GMS 522 Lecture Notes - Overproduction, Joint Venture

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Proactive Motivation
Profit advantage
Unique product
Technological advances
Exclusive information : thinking you have a scoop about a certain market
Managerial urge
Tax benefit
Economies of scale
Reactive Motivations
Competition pressure
Overproduction
Declining domestics sales
Excess capacity
Saturated domestic market
Tax benefit
Proximity to customers&ports
Waterfall approach: step by step approach, enter the country that are closer, make money and
then enter another country
Less risk moneywise
Testing the water
Sprinkler approach: enter everywhere, invest everywhere
Eliminate the competition
Shorter the life cycle, sprinkler approach
Different ways of going global
1) Exporting
2) Licensing: giving the rights on the intellectual property or franchising: expand by selling
the package
3) Foreign direct investment
4) Joint venture: collaboration between 2 or more organizations for a long period
Share risk
Different from strategic alliance: short term, no contract
Maintain independence
Keep identity
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