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Introduction to
International Business
August 4, 2008
Discussion Section
Global Strategy and Entry Modes
 Chapter 7, 9 and 10 in a nutshell
 Review of Chapter 12
 Discussion questions
 Review of Chapter 14
 Discussion questions
 Case: Tesco goes global
Chapter 7, 9 and 10 in a
 Chapter 7: FDI trends, theories, costs & benefits, and
 Chapter 9: How does the foreign exchange market
 Chapter 10: Currency regimes, the evolution and role
of the international monetary regimes
Chapter 12 Learning Goal
 What is “strategy”?
 What benefits do firms derive from
expanding internationally?
 How do pressures for cost reductions and
pressures for local responsiveness influence
strategic choice?
 What are the different strategies for
competing globally and their pros and cons.
Chapter 12: The Strategy of
International Business
 What is strategy? How does it lead to value creation?
 Benefits of global expansion
 Expanding the market, location economics, experience effects,
leveraging subsidiary skills
 Cost pressure vs. pressure for local responsiveness
Low Pressure for Local High Pressure for
Local Responsiveness
 Strategy & their evolution
Low Pressure for Cost
International Strategy
Localization Strategy
High Pressure for Cost
Global Standardization
Transnational Strategy
Chapter 14 Learning Goals
 Explain the three basic differences that firms
contemplating foreign expansion must make: which
markets to enter, when to enter those markets, and
on what scale.
 What are the different entry modes?
 What are their respective advantages and disadvantages?
 Evaluate the pros and cons of acquisitions versus
greenfield ventures as an entry strategy.
 Evaluate the pros and cons of using strategic
alliances with foreign competitors to achieve a firm’s
objectives in a global market place.
Chapter 14: Entry Strategy and
Strategic Alliances
 3 Basic entry decisions: which market to enter, when to
enter, and on what scale to enter?
 Entry modes:
 exporting, turnkey project, licensing, franchising, joint
venture, wholly owned subsidiary
 What determines entry modes?
 Core competencies and pressure for cost reduction
 Greenfield, acquisition or strategic alliances