BUS401 CASE,SLP,TD 4

Module 4 - Home

Market Selection and Foreign Entry-Mode

Modular Learning Outcomes

Upon successful completion of this module, the student will be able to satisfy the following outcomes:

•Case ◦Identify potential new markets for multinational corporations.

◦Analyze market entry strategy options in an international context.

◦Discuss strategic planning in a company that expanded internationally.

•SLP ◦Analyze market potential in a given country.

◦Analyze market entry strategy options in an international context.

•Discussion ◦Discuss and analyze methods of market selection research.

Module Overview

Global companies need to seek ways to keep and achieve a competitive advantage given the characteristics of international markets. Competing successfully in attracting and maintaining target customers in the global economy necessitates innovative strategies.

1. Why do companies expand globally & why do nations want their business?

Nations need jobs and they want to develop their economies and enhance their standards of living. Companies need to expand globally to remain competitive. Expanding globally enables companies:

•to increase profits,

•to gain new market share

•to create new markets

•to locate new technologies and products for domestic markets

•to find new suppliers

•to increase shareholder wealth

2. Entry decisions?

• Where

• When?

• How?

3. Entry modes?

•Importing/exporting – this is simply buying or selling products in a foreign market. Unlike other entry mode strategies, importing or exporting does not require you to step foot in the other country.

•With franchising or licensing, a company can enter a foreign economy by granting the permission to produce their product or patent and develop it as their own, in exchange for a fee and often ongoing royalties.

•Joint ventures are a coalescence of two or more companies, that form a jointly held company operating within the foreign market. Using a foreign alliance in this manner is often called a strategic alliance.

•Mergers imply that two previously independent companies combined into one company.

•Acquisitions mean that a parent company purchases another one, in order to gain access to other markets and/or products.

•With the various options spelled out in the next module, we will embark on truly transnational business strategies and forms.