lecture 2-C07 Global Management Instr PPT MGMT3Ce - 3 PDF

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lecture 2-C07 Global Management Instr PPT MGMT3Ce - 3, BUSA-2005-NE1 - Principles of Managem...

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MGMT CHAPTER 7 - 3 Global Management

Forms of Global Business • Export – Produce products in home countries and sell to customers in foreign countries • Cooperative Contract – Franchise: the manufacturer or marketer licenses the entire business to another – Licensing agreement: receives royalty payments from another company that produces its product, sells its service, or uses its brand name in a foreign market

• Strategic Alliances – Joint venture: two existing companies collaborate to form a third company

– 100 percent owned by the parent company

• Global New Ventures – new companies founded with an active global strategy

Exporting

ADVANTAGES • Less dependence on home market sales • Greater degree of control over research, design, and production decisions

DISADVANTAGES • Many exports are subject to tariff and nontariff barriers

• Transportation costs can increase the price • Companies may depend on foreign importers for product distribution

Licensing

ADVANTAGES

• Allows companies to earn profits without investing more money • The licensor invests in production equipment and facilities. • Helps companies avoid tariff and nontariff barriers

DISADVANTAGES • The licensor gives up control over quality of the product or service sold by the foreign licensee • Licensees can eventually become competitors

Franchise

ADVANTAGES • Fast way to enter foreign markets • Good strategy when a company’s domestic sales have slowed

DISADVANTAGES • Franchisors face a loss of control • Franchising success may be culture-bound

Joint Venture

ADVANTAGES

•

Helps companies avoid tariff and nontariff barriers to entry...