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IM_Chap 8_Entry modes and organisational structure

IM_Chap 8_Entry modes and organisational structure

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4 views

IM_Chap 8_Entry modes and organisational structure

IM_Chap 8_Entry modes and organisational structure

Uploaded by

anon_912873003
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 35

Chapter 9: Entry strategies

and Organizational design


MSc. Pham Ha Trang

[email protected]
Why firms decide to do business
across borders?
1. Entry strategies

Export

Non-equity
Licensing
modes
Contracts
Franchising
Entry modes
Joint Ventures
Equity based
Mergers & Acquisitions
modes
(M&A)
(Investment)
Wholly owned subsidiaries
1. Entry strategies

Export
1. Entry strategies
Export
1. Entry strategies
Export
Watch the video and answer the following questions:

1. What is the value of Vietnam’s export industry?


2. What are the most substantial exporting sectors (and how much) in
Vietnam?
3. What are the modes of transportation in Vietnam?
4. What are Vietnam’s largest importers?
5. What are the impacts of international trade on Vietnam’s exports?
6. What are the challenges for Vietnam’s export industry?
1. Entry strategies
Export
1. Entry strategies

Licensing
A license is an agreement that a licensor allows
licensees to use an industrial property
right/invisible assets (patent, trademark,
propriately information) in exchange for a fee

Property right /invisible assets: patent,


trademark, or proprietary information

Fee: usually based on sales (i.e. 1% of


revenue)
1. Entry strategies

Licensing
1. Entry strategies

Licensing
1. Entry strategies

Franchising
A franchise is a business arrangement
under which one party (the franchisor)
allows another (the franchisee) to
operate an enterprise using its
trademark, logo, product line, and
methods of operation in return for a
fee

Franchising is widely used in the fast-


food and hotel-motel industries
1. Entry strategies

Franchising
1. Entry strategies

Franchising
1. Entry strategies
Franchising
1. Entry strategies
1. Entry strategies

Joint Ventures
1. Entry strategies

Joint Ventures
1. Entry strategies

Mergers & Acquisitions (M&A)

The cross-border purchase or


exchange of equity involving two
or more companies
1. Entry strategies

Mergers & Acquisitions (M&A)


Grab acquired Uber’s Southeast Asia operations (2018)
1. Entry strategies

Wholly owned subsidiaries


An overseas operation that is totally owned and controlled by an MNC
1. Entry strategies
2. Organisational structures

• MNC’s are dramatically reorganizing operations to compete


effectively internationally
• The overall goal is to meet the needs of both the local market
and the home-office strategy of globalization
• As an MNC balances the pressures for global integration with
pressures for local responsiveness, an if-then approach can be
used
• If the strategy needed to respond quickly to the local
market changes, then there will be accompanying change
in the organizational structure
2. Organisational structures
Organizational Expectations of Internationalization
2. Organisational structures

International Division Structure


2. Organisational structures

Global Product Division Structure


2. Organisational structures

Global Area Division Structure


2. Organisational structures

Global Functional Structure


2. Organisational structures

Mixed Structure
2. Organisational structures
Transnational Network Structure
2. Organisational characteristics

• Although MNC’s have similar organizational


structures, they do not all operate in the same way
• Factors that help explain the differences include
overall strategy, employee attitudes, and local
conditions
• Of particular significance to this discussion are the
organizational characteristics of formalization,
specialization, and centralization
2. Organisational characteristics
Formalization

Formalization is the use of defined structures and systems in decision making,


communicating, and controlling
• Some countries make greater use of formalization than others
In recent years, this formal-informal characteristic of organizations has become
the focal point of increased scrutiny
• MNC’s now realize there are two dimensions of formality-informality that must
be considered: internal and external
There are two approaches that firms that must compete globally employ to
achieve the layering of competitive advantages
• Development of extensive internal networks of international subsidiaries in
major national or regional markets
• Forging external networks of strategic alliances with firms around the world
2. Organisational characteristics
Specialization

Specialization is the assigning of individuals to specific, well-defined tasks


• Horizontal specialization assigns jobs so individuals are given a particular
function to perform and stay within the confines of this area
Examples of jobs are customer service, sales, recruiting, training, purchasing,
and marketing research
When there is a great deal of horizontal specialization, personnel develop
functional expertise in one particular area
• Vertical specialization assigns work to groups or departments where
individuals are collectively responsible for performance
2. Organisational characteristics

Centralisation vs Decentralisation

• Facilitates coordination • Overburdened top


management
• Ensure decisions
• Motivational research
consistent with
favors
organization’s objectives
decentralization
• Top-level managers have • Permits greater
means to bring about flexibility
organizational change • Can result in better
• Avoids duplication of decisions
activities • Can increase control
Discussion
1. Entry strategies

How does culture impacts the choices of entry modes,


organisational structures and characteristics?

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