9.2 International involvement options
Global companies such as Unilever, Coca-Cola and Matsushita Electric may operate in as many as 75 countries. The structural problem of holding together such huge complexes scattered thousands of kilometres apart is immense. We looked at organisation structure in Chapter 8 and we touched upon different forms of involvement with other countries in Chapter 4 when we examined foreign direct investment (FDI). In this chapter we are concerned with those different forms of involvement under two headings: entry modes and strategic alliances.
However before beginning discussions on the different entry modes we must first make a number of decisions on which country to enter. There are about 230 countries in the world all representing differing opportunities and difficulties for entry. As your textbook does not deal comprehensively with the process of market selection, after reading the first few pages of Hill (2005) work through the accompanying reading. The reading focuses specifically on the market selection process including the market screening stage which is the process of narrowing country selection into those offering most opportunities.
In your text
Hill 2005, Chapter 14, pp. 479-486.
Reading 9.1
Gould, R. 2003, 'Overseas sales. But in which country?', Management Today , April, pp. 20-22.
Activity 9.1
Ay this point it may be worth reminding yourself of the reasons managers decide to 'go international' in the first place. If you are unsure, return to Reading 7.4 from Chapter 7 and check the reactive and proactive motivations for "going international".
You should be aware that the typology of entry modes and strategic alliances varies from author to author. For example, some authors use the term 'strategic alliances' to include licensing, joint ventures and consortia. Hill (2005) uses the term 'mixed entry mode' to include joint ventures because joint ventures are also a form of FDI. Let's not worry too much about the 'box' in which the various entry modes and strategic alliances belong: we will use the Hill typology, beginning with the six entry modes described in Chapter 14 of the textbook.
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