Global Marketing, Licensing, Strategic Alliance, Fdi
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
6
Licensing, Strategic Alliances, FDI
Outline
The non-exporting modes of entry The Licensing Options, including Franchising Strategic Alliances, including Joint Ventures. FDI and Wholly Owned Subsidiaries Marketing Strategy and Optimal Entry Mode Foreign Expansion and Cultural Distance Waterfall and Sprinkler Strategies Takeaways
6-3
Non-exporting modes of entry
Three main non-exporting modes of entry
Licensing (including franchising) Strategic Alliances Wholly owned manufacturing subsidiaries
6-4
Three modes of entry
Host Country Home country LICENSING
Blueprint : “how to do it”
WHOLLY-OWNED SUBSIDIARY
A replica of home
Host County STRATEGIC ALLIANCE (J.V.)
A “joint effort”
6-5
The Impact of Entry Barriers
The non-exporting modes of entry basically represent alternatives for the firm when entry barriers to a foreign market are high. These entry barriers involve not only artificial barriers such as tariffs, but also involve lack of knowledge of the foreign market and a need to outsource the marketing to local firms with greater understanding of the market.
6-6
Licensing
LICENSING refers to offering a firm’s know-how or other intangible asset to a foreign company for a fee, royalty, and/or other type of payment
Advantages for the new exporter The need for local market research is reduced The licensee may support the product strongly in the new market Disadvantages Can lose control over the core competitive advantage of the firm. The licensee can become a new competitor to the firm.
6-7
Franchising
Definition: franchising is a licensing option where the franchisor offers a local franchisee the use of the business model. The local franchisee: raises the required capital to establish the business, obtains real estate and capital investment hires local employees, and establishes a place of business. The
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
6
Licensing, Strategic Alliances, FDI
Outline
The non-exporting modes of entry The Licensing Options, including Franchising Strategic Alliances, including Joint Ventures. FDI and Wholly Owned Subsidiaries Marketing Strategy and Optimal Entry Mode Foreign Expansion and Cultural Distance Waterfall and Sprinkler Strategies Takeaways
6-3
Non-exporting modes of entry
Three main non-exporting modes of entry
Licensing (including franchising) Strategic Alliances Wholly owned manufacturing subsidiaries
6-4
Three modes of entry
Host Country Home country LICENSING
Blueprint : “how to do it”
WHOLLY-OWNED SUBSIDIARY
A replica of home
Host County STRATEGIC ALLIANCE (J.V.)
A “joint effort”
6-5
The Impact of Entry Barriers
The non-exporting modes of entry basically represent alternatives for the firm when entry barriers to a foreign market are high. These entry barriers involve not only artificial barriers such as tariffs, but also involve lack of knowledge of the foreign market and a need to outsource the marketing to local firms with greater understanding of the market.
6-6
Licensing
LICENSING refers to offering a firm’s know-how or other intangible asset to a foreign company for a fee, royalty, and/or other type of payment
Advantages for the new exporter The need for local market research is reduced The licensee may support the product strongly in the new market Disadvantages Can lose control over the core competitive advantage of the firm. The licensee can become a new competitor to the firm.
6-7
Franchising
Definition: franchising is a licensing option where the franchisor offers a local franchisee the use of the business model. The local franchisee: raises the required capital to establish the business, obtains real estate and capital investment hires local employees, and establishes a place of business. The