Foreign Direct Investment versus Collaborative Alliances

1. Market entry modesFDI vs Collaborative Alliances By: C. Bettendroffer D. Dimitrov C. Klein I.Tahiyat O. Vadillo

3. Examples: opening a new factory, acquisition & mergers, opening subsidiaries.Foreign Direct Investment 10/11/2010 2

4. Companies like Mercedes, BMW, Renault looking for delocalization or opening new factories, use FDI because of: Cheaper labour conditions Access to new markets Take advantage of the incentives that local governments offer for localizing their factories there. Examples – Car Manufacturing Industry 10/11/2010 3

6. develop linked and common processes

7. to increase the performance of both companiesCollaborative Alliances 10/11/2010 4

9. Create a new identity- Approach different segments 10/11/2010 5

10. Ericsson has the technology (focused in b2b) while Sony has a wider marketing expertise. Therefore, the benefits of this joint-venture: Ericsson gain access to a new market Sony gain access to a new technology. Examples – Sony-Ericsson 10/11/2010 6

12. Charge “Royalties”

13. Products/Technology

14. No Goodwill

15. Contract negotiable

16. Marketing in partnership with Licensor

17. Long terms10/11/2010 7

18. Licensing/ Franchising 10/11/2010 8

19. In the retail food sector companies like McDonalds, BurgerKing, … , use franchising because: Gives opportunity for fast growth without compromising a notable expenditure Motivated management: their earnings rely on their activity Through agreements they can maintain companies standards. Examples – Retailfood sector 10/11/2010 9

20. Patents are a practical example of licensing strategy.: Helps companies to increase profit through licensing in non-competitive markets (foreign markets, related industries) Licensing helps spreading the technology and creating a bigger market (Sony’s Betamaxvs JVC’s VHS) Main income source for R&D institutes (Fraunhofer German institute and MP3) Examples – Patents 10/11/2010 10

21. THANK YOU FOR YOUR ATTENTION ! 10/11/2010 11