Competitive strategies for firms in foreign Markets.
Competitive Strategies for firms that are attempting to move toward globalization can be categorized by degree of complexity of each foreign market being considered and by the diversity in a company product line.
Niche Market Exporting:
The primary niche market approach for the company that wants to export is to modify select product performance or measurement characteristics to meet special foreign demands. Combining product criteria from the both the U.S. and the foreign markets can be slow and tedious.
There are however a number of expansion techniques and Competitive Strategies that provide the US firm with the know how to exploit opportunities in the new environment.
For example copying product innovations in countries where patent protection is not emphasized and utilizing no equity contractual agreements with a foreign partner can assist in rapid product innovation.
Joint venture:
As the multinational Competitive strategies of US firms nature, most will include some from of joint venture with a target nation firms, AT&T followed this option in its strategy to produce its own personal computer by entering into several joint ventures with European producers to acquire the required technology and position itself for European expansion.
- Pool of Capital
- Patent
- Trade mark
- Management
- Production on Marketing Equipment.
This is also include in Competitive Strategies of a firms. A foreign branch is an extension of the company in its foreign market a separately located strategic business unit directly responsible for fulfilling the operational duties assigned to it by corporate management. including sales customers services and physical distribution.
Licensing/ Contract Manufacturing:
When a firm has right to start a specific business and a company sign a contract of manufacturing that product or a service in a foreign national market is called licensing.
Two major problems exist with licensing. One is the possibility that the foreign partner will gain the experience and evolve into major competitors after the contract expires. The experience of the some US electronics firms with Japanese companies shows that licensing gain the potential to become powerful rivals. The other potential problem stems from the control that the licensor forfeits on production, marketing and general distribution of its products.
Franchising:
Outlet controlled by the head office. A special form of licensing is franchising which allow the franchise to all a highly publicized product or services using the parent's brand name or trade mark carefully producers and marketing strategies.
Wholly owned Subsidiaries:
Parent company and Daughter company it require lot of investment parent company do to gain control and management efficiencies.
Wholly owned subsidiaries are considered by companies that are willing and able to make up the highest investment commitment to he foreign market. These companies insist on full ownership for reasons of control and managerial efficiency. Policy decision about local product lines, expansion, profits and dividends typically remain with the U.S senior managers.
