Professional Documents
Culture Documents
Entry
Strategies:
Licensing,
Investment,
and Strategic
Alliances
Global Marketing
Chapter 9
1
Introduction
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Which Strategy
Should Be Used?
It depends on:
Vision
Attitude toward risk
Available investment capital
How much control is desired
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Licensing
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Advantages to Licensing
Limited participation
Returns may be lost
Lack of control
Licensee may become competitor
Licensee may exploit company
resources
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Special Licensing
Arrangements
Contract manufacturing
Company provides technical specifications to a subcontractor
or local manufacturer
Allows company to specialize in product design while
contractors accept responsibility for manufacturing facilities
Franchising
Contract between a parent company-franchisor and a
franchisee that allows the franchisee to operate a business
developed by the franchisor in return for a fee and
adherence to franchise-wide policies
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Worldwide Franchise Activity
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Franchising Questions
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Investment
Partial or full ownership of operations
outside of home country
Foreign Direct Investment
Forms
Joint ventures
Minority or majority
equity stakes
Outright acquisition
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Joint Ventures
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Joint Ventures
Advantages Disadvantages
Allows for risk sharing Requires more
financial and political investment than a
Provides opportunity to licensing agreement
learn new environment Must share rewards as
Provides opportunity to well as risks
achieve synergy by Requires strong
combining strengths of coordination
partners Potential for conflict
May be the only way to among partners
enter market given Partner may become a
barriers to entry competitor
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Investment via
Direct Foreign Investment
Start-up of new operations
Greenfield operations or
Greenfield investment
Merger with an existing enterprise
Acquisition of an existing enterprise
Examples: Volkswagen, 70% stake in
Skoda Motors, Czech Republic (equity),
Honda, $550 million auto assembly plant
in Indiana (new operations)
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Global Strategic Partnerships
Possible terms:
Collaborative
agreements
Strategic alliances
Strategic
international
alliances
Global strategic
partnerships
The Star Alliance is a GSP
made up of six airlines.
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The Nature of Global Strategic
Partnerships
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The Nature of Global Strategic
Partnerships
Participants remain independent
following formation of the alliance
Participants share benefits of alliance as
well as control over performance of
assigned tasks
Participants make ongoing contributions
in technology, products, and other key
strategic areas
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Five Attributes of True Global
Strategic Partnerships
Two or more companies develop a joint long-
term strategy
Relationship is reciprocal
Partners vision and efforts are global
Relationship is organized along horizontal
lines (not vertical)
When competing in markets not covered by
alliance, participants retain national and
ideological identities
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Success Factors of Alliances
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Success Factors
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Alliances with Asian
Competitors
Four common problem areas
Each partner had a different dream
Each must contribute to the alliance and
each must depend on the other to a
degree that justifies the alliance
Differences in management philosophy,
expectations, and approaches
No corporate memory
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Cooperative Strategies in Japan:
Keiretsu
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21st Century Cooperative Strategies:
Targeting the Digital Future
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Beyond Strategic Alliances
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Market Expansion Strategies
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Looking Ahead to Chapter 10
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All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
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