BUSI2025 Lecture Notes - Lecture 12: Experience Curve Effects, Switching Barriers, Franchising
Document Summary
L1 2 en t ry st r a t egy a n d st r a t egi c a lli anc e s. Basic decisions firm s make when expanidng globally: which markets to enter, when to enter them and on what scale, which entry mode to use. Several factors affect the choice of entry mode including: transport costs, trade barriers, political risks, economic risks, costs firm strategy. The optimal mode varies by situation what makes sense for one company might not make sense for another. Long-term profit potential: balance among benefits, costs and risks: a (cid:272)ou(cid:374)t(cid:396)(cid:455)"s (cid:271)usi(cid:374)ess e(cid:374)(cid:448)i(cid:396)o(cid:374)(cid:373)e(cid:374)t, political/regulatory environment, geographic location - regional versus country-by-country positioning. Benefits: function of market size (demographics, p(cid:396)ese(cid:374)t a(cid:374)d futu(cid:396)e (cid:272)o(cid:374)su(cid:373)e(cid:396)"s (cid:449)ealth (ppp) Cu(cid:396)(cid:396)e(cid:374)t stage of a (cid:272)ou(cid:374)t(cid:396)(cid:455)"s e(cid:272)o(cid:374)o(cid:373)i(cid:272) de(cid:448)elop(cid:373)e(cid:374)t a(cid:374)d politi(cid:272)al sta(cid:271)ilit(cid:455) (cid:448)s. futu(cid:396)e e(cid:272)o(cid:374)o(cid:373)i(cid:272) growth rate. Early versus late entry: first-mover advantages and disadvantages. Advantages: preemption of rivals, ability to build sales volume (move down experience curve), buyer switching costs.
