3.9.3 assessing internationalisation Flashcards
what is licensing?
when a business sells the right to an overseas business to produce and/or sell its products
what is internationalisation?
businesses moving operations or sales into different international markets
what is off-shoring?
the relocation of business activities from the home country to a different international location
what are some reasons for off-shoring?
access lower manufacturing costs
access better skill
make use of existing capacity overseas
make it easier to supply target international markets
what is re-shoring?
when a business moves production back to the domestic country
what are alliances / ventures?
occur when a domestic firm works in a partnership with an overseas business
what is direct investment?
investing overseas, perhaps to establish outlets or production facilities.
what is exporting?
where a business produces domestically and then sells overseasw
what are some reasons for operating in international markets?
accessing demand in suitable markets
cost reduction
exchange rates
trade barriers
political stability
what are some factors that influence the attractiveness of international markets?
size & growth of market
expected costs/availability of finance
cultural differences/similarities
degree of competition
impact of overseas growth on business
what is Bartlett and Ghoshal’s model?
examines the different approaches to managing business overseas, highlighting the key factors of cost pressures and local responsiveness.
low cost pressure and low local responsiveness?
international strategy
what is an international strategy?
similarities between markets and little gains from globally integrating. head office and main decisions will be based at home.
low cost pressure and high local responsiveness?
multidomestic strategy
what is a multidomestic strategy?
there are considerable variations between market demands and few benefits from globally integrating. portfolio of relatively independent companies running themselves.
high cost pressure and low local responsiveness?
global strategy
what is a global strategy?
occurs when there are significant economies of scale and similarities in terms of market demand. the business develops standardised products. products are designed and developed in domestic country.
high cost pressure and high local responsiveness?
transnational strategy
what is a transnational strategy?
balance of centralisation and decentralisation. staff move around the business globally to build shared values and knowledge.
potential benefits of internationalisation?
increased sales, revenue & profit
cheaper resources
economies of scale
developing different products for different markets, spreading risk
potential drawbacks of internationalisation?
downward pressure on prices
new producers from developing countries
increased need for investment to remain competitive around the globe
the threat of takeover
