5 Market entry model - non-equity investment

Question 1

SME

Answer 1

small & medium size enterprises

companies with less than 500 employees

have fewer resources than larger firms & cannot simply buy up local firms to establish a foothold in a foreign market

Question 2

Non-equity entry investment

Answer 2

SMEs
tent to reflect relatively smaller commitments to overseas markets

Export and contractual agreement

Export, Licensin, Franchising, International contracts

Question 3

Equity investment

Answer 3

MNEs
normally require larger, harder to reverse commitment

Equity modes establish an organization overseas that the firm owns at least partially

Greenfield, Acquisition, Join Venture

Question 4

Entrepreneurs

Answer 4

Founder &/owners of new business or manger of existing firms who identify and exploit new opportunities

Question 5

International entrepreneurship

Answer 5

A combination of innovative, proactive and risk-seeking behavior that crosses national borders and is intended to create wealth in organizations

Question 6

Non-equity internationalization strategy - goods

Answer 6

seller:
direct export
indirect export via domestic intermediary
indirect export with foreign distributor or agent

buyer:
direct import
indirect import
subcontracting of manufacturing

Question 7

Non-equity internationalization strategy - Services

Answer 7

Seller:
Delivering services to customers abroad
attracting foreign customers to your location

Buyer:
Hiring consultants based abroad
subcontracting of services

Question 8

Non-equity internationalization strategy - Combination of Good, services & right

Answer 8

Seller:
licensor
Franchisor
Build long turn-key project 
build operate-transfer contracts 
Management contract 

Buyer:
licensee
Franchisee
Subcontracting
R&D contracts

Question 9

Sporadic export

Answer 9

Sporadic (or passive) exporting is usually prompted by unsolicited inquiries from customers who learned about the products

Question 10

Direct export

Answer 10

represent the most basic mode, capitalizing on economics of scale in production concentrated in the home country and affording better control over distribution

Question 11

Indirect export

Answer 11

exporting through an intermediary

Intermediaries are more common for standardized products and commodities, where competition focus on prices

Question 12

2 types of indirect exports

Answer 12

Local sale agent: receive a commission on sales

distributors: they buy the products and sell it in the local market at their own risk & using their own channels

Question 13

Export intermediary

Answer 13

link domestic seller with foreign buyers

Question 14

International service export

Answer 14

cross-border services –> services that are sent across national borders (airline)

Serving foreign visitors –> delivery of services to people living in other counties (tourism, education)

Question 15

Contractual models - Licensing

Answer 15

Firm A give to B right to use A’s proprietary technology, patent, trademark for a royalty fee paid to A by B. (Licensor give - licensee take)

Question 16

Contractual models - Franchising

Answer 16

Typically covers entire business concepts: not only the products, service & trademark, but also the marketing strategy, operation manuals & quality control procedure

Question 17

Contractual models - Turkey project

Answer 17

Project in which clients pay contractors to design and construct new facilities & train personnel

Question 18

Contractual models - Design & build contract (DB)

Answer 18

contract combining the architectural or design work with the actual construction

Question 19

Contractual models - Build-operate-transfer (BOT)

Answer 19

contract combining construction & temporary operation of a project eventually to be transferred to a new owner

Question 20

Contractual models - consortium

Answer 20

project base temporary business owned & managed jointly by several firms

Question 21

Contractual models - subcontracting

Answer 21

contract that involves outsourcing of an intermediate stage of a value chain

Question 22

Contractual models - R&D contract

Answer 22

a subcontracting of R&D between firms

Question 23

Contractual models - Management contracts

Answer 23

allowance to run a business, not owning it

Question 24

Internationalization model - uppsala model

Answer 24

model of internationalization process focusing on learning processes

essence of the model: internationalization as a dynamic process of learning

experiential knowledge shapes the firm’s ability to recognize business opportunities, its perception of risk & the cost of deepening its involvement

Question 25

Internationalization model - network internationalization model

Answer 25

overtime firm in a netwrok reinforces each others’ internationalization processes thus the expertise in a firm’s network grows both with new members joining, and with existing member gaining more experience

Question 26

Internationalization model - stages model of internationalization

Answer 26

internationalization sees as a slow stage-by -stage process an SME goes through

Question 27

Born global / international New Venture (INV)

Answer 27

stat up company that form inception seek to derive significant competitive advantage form the use of resources & the sale of outputs in multiple countries

Question 28

INVs strategies include

Answer 28

• building an entrepreneurial team with international competencies
• cooperation with internationally active firms
• Learning form other operating in the foreign country
• acquiring resources abroad

Question 29

Building resources for IB

Answer 29

Traditional internationalization process

• experiential learning and knowledge acquisitions
• network building and exploitation

Accelerated internationalization process
-building an entrepreneurial team with international experience
-learning for importing and inward foreign investors
learning form other operating in the foreign country
acquiring resources in the foreign country,

Question 30

institutional environments

Answer 30

ability of internationally inexperienced firms to engage in international business is to a large extent shaped by:

• the institutional environment in the home country
• institutional distance between the home and host counties