MSC Strategy Presentation

4

3

5

Making the Decision on Foreign Market Entry

1

2

COUNTRY OPPORTUNITIES

COUNTRY RISK ANALYSIS

COMPETITIVE ANALYSIS

ENTRY MODE

DEVELOPMENT PATHS

ORGANIZATION:CONTROL

6

Analysis

(Assessing Country

Attractiveness)

Implementation

Internal

External

‹#›

Entry and Development

Global

Strategic Objectives

Government

Policies

Market

Attractiveness

Competitive

Advantages

Risks

Entry and

Country

Strategy

AMBITION

What do we want to achieve?

Market-driven & resource-driven?

CAPABILITIES

POSITIONING

Which segments

Which value proposition?

Business Model

Transfer

Adapt

Create

Global /Regional Linkages

People Development

ORGANIZATION

Development mode

- Organic

- Joint Ventures

- Acquisitions

‹#›

2

Organizational Capabilities

LOCAL HUMAN

RESOURCES

MANAGEMENT

- Recruitment

- Socialization

- Career

- Training

- Managing expatriates

INNOVATION

- Transferring or developing technology

- Creating global base out of local resources

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5

Market-driven

Resource-driven

Capture growth

opportunities

of the region to

expand global sales

Capture resources

(natural, human,

knowledge) for global

competitiveness

Ambition

‹#›

First movers advantages

Followers advantage

Acquirers advantages

Pre-empt (seize) key resources

Establish standards

Blocks brands and distribution

Benefit from mistakes of first movers

Capitalize on blind spots

Ride on efforts of first movers

Window of opportunity

First Mover Advantages

‹#›

6

First Mover Advantage?

Entry into the Chinese car industry

Jeep

Volkswagen

Peugeot-Citroen

General Motors

Honda

Toyota

China

Market Share

in 2017

First movers

First Generation Follower

Late comers

Chart based on data from http://carsalesbase.com/china-car-sales-analysis-2016/

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8

Positioning: Segmentation

Middle Class

Bottom of the Pyramid

Rich

Luxurious ‘Top of the line’ products and services

Differentiation strategy is ideal

Mix of

global and local brands and products and

services

Important in terms of numbers

Product and services adaptation and

Cost leadership strategy is ideal

‹#›

Traditional Middle Class

Bottom of the Pyramid

Value pricing based on differentiation and segmentation

Product obsolescence and renewal

Functionality & packaging of products & services are adapted based on industrialized markets

Urban area focus

Use of skilled workforce

Value pricing based on cost leadership

Products built to last

Functionality & packaging of products & services are reinvented to fit local conditions

Rural focus  

Use of less skilled workforce

Difference Between Traditional Middle Class Strategies and Bottom of the Pyramid Strategies

‹#›

Price

Costs

Industry

Average

Profit

Differentiation Strategy

Cost Leadership Strategy

Competing based on Different Strategies

Technological performance

Superior quality

Superior service

Image & reputation

Customization & adaptation of products & services is ideal

Economies of scale due to size

Economies of scope due to shared costs

Low cost of factors (e.g., labor, materials)

Superior productivity in processes

Standardization of products & services is ideal

Internal Costs

Supplies

Customer Value

‹#›

Wholly-Owned

Subsidiary

Acquisition

Office

Licensing &

Franchising

Joint Venture

Exporting &

agent

distributor

Entry Modes

Benefits?

Costs?

Feasibility?

Risks?

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Wholly-owned

Subsidiary

Acquisition

Joint Venture

License

Market

Attractiveness

Costs

Time

Horizon

Risks

Internal

Requirements

Competitive

Advantages

Relevant for Attractive Markets

Relevant for both Attractive Markets

and less Attractive Markets

High investments

High

Medium

Low

Long pay-off

Medium-term

if properly

managed

Medium-term

Short-term

High exposure

High

Shared risks but

risks of conflicts

Low risks

Local know-how

Acquisition skills

Local insights

Partnership

management

Technology

transfer

Can be high for

early entrants

Can be high if

properly managed

Leveraged with

partner

Limited but

testing base

Entry Modes

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