Going International: Strategic Decisions

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Going International Strategic Decisions

• Multidomestic Companies
• their intl subs are autonomous and
  self-governing
• Global companies
• operates as one single entity worldwide
• in reality - most companies use a combination of
  both approached

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Global Firms
Chapter 9
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MultidomesticFirms
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Reasons for going international

• Reactive (from reaction - to receive information,
  then act)
• the company is responding to demand it discovers
  in another location
• it sees it competitors going to a particular
  place
• regulations - environmental/work safety may be
  easier overseas
• costs of production at home force it to cheaper
  areas
• chance occurrence

additional reasons on page 240 - 241
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Reactive, continued

• If a companies customers go international, then
  it may be required to follow.eg. if an auto
  parts supplier to Magna sees Magna beginning to
  make some important component in Mexico, then it
  may also have to go to Mexico so it can mfg.
  there and continue to supply Magna - it would be
  too expensive to ship the parts from Canada

page 242
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Reasons for going international

• Proactive (to actively look for an opportunity)
• strategically seeking out advantages
• launch and offense into a new market before
  competitor does
• power and prestige
• incentives
• lower costs of labour, production, energy

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Proactive, continued

• As costs of labour have increased in North
  America, many assemblers and component parts mfg.
  have had to move offshore
• Also, another reason to go international is to
  gain prestige which can be applied to customers
  at home - if a company has overseas offices, it
  appears to be more impressive at home ie. law
  firms, CA firms

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Ways to enter the new market(choice of entry
mode)

• simple export of the product
• develop a joint venture to sell through an
  existing sales company in similar business
• sell license to foreign company and collect
  royalties
• contract a foreign company to do the business for
  a of the sales
• overseas office and subsidiary company set up

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Chapter 9
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Strategic Alliances is a tactic you can use with
all 3 modes
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