INTB 1209 Chapter Notes - Chapter 13: Franchising, Experience Curve Effects, Intangible Property
22 Mar 2016
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Which foreign market: the choice must be based on an assessment of a nation"s long-run profit. Second advantage is the ability to build sales volume in that country and ride down the experience curve ahead of rivals giving early entrants a cost advantage. Third advantage is the ability of early entrants to create switching costs that tie customers into their products: first-mover disadvantages. Pioneering costs, costs that an early entrant has to bear that a later entrant can avoid. Arise when a business has to devote time and effort to adapt its business to a new market. Research confirms that the probability of survival increases if an international business enters a national market after several other foreign firms already have. Early entrants can find themselves at a disadvantage if a subsequent change in regulations invalidates prior assumptions about the best business model. Scale of entry and strategic commitments: large scale entry.
