones in late 1970’s
9. ADVANTAGE OF LATE ENTRANTS
Lower cost of production than
cost of innovation
Minimal cost of product usage
and awareness
Defined market
Example: China, Hong Kong, Taiwan
Bangladesh Telecom Industry: Citycell vs. Grameen Phone
11. Moves to Germany in 1998
American approach failed in German lands
Wal-Mart's American managers pressured German
executives to enforce American-style management
practices in the workplace.
German court rules against Wal-Mart
High labor cost
Clashes with labor unions
Labor resisting management's demands
In 2006 sales of stores to metro retail chain
Cost of retreat: $1 billion
13. Exporting can be defined as the marketing of goods
produced in one country into another
Traditional form of entry
Common approach for mature international companies
with strong marketing and relational capabilities
14. Direct Exporting:
The organization may use an
agent, distributor, or
overseas subsidiary, or act
via a Government agency
Indirect Exporting:
The company sells to a buyer
(importer or distributor) in
the home country, which in
turn exports the product.
Example: Walmart and Sears
15. Less risky
Low investment required relative to other modes of
entry
The cost of establishing the manufacturing facilities
overseas is minimized
Learning opportunity
Reduces the potential risks of operating overseas
Assists in diversification
16. Lack of control and contact
High transport costs
Presence of tariff and other barriers
Very limited learning to the firms about the characteristics
of the imported nation
Susceptible to exchange rate fluctuations
17. BANGLADESH’S SUCCESS: 2nd Largest Producer in Garments
Export(USmillion $) Growth (%)
EU countries 14745.39 17.35
USA 5141.38 2.90
Non-traditional
3603.15 21.15
markets
Total 24491.88 13.83
18. SUCCESS FACTORS:
Cheap labor
Government support
Back to back letter credit
Compliance to international rules of trading
19. FAILURE STORY
Ban on Shrimp Exports by EU and Japan
Reason: Contamination in shrimps
20. Setting up operations in foreign locations
Also known as wholly owned subsidiaries
21. Greater control and higher profits
Strong commitment to the local market on the part of
companies
Allows the investor to manage and control
marketing, production, and sourcing decisions
Assists in learning about the country’s market
22. No risk of cultural conflicts
Cost of financing the import barriers reduced
Greater knowledge of local market allows the firm
to strategize appropriately to gain more sales
23. Most expensive method of entry
Risks associated with learning to do business in a
new culture
High political risks of being nationalized
Continuous investments required for a long time
until returns can be yield
Risk of management of the local resources
Political and environmental factors, example
Fujifilm in US
24. Example
Mercedes production in Pune , India
Started production in mid 1990s from Pimpri
In 2007 it acquired 100acres of land in Maharashtra
In 2009 production started in Pune
Rs.250 crores of investment
Dealership in 31 cities of India
25. Example
Carrefour S.A.:
French multinational retailer
Fourth largest retail group
Failed operations in South Korea
Failed to understand Korean customers
Shut down in April 2006
Sales of stores worth $1.3 billion
26. A licensed asset may be:
A brand name
A company name
Patent
Trade secret
Product formulation
28. Enables companies to evade tariffs, quotas or
similar export barriers
Licensees are granted considerable autonomy
Licensor retains ownership of intellectual
property
Costs are usually low, no capital or investment
needed
29. Less profitable than other entry modes
Quality control issues might arrive
Risk of licensees turning into strong
competitors, even market leaders
33. When is a Business “Franchisable”?
It needs to be credible
It needs to be unique
It needs to be teachable
It needs to provide an adequate return
42. COMPARISON CHART
Franchising Licensing
Governed by Securities law Contract law
Registration Required Not required
Territorial Rights Offered to franchisee Not offered; licensee can
sell similar licenses and
products in same area
Support & Training Provided by franchiser Not provided
Royalty Payments Yes Yes
Use of
Trademark/Logo
Logo and trademark
retained by franchiser and
used by franchisee
Can be licensed
Control Franchiser exercises control
over franchisee
Licensor does not have
control over licensee
43. An enterprise in which two or more investors share
ownership and control over property rights and operation
A cooperative joint venture is an agreement for the
partners to collaborate but does not involve any equity
investments. Example: Cisco
44. Allows for sharing of risk (both financial and political)
Sharing of resources
Provides opportunity to learn new environment
Provides opportunity to achieve synergy by combining
strengths of partners
May be the only way to enter market given barriers to
entry
Access to distribution network
Contact with local suppliers and government officials
45. Lack of control
Requires strong coordination
Partner may become a competitor
Collision of cultures
Conflicts arising over matters such as strategies,
resource allocation, transfer pricing, ownership of
critical assets like technologies and brand names
47. Factors that led to Failure:
1. Lack in communication and coordination
2. Lack in dominant control of one party over the other
3. Sony needed to achieve what Apple had
4. The consumer-focused cellphone business ran contrary
to Ericsson's engineering-heavy, business-to-business
focus
48. Coalition of two or more organizations to achieve
strategically significant goals that are mutually beneficial
Examples include
• Shared manufacturing
• Research and Development (R&D) arrangements
• Distribution alliances
• Marketing agreements
Strategic Alliances are non-equity based agreements i.e.
companies remain independent and separate
49. Shared risk
Shared knowledge
Opportunities for growth
Speed to market
Complexity
Costs
Access to resources
Access to target markets
Economies of scale
50. Creating a competitor
Uneven alliances with minority share
Foreign confiscation
Risk of losing control over proprietary information
Coordination difficulties
52. Reasons for Success:
1. Alliance was well negotiated and structured
2. Solid planning and manageable expectations
regarding implementation
3. Coordinating brand exposure, joint marketing and
customer experience
53. A corporate action in which a company buys most, if
not all, of the target company's ownership stakes in
order to assume control of the target firm
54. A corporate action in which a company buys most, if
not all, of the target company's ownership stakes in
order to assume control of the target firm
55. Can quickly position a firm in a new business
Less time to establish presence
Takes a potential competitor out of the market
Lower risk than Greenfield Investments
56. Expensive way to enter a market
Likelihood of overbidding
Not all bundles of assets and capabilities are of
interest to the acquirer
Costly
Integrating an acquired company into a corporation is
challenging
58. Reasons behind Failure:
Cultural clash
Attitude to hierarchy was different
Coordination problems
Heavy competition from non-US brands in
the US auto market
Issue of trust
60. FDI figures reflect investment flows out of the home country as
companies invest in or acquire plants, equipment, or other assets
Foreign investments may take the form of minority or majority shares
in joint ventures, minority or majority equity stakes in another
company or outright acquisition
A company may choose to use a combination of these entry strategies
by acquiring one company, buying an equity stake in another, and
operating a joint venture with a third
61.
62.
63. A type of project that is constructed so that it could be sold
to any buyer as a completed product
Contractor agrees to deliver every detail of the project to
a foreign client, including the training of operating
personnel
Upon completion of the contract, the foreign client
receives the "key" to a plant ready for its overall
performance
64. Allows for a means of exporting process technology
Less risky than conventional strategies
Economic benefit
Applicable for technology based firms
65. The firm has no long term interest in the country
Firm can take minority equity interest in company
Inadvertently creates competition
67. Involves taking advantage of a channel to an
international market rather than selecting the country-market
in a more conventional manner
The most common form of piggybacking is to
internationalize by serving a customer who is more
international than the vendor firm
68. Low risk method of beginning export operations for
the rider
Focused selling to the appropriate market segments
Advantage for the rider is that he has the chance to
gain market knowledge and expertise through the
carrier
69. Company leaves control of products to intermediary
Loss of control of product in the long run
Competitive advantage left open for the carrier to
examine
Finding a suitable partner is difficult
74. Bangladesh’s Military Activities Overseas
1991 - Operation Desert Storm; and the world's largest
contributor (10,736) to UN peacekeeping forces
2007 - Major deployments in Democratic Republic of Congo,
Liberia, Sudan, Timor-Leste and Côte d'Ivoire
2013 - second highest number of total personnel to United
Nations Peacekeeping Operations; with (1,830 police, 73 UNMEM
and 6,605 troops) attached to various UN peacekeeping forces
worldwide
75. India-Bangladesh
India and Bangladesh have signed a Cultural Exchange
Program (CEP) for the years 2010-2012
Both sides are to exchange the visits of scholars/academicians
in the field of art, culture and literature and also dance, music,
theatre, Jatra groups, art exhibitions, mime shows, performing
art groups, exhibitions and other cultural events to meet the
local demands for exposure to each other’s rich cultural
tradition
76. BRAC
Works for economic development, education, public health, social
development and disaster relief
Apart from Bangladesh, BRAC is present Afghanistan, Pakistan, Sri
Lanka, Uganda, Tanzania, South Sudan, Sierra Leone, Liberia,
Haiti and The Philippines
It has successfully crossed national boundaries with its
unconventionally beneficial development works