International Business
Hill: International Business: Competing in the Global Marketplace, Sixth Edition
V. The Strategy and Structure of International Business
14. Entry Strategy and Strategic Alliances
© The McGraw−Hill Companies, 2007
229
14
Entry Strategy and Strategic Alliances
Introduction Basic Entry Decisions Which Foreign Markets? Timing of Entry Scale of Entry and Strategic Commitments Summary Entry Modes Exporting Turnkey Projects Licensing Franchising Joint Ventures Wholly Owned Subsidiaries Selecting an Entry Mode Core Competencies and Entry Mode Pressures for Cost Reductions and Entry Mode Greenfield Venture or Acquisition? Pros and Cons of Acquisitions Pros and Cons of Greenfield Ventures Greenfield or Acquisition? Strategic Alliances The Advantages of Strategic Alliances The Disadvantages of Strategic Alliances Making Alliances Work Chapter Summary Critical Thinking and Discussion Questions Closing Case: Diebold
230
Hill: International Business: Competing in the Global Marketplace, Sixth Edition
V. The Strategy and Structure of International Business
14. Entry Strategy and Strategic Alliances
© The McGraw−Hill Companies, 2007
Tesco Goes Global
Tesco is the largest grocery retailer in the United Kingdom, with a 25 percent share of the local market. In its home market, the company’s strengths are reputed to come from strong competencies in marketing and store site selection, logistics and inventory management, and its own label product offerings. By the early 1990s, these competencies had already given the company a leading position in the United Kingdom. The company was generating strong free cash flows, and senior management had to decide how to use that cash. One strategy they settled on was overseas expansion. As they looked at international markets, they soon concluded that the best opportunities were not in established markets, such as those in North America and Western Europe, where strong local competitors already existed, but in
V. The Strategy and Structure of International Business
14. Entry Strategy and Strategic Alliances
© The McGraw−Hill Companies, 2007
229
14
Entry Strategy and Strategic Alliances
Introduction Basic Entry Decisions Which Foreign Markets? Timing of Entry Scale of Entry and Strategic Commitments Summary Entry Modes Exporting Turnkey Projects Licensing Franchising Joint Ventures Wholly Owned Subsidiaries Selecting an Entry Mode Core Competencies and Entry Mode Pressures for Cost Reductions and Entry Mode Greenfield Venture or Acquisition? Pros and Cons of Acquisitions Pros and Cons of Greenfield Ventures Greenfield or Acquisition? Strategic Alliances The Advantages of Strategic Alliances The Disadvantages of Strategic Alliances Making Alliances Work Chapter Summary Critical Thinking and Discussion Questions Closing Case: Diebold
230
Hill: International Business: Competing in the Global Marketplace, Sixth Edition
V. The Strategy and Structure of International Business
14. Entry Strategy and Strategic Alliances
© The McGraw−Hill Companies, 2007
Tesco Goes Global
Tesco is the largest grocery retailer in the United Kingdom, with a 25 percent share of the local market. In its home market, the company’s strengths are reputed to come from strong competencies in marketing and store site selection, logistics and inventory management, and its own label product offerings. By the early 1990s, these competencies had already given the company a leading position in the United Kingdom. The company was generating strong free cash flows, and senior management had to decide how to use that cash. One strategy they settled on was overseas expansion. As they looked at international markets, they soon concluded that the best opportunities were not in established markets, such as those in North America and Western Europe, where strong local competitors already existed, but in