Chapter 13: Entry Strategy and Strategic Alliances TECHNICO Chose wholly owned subsidiary (agribusiness) 1. Enter into china … not prepared to let chinese counterparts exploit their technology 2. Avoiding technical and licensing agreement 3. No risk in allowing co to use licensing strategy and not using it well |

Basic Entry Decisions
OLI
a) Location b) Ownership specific advantage c) internalisation-specific attributes (entry modes)

1) Which foreign markets? * Assessment of nations long run profit potential * Assess overall attractiveness of model * Suitability of product to that region * Nature of indigenous competitors

2) Timing of entry * Consider first mover advantages a) ability to pre-empt rivals and capture demand by establishing strong brand name b) ability to build sales volume before other entrants cost savings allow you to further cut your costs c) create switching costs that tie customers into products * first mover disadvantages a) pioneering costs: costs that firms have to bear that late entrants can avoid… eg cost of business failure b) research shows that higher probability of survival of an international business after several firms done so c) costs of promoting and marketing the product in a new market

3) scale of entry and strategic commitments * entering market on large scale involve commitment of significant resources; also provides rapid entry * CSL – acquire – avoids cost of foreign liability * Other companies prefer to go in on small scale and expand from there * Large scale entry i) Positive: easier for company to attract customers and distributors… large scale allows people to believe they will be sustainable in long run, EOS, first mover etc ii) Negative: less resources because spent all on expansion…