IB 3101 Lecture Notes - Lecture 10: Economic Bubble, Experience Curve Effects, Developing Country

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Published on 17 May 2017
Week 10 Chapter 13 Entry Strategy and Alliances
Global expansion decisions
Which markets to enter? Best ROI?
When to enter and on what scale?
Which entry mode to use
The choice depends on:
o Transport costs and trade barriers
o Political and economic risks
o Firm strategy
Location choice:
Favorable markets
o Politically stable
o Free market systems
o Relatively low inflation rates
o Low private sector debt
Less favorable markets
o Politically unstable developing nations with mixed or command
o Developing nations where speculative financial bubble have led to
excess borrowing
Timing of Entry- Early
First mover advantages:
o Pre-empt rivals and capture demand by establishing strong brand
o Ride down the experience curve
o Create switching costs
Tie customers into their products or services making it difficult
for later entrants to win business
First move disadvantages
o Pioneering costs
Business failure
Promoting your product
Scale of Entry
Significant scale
o Strategic commitment
o Long term impact
o Invest so much money, it is not easy to pull out of the market
Small scale
o Learn about a foreign market
o Limiting exposure to new market
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