BUS5 187 Lecture Notes - Lecture 17: Planned Economy, Longrun, Starbucks
What Are the Basic Decisions Firms Make When Expanding Globally?
•Firms expanding internationally must decide
1. Which markets to enter
2. When to enter them
3. What scale
4. Which entry mode to use
What Influences
the Choice of Entry Mode?
•Several factors affect the choice of entry mode including
–transport costs
–trade barriers
–political risks
–economic risks
–costs
–firm strategy
Starbucks
•Why did Starbucks decide to expand into India? What were the benefits of making a
significant investment in the country?
•Which entry mode did Starbucks use? What advantages did this entry mode have over
other?
•Considering its joint-venture strategy for entering foreign markets, how did Starbucks
ensure a similar experience for customers across all of its international locations?
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Document Summary
Firms expanding internationally must decide: which markets to enter, when to enter them, what scale, which entry mode to use. Several factors affect the choice of entry mode including. The choice of foreign markets will depend on their long-run profit potential. 4. are politically stable have free market systems have relatively low inflation rates have low private sector debt. 3. are politically unstable have mixed or command economies have excessive levels of borrowing. Markets are also more attractive when the product in question is not widely available and satisfies an unmet need. Once attractive markets are identified, the firm must consider the timing of entry. Entry is early when the firm enters a foreign market before other foreign firms. Entry is late when the firm enters the market after firms have already established themselves in the market. Why enter a foreign market early: first-mover advantages include. The ability to preempt rivals by establishing a strong brand name: first-mover disadvantages.
