Fabricación de los electrodos

One of the most important topics in international business research is the type of market entry mode (Ahsan & Musteen, 2011). When expanding into foreign markets businesses have several options for market entry. The most common options for organisations contemplating international expansion include exports, licensing or franchising, joint ventures (JV), and wholly-owned subsidiaries (WOS) (Ahsan & Musteen, 2011; Horstmann & Markusen, 1987). As discussed in Chapter Two different modes of market entry suit different organisational stages and requirements, where one organisation might benefit from exporting or licensing formats another might be more suited to an internalisation structure, such as a WOS (Ahsan & Musteen, 2011; Grosse & Behrman, 1992; Horstmann & Markusen, 1987).

84 | P a g e For automotive marques in the Anglo-sphere (New Zealand, Australia, Canada, UK, USA, and South Africa) the analysis of data demonstrates that there are two dominant market entry types used, licensed distributors (46%) and wholly-owned subsidiaries (47%). Licensed distributors (licensing) are considered a non-equity mode of entry (from the perspective of the parent) where resource requirements, organisational control, expected future returns, and risk exposure are all low (Ahsan & Musteen, 2011; Horstmann & Markusen, 1987). At the other end of the spectrum, wholly-owned subsidiaries are a full-equity mode of entry with high resource requirements, organisational control, expected future returns, and risk exposure (Ahsan & Musteen, 2011; Horstmann & Markusen, 1987). Uncertainty factors in the foreign country are commonly said to be large determinants of market entry type. Macroeconomic, political, institutional, legal, cultural, and market factors are all uncertainty factors, the two most commonly investigated are cultural and institutional (Ahsan & Musteen). Typically, as the level of uncertainty increases the desire for a high control mode (such as WOS) decreases, whereas, when uncertainty levels are low full-equity entry types are preferred (Ahsan & Musteen, 2011; Grosse & Behrman, 1992; Horstmann & Markusen, 1987). Additionally, target market size is another determinant of entry type, a large target market will usually attract WOS and a small target market will attract non-equity entry modes (Ahsan & Musteen, 2011; Grosse, 1985).

The research findings show that automotive marques predominantly use one main market entry mode (55% of marques) across all of the markets analysed and, if applicable, a subsequent method less often (35% of marques), where change of market entry mode was observed. The literature would suggest that the marques who use licensing as a method of entry are minimising risk and resources, and/or have a small target market, whereas, marques using a WOS method are targeting a larger market, trying to reduce internal uncertainty by having a high level of control, and/or are taking advantage of future growth opportunities (Ahsan & Musteen, 2011). The countries with the highest percentage of WOS were the UK (60%), USA (58%), and Canada (54%). These countries have low levels of political or legal uncertainty; all have large markets of their own; and, are geographically close to other large or emerging markets which present growth opportunities (du Venage, 2015; Oh, 2014; Pavlínek, 2015). WOS in Australia (48%) and New Zealand (42%) are also the dominant method and both countries are politically and economically stable but have smaller markets than the former, and are geographically more isolated (Lall, 1980; Mackay, 1993). In South Africa, which is now also a politically stable country with potential for market growth (du Venage, 2015) WOS were the subsidiary structure of 40% of the marques studied. Based on this analysis the following assumptions can be made: (1) marques who choose non-equity methods of market entry are seeking to reduce resource costs and/or have a small target market (low sales volume/market share); and, (2) marques who establish

85 | P a g e wholly-owned subsidiaries have a large target market (high sales volume/market share), see opportunities for growth, and/or seek to reduce internal risk.

The research also suggests that the market entry method is not necessarily a determinant of success but may be so. For example, in 2013, 20% of the top 10 marques in New Zealand, Australia, and the UK were licensed distributors, none of which were ranked in the top three. This indicates that non- equity market entry in the automotive industry is not necessarily restrictive to sales success. Additionally, Toyota, the world’s top manufacturer (Statista, 2015) is consistently in the top five marques across New Zealand, Australia, USA, and Canada but ranks 9th _{in the United Kingdom}

consecutively from 2011-2013. Toyota globally sells 62% more vehicles than Ford yet in the United Kingdom Ford registers approximately 250% more vehicles than Toyota (Statista, 2015). Interestingly, The United Kingdom and New Zealand markets have anomalies compared to the other markets studied. The United Kingdom is the only market to have three ‘luxury’ marques (Audi, BMW, and Mercedes Benz) feature in the top 10 and Ford has held market leadership for 38 consecutive years (@FordOnline, 2015). This phenomenon of market leadership also occurs in New Zealand where Toyota has held the market leader title for each of the last 27 years in succession (Toyota New Zealand, 2015). These results suggest that other country specific market factors in the automotive industry appear to play a role in the success of automotive marques.

While this result cannot be argued to be definitive, and exceptions appear to occur, a WOS appears to result in greater market share in the long term. While not studied in detail over the last four decades, in New Zealand license agreements for distribution as a market entry mode have been replaced by a wholly-owned subsidiary over time, of which Toyota New Zealand is no exception. This result further supports the internalisation framework promoted in the international business literature. It also raises questions over the longevity of current licensed market entry modes of some franchises, in particular Hyundai in the New Zealand market. The current distributor management model appears to be transitory at best.

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