GMS 200 Lecture Notes - Lecture 3: Market Entry Strategy, Legal Personality, Franchise Agreement
26 Nov 2016
School
Department
Course
Professor
Chapter 3 – Global Dimensions of Management
• Global economy – a worldwide network of interdependent countries that share resource,
supplies, product markets and a competitive business environment
o Countries are connected
• Globalization – process of growing interdependence among the components of the global
economy
o What are the key channels through which countries are becoming more interdependent
or integrated?
▪ World trading
▪ Social media
▪ International finance
• Why would a company want to conduct business in global markets?
o More customers
o Greater profit potential
o Labour costs are lower abroad, for example in China
o More financial resources
o Better supplies and products
• How can companies effectively participate in the global market?
o Market entry strategies:
▪ Exporting
• Direct exporting – sell your product directly to foreign customers
• Indirect exporting – sell your product to foreign customers through an
agent or distributor abroad
• What are the advantages of direct exporting?
o Can establish and maintain a relationship with foreign
customers
o Can control the pricing of your product
o Get a larger share of the profit, if any
• What are the disadvantages of direct exporting?
o Managers have to learn about foreign markets
o Higher front cost (travel, investment and research, expand your
team)
o Cultural and communication issues (products must have labels
in official languages)
• What are the advantages of indirect exporting?
o Requires limited knowledge of foreign markets
o Faster and less costly
• What are the disadvantages of indirect exporting?
o No opportunity to develop and relationship with foreign
customers
o A holdup problem
▪ Licensing agreement
• Trademarks
• Pay another company a fee for the right to make or sell a product in a
particular country or region
find more resources at oneclass.com
find more resources at oneclass.com
24
GMS 200 Full Course Notes
Verified Note
24 documents
