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Lecture

GMS LEC 3.docx

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Department
Global Management Studies
Course
GMS 200
Professor
Horatio Morgan
Semester
Fall

Description
Global Dimensions of Management Chapter 3 Lecture 3 Part 1 Part 1: International Business Why do companies go abroad?  To access to new markets or customers (this point most important)  To establish connections to foreign suppliers of raw materials  To tap into chapter funding sources (banks, venture capitalists)  To take advantage of relatively abundant low-wage unskilled labour (cheap labour) Immigration policy prevents low wage workers to come to Canada so businesses go to them Common Market Entry Strategies Exporting (most common, least risky)  Direct exporting – selling directly to foreign customers o Advantages: Establish and maintain relationship with foreign customers; control pricing decisions o Disadvantages: May demand managerial time and significant financial commitment  Indirect exporting – selling to foreign customers through an agent or distributor o Advantages: requires limited financial commitment and knowledge of foreign markets o Disadvantages: no contact with foreign customers; smaller profit margin; lose opportunity to learn about foreign markets. o Licensing  Licensing agreement: an international marketer (i.e licensor) me permit another company to use intellectual capital (IP) such as trademarks in exchange for compensation in royalty fees  Royalty fees (i.e 10% of sales) may reduce the profit margin of the license, but yield several benefits o Global trademark allows the company to quickly become international without having to spend considerable time and money in developing its own brand QSR= Quick Service Restaurants Top 10 Global Franchises 1. Mcdonalds 2. Subway 3. KFC 4. Burger King 5. 7-Eleven 6. InterContinental Hotels 7. Pitta Hut 8. Snap-on Tools 9. Taco Bell 10. Ramada Worldwide Easier to go abroad with a restaurant International Joint Ventures  Objectives: Reliance – natural gas production was due to the company’s inability to undertake exploration in deep-> it lacked advanced technolo
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