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International Management > 8 Modes Of Internationalization > Flashcards

8 Modes Of Internationalization Flashcards

1
Q

Four steps of classic internationalization process

A
  1. export through agent/distributor
  2. export through sales rep/sales and logistic subsidiary
  3. local assembly or packaging
  4. foreign direct investment
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2
Q

From passive exporter to active marketeer: examples

A
  • Toyota
  • Benetton
  • Mateus rose
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3
Q

What influences choice of export market?

A
  1. vicinity
  2. cultural identification
  3. past experience
  4. opportunity (e.g. export contract)
  5. rational analysis (market research)
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4
Q

Difference passive exporter and active marketeer

A

To sell in markets yourself you need:
- knowing customers/competitors
- understanding distribution
- anticipating trends

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5
Q

Traditional motivations for internationalization

A

1) need to secure key supplies
2) market seeking
3) access low cost factors

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6
Q

Emerging motivations for internationalization

A

1) scale economies
2) increasing R&D investments
3) shortening product life cycles
=> those three due to global interconnected structures
4) scanning opportunities/learning on global scale
5) competitive positioning (cross-subsidization)

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7
Q

Cross subsidization

A

Use profits from one market to offset losses/higher prices of other market

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8
Q

Born global companies

A

= instant international, micronational, international new venture
Immediately step onto world stage, without engaging in a sequence of dissimilar foreign markets first

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9
Q

When are firms born multinational?

A
  • when nature of business/ownership/past legacy makes them international right from start
    1) nature of business: Facebook, amazon
    2) ownership: critical techworks
    3) past legacy: AutoEuropa (VW automobile manurfacturing plant in Portugal), efacec (Portugueses multinational engineering)
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10
Q

What factors to consider when evaluating countries for international operations

A
  1. purpose
  2. modes of entry
  3. location factors
  4. where?
  5. information for decision
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11
Q

Purpose/modes of entry - evaluation criteria for internationalisation

A
  • greenfield
  • acquisition
  • licensing
  • start-up
  • joint venture
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12
Q

Purpose/modes of entry - evaluation criteria for internationalisation

A
  • greenfield
  • acquisition
  • licensing
  • start-up
  • joint venture
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13
Q

Greenfield - mode of entry

A

Build factory/office

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14
Q

Acquisition of a company is opposite of what in terms of mode of entry

A

Greenfield

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15
Q

Joint venture

A

Companies get tgt to explore specific business e.g. partnering with local business to create local business

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16
Q

Where to locate - evaluation of countries
-> spurious (irreführend) factors used

A
  • knowing local partner
  • cultural identification
  • geographic proximity
  • past experience
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17
Q

Where to locate - evaluation of countries: Two most used techniques, based on assessment and not spurious factors

A
  • Scanning
  • detailed analysis
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18
Q

Scanning - where to locate

A

Comparing several countries based on statistics and critical business variables (unacceptable conditions)
- speedy
- long list -> short list (for detailed analysis)

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19
Q

Detailed analysis - where to locate

A

Concentrate on the short list, deepen analysis (risks, opportunities)
- country visits with local distributors
- interview analysts
- evaluation possible partners
=> feasibility study: decision points before escalation of commitment/investment

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20
Q

Does scanning involve qualitative info or quantative

A
  • quantative
21
Q

Does a detailed analysis involve qualitiatve or quantitative info?

A

Quantitative and Qualitative info

22
Q

Escalation of commitment

A

Choosing alternative due to having invested a lot of resources and not based on its merits

23
Q

Information for decision - evaluation of countries

A
  1. opportunities for sales expansion
  2. needs of allocation of resources
  3. risks
  4. costs
24
Q

Opportunes for sales expansion - information for decision

A
  • Economic/demographic variables:
    1. product obsolescence
    2. prices
    3. competitors
    4. social inequalities
    5. cultural factors
    6. consumer tastes
25
Q

Needs of allocation of resources - information for decision

A
  1. Labor costs
  2. availability technicians
  3. loyalty of agents/distributors
  4. infrastructures
  5. communications
  6. warehousing
  7. govt attitudes
26
Q

Risks - information for decision

A

Political risk
Forex risk
Operational risk
Regulatory risk
Legal risk (e.g. effectiveness of courts)

27
Q

Location factors - evaluation of countries: three questions

A

1) where:
Sales
Production
Logistics
Support/admin
2) sequence of entry in diff countries
3) what resources to allocate (human, technical, financial resources, company infrastructure)

28
Q

Motivations for importers

A
  • specialization of Labor
  • input optimization (costs)
  • local unavailability
  • diversification against disruption
29
Q

Motivation for exporters

A
  • scales and profitability
  • productivity
  • economies of scale
  • diversification against disruption
30
Q

Most common problems and pitfalls of importing/exporting

A
  1. financial risks
  2. customer management
  3. international business expertise
  4. marketing challenges
  5. top management commitment (lack of)
  6. govt regulation
  7. trade documentation
31
Q

Risks of staying purely domestic

A
  • lower sales/profitability
  • lower fixed cost dilution
  • higher exposure domestic economic cycles
  • higher cost resource acquisition
32
Q

Factors impacting choice of location

A
  • limited resource
  • risk/oopportunities
  • higher/lower strategic fit
  • sustain/improve/extend competences
33
Q

Alternatives for resource allocation across locations

A

1) alternative graduate commitment
2) geographic diversification vs concentration
3) reinvestment vs harvesting

34
Q

Alternative gradual commitments

A
  • intermediates before M&A
  • export before local production
  • one country before expanding in the region
35
Q

Geographic diversification vs concentration (Alternatives for Resource Allocation Across Locations)

A

Diversification: rapid movement to many countries and gradual commitment to each one
Concentration: become among top 3 before moving to another region

36
Q

What alternatives for resource allocation do Industrie with high obsolescence risk follow

A

Diversification

37
Q

What alternatives for resource allocation do industries with high entry costs such as retail or local production follow

A

Concentration

38
Q

Reinvestment vs Harvesting (Alternatives for Resource Allocation Across Locations)

A

Reinvestment- having to make additional commitments in new location
Harvesting - divesting underperforming operations (usually takes too long due to fear of mgt consequences and bad publicity)

39
Q

Reinvestment vs Harvesting (Alternatives for Resource Allocation Across Locations)

A

Reinvestment- having to make additional commitments in new location
Harvesting - divesting underperforming operations (usually takes too long due to fear of mgt consequences and bad publicity)

40
Q

What alternatives for resource allocation does IKEA investing in the IKEA foundation (after producing Indian rugs with child labor) and sumol+compal investing in turnaround encompass

A

Reinvestment

41
Q

What alternatives for resource allocation does Burger King or Tesco discontinuing operations encompass

A

Harvesting

42
Q

Two factors making it easier for Burger King to enter new markets

A
  1. Corporate reputation of MNE - local suppliers and authorities want to work with them
  2. in pull industries - global brands have height consumer attraction
43
Q

MNE

A

Multinational entreprise

44
Q

Why does time to market make a difference when entering new markets

A

First movers higher chance of getting best locations, do not have to differentiate from competition

45
Q

Detailed country analysis: how to analyse risks and opportunities

A
  1. market dimension, sales growth potential
  2. cost of resource acquisition
  3. political and legal
  4. financial: foreign exchange rate volatility
  5. natural disasters
  6. competitive landscape
46
Q

How to avoid escalation of commitments

A

Check points to avoid bad decisions making

47
Q

Market sizing and revenue estimation is way to compare opportunities: how do you get to projected revenues

A

Projected revenues = estimated size of market x estimated market share in country

48
Q

Super bock: what would an unacceptable condition in the country scanning be

A

Does country allow 100% ownership of FDI (North Korea - no)

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