Competition in Foreign and Global Environment

3784 Words Mar 28th, 2013 16 Pages
BPMN 6023 STRATEGIC MANAGEMENT COMPETITION IN FOREIGN AND GLOBAL ENVIRONMENT
Prepared by: MOHAMMAD IKRAM MUZAMMIL BIN IDRUS (810943) NUROLL AZRIN BINTI KAMAROLL ZAMAN (813857) Course: MSC. FINANCE Prepared for: PROF. DR. RUSWIATI SURYA SAPUTRA

WHY COMPANIES DECIDE TO ENTER FOREIGN MARKETS Competing in international markets allows companies to (1) gain access to new customers, (2) achieve lower costs through greater scale economies, learning curve effects, or purchasing power, (3) leverage core competencies developed domestically in additional country markets, (4) gain access to resources and capabilities located outside a company's domestic market, and (5) spread business risk across a wider market base. WHY COMPETING ACROSS NATIONAL
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The advantages in exporting strategies are low capital requirements, economies of scale in utilizing production capacity, no distribution risk and no direct investment risk. The disadvantages for this strategies is maintaining relative cost advantages of home based production, transportation and shipping costs, exchange rate risks, tariff/import duties and loss channel control The advantages in licensing and franchising strategies are low resource requirements, income from royalties and franchising fees and rapid expansion into many markets. The disadvantages for these strategies are maintaining control of proprietary know-how, loss of operational and quality control and adapting to local markets tastes and expectations. Acquisition strategies can give benefits in term of high level of control, quick largescale market entry, avoid entry barriers and access to acquired firm’s skills while the disadvantages are costs of acquisition is too high, complexity of acquisitions process and integration of the firms structures, cultures, operations, and personnel A Greenfield venture is a subsidiary business
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