Reasons for FDI
1. marketing and cost factor (1) Wider market access in order to maintain and increase their sales (2) To obtain low cost resources 2.attractive investment climate To invest where their investment is most protected and has the best chance to flourish. 3.ability to overcome trade barrier. Duties, tariffs, or other import restrictions
Assessment of licensing
Advantages: (1) licensor: require neither capital investment nor knowledge or marketing strength Royalty income provides an opportunity to obtain an additional return on R&D investments already incurred. (2) licensee: Offers a proven concept that reduces the risk of R&D failures Ongoing licensing cooperation and support enables the licensee to benefit form new development (3) for both Reduces the exposure to government intervention Protect intellectual property rights
Strategic alliance
One special form of joint ventures Two or more companies with a common business objective However, ongoing flexibility, (they can be formed, adjusted, dissolved rapidly in response to changing conditions) Usually, to collaborate in the achievement of a given project or objective Partners for one project may well be fierce competitors for another.
Stimuli to internationalize
2. Reactive stimuli (1) overproduction Overproduction—high inventories—developing an international market---but temporary activity—domestic market return to previous levels,international marketing activities are terminated (2) stable and declining sales Declining sales—to prolong the life cycle in international markets (in the past, success in developing countries, such as color TV, but now?) (3) saturated domestic market (similar to point 2)
Definition A parent company grants another, independent entity the right to do business in a specified manner. Similar to licensing. However, to force the franchisee to adopt a certain number of operating policies so that it can maintain a standard level of quality associated with its brand name. Hilton, McDonald's, Benetton, Gap etc

Assessment of Franchise
Similar to Franchising Please read p293
Foreign Direct Investment
FDI represents international investment flows which require property and plants
Entry modes of internationalization
Licensing and franchising Foreign direct investment (full ownership) (joint venture, strategic alliance) Acquisition Agent distributor Office
Change agent
(1) internal change agents Type and quality of management (managers who lived abroad, know foreign languages, or are interested in foreign cultures to investigate whether international marketing opportunities) New management—to involve all levels of management early on in the international planning process. Significant internal event( new product)
Licensing
Definition Under a licensing agreement, one firm, the licensor , permits another (licensee) to use its intellectual property in exchange for compensation designated as royalty (版税). patents, trademarks, copyrights, technology, specific marketing skills
Joint venture
Definition Are collaborations of two or more organizations for more than a transitory period Advantage (1) can pool resources and lead to a better outcome for each partner than if they worked individually (2) permit better relationship with local organizations-government, local authorities, or labor unions.
Full ownership
Definition To have 100 percent ownership. Management must evaluate how important total control is for the success of international marketing activities. Problem: Transfer of profits Response: to control full ownership Market instability
Joint venture
Disadvantages (1) conflicts of interest (2) problems with disclosure of sensitive information (3) disagreement over how profits are to be shared
Change agent
External change agent (1) foreign demand (2) competitor (competitive pressure) (3) domestic distributors (4) banks (5) chambers of commerce (6) government
Stimuli to internationalize
1. proactive stimuli (1) profits (2) unique products and a technological advantage( how long such a technological or product advantage will continue) (3) market information (foreign customers, marketplace, market situations) (4) economies of scale
Please read the appendix
Trademark licensing
Definition To permit use of the names of logos of designers, literary characters, sports teams, and movie stars. Example?