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Strategies For Analyzing and Entering Foreign Markets: Griffin & Pustay
Strategies For Analyzing and Entering Foreign Markets: Griffin & Pustay
Foreign Markets
Advantages Disadvantages
• Relatively low • Vulnerability to tariffs
financial exposure and NTBs
• Permit gradual • Logistical
market entry complexities
• Acquire knowledge • Potential conflicts
about local market with distributors
• Avoid restrictions on
foreign investment
Proactive Reactive
Indirect
exporting
Direct Intracorporate
exporting transfers
Governmental policies
Marketing concerns
Logistical considerations
Distribution issues
Webb-Pomerene association
Other intermediaries
A Webb-Pomerene Association is a
group of U.S. firms that operate within
the same industry and that are
allowed by law to coordinate their
export activities without fear of
violating U.S. antitrust laws.
• Mitsubishi Corporation
• Mitsui & Company
• Marubeni
• Sumitomo Group
• Itochu Corporation
Manufacturers’ agents
Freight forwarders
Advantages Disadvantages
• Low financial risks • Limited market
• Low-cost way to opportunities/profits
assess market
potential • Dependence on
licensee
• Avoid tariffs, NTBs,
restrictions on foreign • Potential conflicts
investment with licensee
• Licensee provides
knowledge of local • Possibility of creating
markets future competitor
Advantages Disadvantages
• Low financial risks • Limited market
• Low-cost way to assess opportunities/profits
market potential
• Dependence on
• Avoid tariffs, NTBs,
restrictions on foreign franchisee
investment • Potential conflicts
• Maintain more control with franchisee
than with licensing
• Possibility of creating
• Franchisee provides
knowledge of local future competitor
market
Contract
Manufacturing
Management
Contract
Turnkey
Project
Advantages Disadvantages
• Low financial risks • Reduced control (may
affect quality, delivery
• Minimize resources
schedules, etc.)
devoted to
manufacturing • Reduce learning
• Focus firm’s potential
resources on other • Potential public
elements of the value relations problems
chain
Advantages Disadvantages
• Focus firm’s • Potential returns
resources on its area limited by contract
of expertise expertise
• Minimal financial • May unintentionally
exposure transfer proprietary
knowledge and
techniques to
contractee
Advantages Disadvantages
• Focus firm’s • Financial risks
resources on its – Cost overruns
area of expertise
• Construction risks
• Avoid all long-
– Delays
term operational
risks – Problems with
suppliers
Advantages Disadvantages
• High financial and
• High profit potential managerial
investments
• Maintain control over
operations • Higher exposure to
political risk
• Acquire knowledge of • Vulnerability to
local market restrictions on foreign
investment
• Avoid tariffs and
• Greater managerial
NTBs complexity
• Best site
• Modern facilities
• Economic development incentives
• Clean slate