Chapter 8: Global Entry and Expansion Strategies
Learning Objectives
• Identify the decision criteria for global market entry
• Describe the process of selecting an export market
• Compare and contrast global market entry methods
• Discuss global market expansion strategies
Chapter Overview
Companies can choose from among a wide range of alternatives when deciding how to
participate in markets around the world. Exporting, licensing, joint ventures, and
ownership by acquisition or direct investment expansion each offer distinct advantages
and disadvantages. Sourcing from a local or third-country supplier allows a company to
enter new markets without investing in additional production capacity. Close cooperation
with an overseas distributor can provide market access and market feedback. Licensing is
a strategy to monetize intellectual property, know-how, and brand equity with minimal
investment. Franchises can take a proven domestic business model overseas with rapid
global penetration. Joint ventures offer companies the opportunity to share risk and
combine value-chain strengths. Direct ownership similarly requires a major commitment
of resources, both capital and managerial. Market expansion strategies can be developed
in matrix form to assist managers in thinking through the various alternatives. The
options include country and market concentration, country concentration and market
diversification, country diversification and market concentration, and country and market
diversification. The preferred expansion strategy will depend upon a company’s stage of
development.
Lecture Outline
I. Decision Criteria for International Business (p. 214)
a. Political Risk
b. Market Access
c. Factor Costs and Conditions
d. Country Infrastructure
e. Foreign Exchange
f. Creating A Product-Market Profile
g. Market Selection Criteria
i. Market Potential
ii. Market Access
iii. Shipping Costs and Time
iv. Potential Competition
v. Service Requirements
vi. Product Fit
h. Visits to the Potential Market
II. Entry and Expansion Decisions and Alternatives (p.219)
a. “Going Global” Decision Criteria
III. Exporting and Export Sourcing (p.222)
IV. Organizing for Exporting (p.223)
a. In-House Export Organization
b. Organizing in the Market Country
i. Licensing
ii. Franchising
c. Product Sourcing
d. Investment: Joint Venture and FDI
e. Ownership/Investment
V. Marketing Expansion Strategies (p.232)
a. Four Market Expansion Strategies
VI. Alternative Strategies: Stages of Development Model (p.234)
VI. Summary (p. 237)
Tables and Figures
Figure 8-1 Ownership, Control and Risk (p. 220)
Figure 8-2 Marketing Expansion Strategies (p. 233)
Table 8-1 Stage of Development of the Transnational Corporation (p. 234)
Table 8-2 Stages of Development I (p. 234)
Figure 8-3 Orientation of Management and Companies (p. 235)
Table 8-3 Stages of Development II (p. 236)
Table 8-4 Stages of Development III (p. 237)
Sidebars
Sidebar 8-1 International Paper Company’s International Expansion (p. 213)
Sidebar 8-2 External Independent Export Organizations (p. 223)
Sidebar 8-3 A Word of Caution (p. 225)
Sidebar 8-4 Yellow Tail Enters the US – The Distributor Model (p. 225)
Sidebar 8-5 KFC Enters China – The Franchise Model (p. 228)
Sidebar 8-6 Tropicana Enters the Japanese Market (p. 230)