Inter Bus ( Lesson 7)
LESSON 7
Activity 1: Analyzing Entry Modes
With your team, review the entry mode activity that you completed during the Task. Together you should have five different examples of company entry modes for each member. Organize your companies into like modes. You may have to negotiate and look up more information on the company and entry mode if you have conflicting information. Discuss why each was chosen and what the pros and cons of the choice are.
Then design a poster that shows the companies categorized by entry mode, product/service provided, international region or regions, and unique management requirements.
Activity 2: Team Project
This project is designed to introduce you to the complexity of negotiations and to help develop your negotiating skills. You will work in teams to complete the project.
Background: A Western European automobile manufacturer is considering entering markets in Southeast Asia. The company wants to construct an assembly plant outside Ho Chi Min City, Vietnam, to assemble its lower-priced cars. Major components would come from manufacturing plants in Brazil, Poland, and China. The cars would then be sold in emerging markets throughout Southeast Asia and the Indian subcontinent. Managers are hoping to strike a $100 million joint venture deal with Vietnam’s government. The company would supply technology and management for the venture, and the government would contribute a minority share of financing to the venture. The company considers the government’s main contributions to be providing tax breaks (and other financial incentives) and a stable business environment in which to operate. Financial capital is flowing into Vietnam at a fair pace. The currency is strong, and inflation remains low. As with other nations in the region, investors are generally wary of the nation’s stability. The new auto assembly plant would boost the local economy, reduce unemployment, and increase local wages. But some local politicians fear the company might be interested only in exploiting the country’s relatively low-cost labor.
Directions:
In negotiating teams of three or four persons, half the teams will represent the company and the other half the government.
As a group, meet for 15 minutes to develop the team’s opening position and negotiating strategy.
Meet with a team from the other side and undertake 20 minutes of negotiations.
After the negotiating session, spend 15 minutes comparing the progress of your negotiations with that of the other pairs of teams.
Be ready to report to the whole group on the results of the negotiations, what barriers you encountered, and how you dealt with them.
Activity 3: Case Study Telecom
As a team read and analyze the case study at the end of Chapter 13 on Telecom. Use the following questions to guide your discussion but you will need to also do more research and dig deeper into the situation and issues.
What strengths did AT&T bring to its joint venture with Unisource?
Can you think of any potential complications that could have arisen in the AT&T–Unisource joint venture?
Assess the formation of Global One, Unisource, and other partnerships in this case.
What strategic factors might have influenced the entry mode choices that these firms made?
Solution Preview
Entry Modes
Entering an overseas market requires the company to make big investments and encompass strategies that will enhance the profits of the company abroad. Engaging in business abroad requires massive inputs from both the company and its staff. Firms which invest abroad usually have to go through various steps that make their viability important.
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