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Mastering Global Expansion The OLI Framework Explained

The OLI Framework, or Dunning’s Eclectic Paradigm, aids businesses in determining the optimal method for international expansion by evaluating Ownership, Location, and Internalization advantages. It is particularly useful for multinational corporations to assess competitive advantages and profitability while minimizing risks. A case study of Starbucks illustrates the application of this framework in selecting strategic markets and maintaining brand control through partnerships.

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11 views9 pages

Mastering Global Expansion The OLI Framework Explained

The OLI Framework, or Dunning’s Eclectic Paradigm, aids businesses in determining the optimal method for international expansion by evaluating Ownership, Location, and Internalization advantages. It is particularly useful for multinational corporations to assess competitive advantages and profitability while minimizing risks. A case study of Starbucks illustrates the application of this framework in selecting strategic markets and maintaining brand control through partnerships.

Uploaded by

bomata8416
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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01/09

Mastering
Global
Expansion: The
OLI Framework
Explained
02/09
What is the OLI
Framework and Why is it
Important?
The OLI Framework, also known as
Dunning’s Eclectic Paradigm, helps
businesses determine the best way to
expand into foreign markets—whether
through Foreign Direct Investment (FDI),
exporting, or licensing. It provides a
structured approach by evaluating three
key factors: Ownership, Location, and
Internalization (OLI).

This framework is widely used by


multinational corporations to assess
whether entering a new market will offer a
competitive advantage and how they can
maximize profitability while minimizing
risks.

KEEP SWIPING
03/09

What factors determine a


company's international
expansion strategy?
The OLI Framework, developed by John
Dunning, helps businesses decide when and
how to expand into foreign markets.

What is the OLI Framework?

O – Ownership Advantage: What unique


assets does the firm have?
L – Location Advantage: Why choose a
specific market?
I – Internalization Advantage: Should the
firm control operations or outsource?

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04/09

Ownership (O) – What


Competitive Advantage
Does the Firm Have?
A company should possess unique assets
that give it an edge internationally. These
can be brand reputation, intellectual
property, proprietary technology, or strong
management capabilities.
Example: Starbucks’ strong brand,
exclusive coffee recipes, and premium
customer experience differentiate it from
competitors.

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05/09

Location (L) – Why


Choose a Specific
Country?
The target country should offer strategic
advantages like a large consumer base,
cost-efficient labor, access to raw materials,
or favorable regulations.
Example: Starbucks chose India due to its
rapidly growing middle class, increasing
demand for premium coffee, and cost-
effective supply chain opportunities.

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06/09

Internalization (I) – Should


the Firm Control
Operations or Outsource?
If outsourcing increases risks or costs, firms
should internalize operations through
direct investment rather than licensing or
partnerships.
Example: Instead of franchising, Starbucks
formed a joint venture with Tata Beverages
to maintain brand control while benefiting
from Tata’s local expertise.

KEEP SWIPING
07/09

Starbucks & the OLI


Framework: A Case Study
☕ Ownership Advantage: Starbucks’
global brand recognition, unique store
ambiance, and high-quality products give it
a strong competitive edge.
📍 Location Advantage: India’s rapid
economic growth, increasing urbanization,
and a rising café culture made it a strategic
market for Starbucks.
🔗 Internalization Decision: Instead of
franchising, Starbucks partnered with Tata
Beverages to navigate local complexities
while maintaining brand standards.

KEEP SWIPING
08/09

Key Takeaways:

The OLI Framework helps firms make data-


driven decisions about international
expansion.

A company must assess its competitive


strengths, strategic location benefits, and
operational control needs before entering a
foreign market.

Starbucks’ success in India highlights how


businesses can leverage partnerships while
maintaining brand identity.

ONE MORE
09/09

What is
your best
advice to grow
a business
internationally?
COMMENT BELOW

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