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global expansion - promises
- Access to (cheaper) input factors
- Access to new markets
- Access to new competencies
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global expansion – risks
- The liability of foreignness (Limited social capital (ties to local suppliers, distributors, alliance partners), Limited reputational capital, Limited local knowledge)
- Knowledge leakage
- Reputational risks (if you cede too much controls to the local partners)
- Foreign exchange risks
- Political risks
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Exporting – pros and cons
- No local presence or infrastructure
- No need for sharing of sensitive info
- Cheap and easy
- limited control over how products distributed/priced
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Licensing/ Franchising– pros and cons
- a measure of control
- knowledge leakage
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Joint Venture– pros and cons
- Moderate amount of up-front investments
- Significant level of control
- Often a legal requirement
- knowledge leakage
- Cooperation/coordination challenges
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Acquisition– pros and cons
- Gets access to a fully built up local player without the liability of foreignness
- Complete control
- significant up-front investment
- Adverse selection challenges
- Integration challenges
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Greenfield– pros and cons
- Complete control
- Shape subsidiary in one’s own image
- significant up-front investment
- Liability of foreignness
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4 types of strategies for globalized operations and features
- International strategy: for high differentiation company like Rolex (luxury(, who does not need to adapt, eg. exporting
- Multidomestic strategy: differentiation, sacrifices efficiency in favor of emphasizing responsiveness to local requirements
- Transnational strategy: balance the desire for efficiency with the need to adjust to local preferences (integration of both)
- Global (standardization) strategy: sacrifices responsiveness to local requirements within each of its markets in favor of emphasizing efficiency
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Porter’s diamond framework- National competitive advantage factors
- Competitive intensity within industry
- Supporting industries/ complementors
- Factor conditions
- Demand conditions
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