INTB (Market Entry Strategies)

What are the three primary factors that increase together across the spectrum of market-entry strategies?

Cost, involvement, and risk.

Which market-entry strategy involves the lowest level of involvement and cost?

Exporting

Term: Exporting

Definition: Moving physical goods directly from the home market to a new market with minimal investment in the foreign country.

In an exporting strategy, the home firm typically has a high dependence on _____.

Local distributors or retailers

What is the ownership structure of a firm using an exporting strategy?

The home firm retains $100\%$ ownership.

Term: Licensing

Definition: A legal arrangement where a home firm leases rights to intangible assets/intellectual property to a foreign firm.

What three types of intellectual property are commonly transferred in a licensing agreement?

Trademarks, patents, and technology.

How does a licensee typically compensate a licensor?

By paying royalties and license fees.

Which specific market-entry strategy is defined as 'licensing a business model'?

Franchising

In franchising, the _____ owns the local operation, while the _____ retains control over the brand and system.

Franchisee; franchisor

Term: Joint Venture

Definition: A market-entry strategy where ownership is shared between a home firm and an entry-market partner, usually creating a new legal entity.

Under what condition is a Joint Venture often preferred over other strategies?

When two sides bring complementary specialties or capabilities to the table.

How does the political system of a host country influence market-entry requirements?

Governments may mandate minimum host-market ownership requirements, often necessitating joint ventures.

Term: Equity Stake

Definition: An investment where a home firm purchases a percentage of ownership in a foreign local firm.

What is the primary difference between a 'minority' and 'majority' equity stake?

A minority stake is $

Term: Greenfield Investment

Definition: Building a brand new, $100\%$ owned operation from the ground up on new land or real estate.

Which market-entry strategy offers the highest level of control but also the highest risk?

Greenfield Investment

What type of market entry did Tesla use for the European market in 2013?

Exporting cars from the United States.

How was the arrangement for Tesla's gigafactory in Shanghai historically significant?

It was the first time the Chinese government allowed a wholly-owned foreign factory without a local joint venture partner.

Why did Disney enter the Japanese market through licensing with the Oriental Land Company rather than direct ownership?

To minimize investment risk while providing 'know-how' and brand rights to a local operator.

Which coffee company successfully used franchising to expand in Australia while Starbucks initially failed?

Gloria Jeans

The North American Coffee Partnership (NACP) is a joint venture between which two companies?

Starbucks and PepsiCo

In the NACP joint venture, what specific capability did PepsiCo provide?

Bottling, distribution, and manufacturing expertise.

The Volkswagen St. Thomas Battery Cell Gigafactory in Ontario is an example of a _____.

Greenfield Investment

What was a major reason for Starbucks' initial failure in the Australian market regarding its expansion speed?

They launched too rapidly and over-saturated the market before consumers developed an appetite for the brand.

How did the local coffee culture in Australia differ from the 'American style' Starbucks offered?

Australia has a sophisticated, community-based espresso culture rooted in Italian and Greek immigrant history.

Besides expansion speed, what 'Product' and 'Price' mistakes did Starbucks make in Australia?

They offered sugary, large-volume drinks that locals didn't like and charged higher prices than local cafes.

Following its initial retreat, who purchased the Starbucks locations in Australia in 2014?

The Withers Group

What is the target market for Starbucks' 'comeback' strategy in Australia?

Tourists and international students looking for a familiar brand.

In global marketing, what are the two main categories of product attributes?

Tangible and Intangible attributes.

List three examples of tangible product attributes.

Physical features, packaging, and labeling.

List three examples of intangible product attributes.

Customer service, reputation/status, and product warranty.

What are the three 'Product Layers' that make up a bundle of benefits for the customer?

Core product, Actual product, and Augmented product.

Concept: Core Product

Definition: The basic bundle of benefits that satisfies a customer's underlying needs.

Concept: Actual Product

Definition: The tangible physical product including its brand name, features, design, and quality level.

Concept: Augmented Product

Definition: Additional non-physical services and benefits like delivery, credit, warranty, and after-sale support.

In the Nike example, what constitutes the 'Augmented Product'?

Nike+ app integrations, exclusive member benefits, and community support.

What is the primary risk associated with a Joint Venture compared to a Greenfield Investment?

Loss of full control and potential for partner conflict, though investment costs are shared.

Which market-entry strategy involves the 'legal transfer/usage of intangible assets'?

Licensing

Why might a firm choose a majority equity stake over a minority one?

To ensure strong operational control and strategic decision-making presence.

What term describes the movement of physical goods directly from the home country to a new market?

Exporting

Contract manufacturing is positioned between _____ and _____ on the cost/involvement spectrum.

Licensing; Joint Venture

A firm that builds a factory from scratch in a new country is engaging in _____.

Greenfield Investment

How does 'franchising' differ from general 'licensing'?

Franchising involves licensing an entire business model and operational system, not just a brand or patent.

In terms of currency exchange, how are profits handled in a Joint Venture?

Profits are shared between partners and then converted/repatriated.

What is a 'Core Product' benefit of a high-end Hermes watch?

Status and the need for prestige/luxury.

Packaging and labeling are part of the _____ product layer.

Actual

Warranty and after-sale support are part of the _____ product layer.

Augmented

What is the ownership structure of a Greenfield Investment?

$100\%$ owned by the home firm.

Which entry strategy relies most heavily on local distributors for a physical presence?

Exporting

True or False: Licensing usually involves substantial movement of physical goods across borders.

False (it primarily involves the transfer of intellectual property).

What was the ownership requirement for foreign firms entering China traditionally?

A minimum $50/50$ ownership joint venture with a Chinese company.

Why did Volkswagen choose Canada for its Greenfield battery factory?

Strategic government investment in EVs and favorable currency exchange (pre-tariffs).

Term: Acquisition

Definition: Purchasing an existing company in a foreign market to gain an immediate presence and control.

What is a 'Core Product' need satisfied by Nike footwear?

The need for high-quality athletic performance and an emotional brand connection.

In the 'dating' analogy of market entry, what represents the commitment level of a Greenfield Investment?

Marriage (full commitment, shared future, high stakes).

In a licensing agreement, who is the 'licensor'?

The home firm that owns the intellectual property and grants usage rights.

What is the primary 'nature of presence' for a firm using a licensing strategy in a new market?

No operational presence; intellectual property presence only.

Franchising is characterized by _____ movement of proprietary materials compared to licensing.

Substantial

Which strategy allows a firm to 'learn' about a market with the least financial risk?

Exporting

Joint ventures are often used when a political system has _____ over the industry.

A lot of control

What is the 'Actual Product' layer of a Starbucks coffee?

The specific coffee blend, the branded cup, the design, and the quality of the drink.

What determines if an equity stake is classified as 'Minority Ownership'?

The home firm owns less than $50\%$ of the foreign firm.

What does 'repatriated' mean in the context of international business profits?

Sending profits earned in a foreign country back to the firm's home country.

Why is market research critical for choosing between 'Standardization' and 'Adaptation' in product decisions?

To ensure product attributes mesh with the specific cultural and behavioral expectations of the local market.

Which entry strategy involves 'job creation from the ground up' in the host country?

Greenfield Investment

What are 'complementary specialties' in the context of a Joint Venture?

Different skills brought by each partner (e.g., one provides technology, the other provides local distribution).

A licensing agreement for a logo is a transfer of a _____.

Trademark

In the Australian coffee market, what is a 'Flat White' or 'Australian Macchiato' an example of?

Specialty menu items that are part of the local coffee culture.

How does a 'merger' differ from a 'joint venture'?

A merger combines two companies into one; a joint venture creates a third, separate entity.

What is the 'Core' benefit of the North American Coffee Partnership products?

Convenience and quick caffeination outside of a coffee shop.

Equity stakes and acquisitions represent _____ levels of investment compared to joint ventures.

Higher

What happens to foreign currency when an exporter makes a sale?

It is converted back to the home firm's currency.

Product 'quality' and 'features' belong to which layer of the product model?

Actual Product

Term: Contract Manufacturing

Definition: A strategy where a firm provides technical specifications to a local manufacturer or subcontractor who then produces the goods.

Joint ventures involve _____ ownership between home and entry-market partners.

Shared

Why is Greenfield Investment described as needing to be 'well-justified'?

Because it requires the highest level of commitment and is very difficult to withdraw from without massive losses.

Which entry strategy relies on 'licensee pays royalties'?

Licensing

A firm that owns $75\%$ of a foreign subsidiary has a _____.

Majority Equity Stake

What is the primary intangible attribute of a brand like Rolex?

Prestige and status.