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Cross-cultural Marketing > B - Theories of Internationalization > Flashcards

B - Theories of Internationalization Flashcards

1
Q

Definition: Degree of internationalization

A

Degree of economic relatedness of a company, of an industry, or of an economy with other countries

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2
Q

Descriptive figures of degree of internationalization

Example

A

“foreign ratio” - Internationalization of coworkers

number of coworkers abroad / number of coworkers

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3
Q

Degree of internationalization

Multidimensional Approaches

Macharzina/Oesterle

A
  1. Dominant strategy (e.g. export, FDI)
  2. Organizational structure (e.g. export department)
  3. Success criteria (e.g. share of revenue made abroad)
  4. Corporate culture (e.g. ethno-, poly-, geocentric)
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4
Q

Degree of Internationalization

Multidimensional approaches

Kutschker

A
  1. number and geographical/cultural distance of country markets
  2. international structure of the value chain
  3. integration of foreign operation in the corporate association
  4. Pace of internationalization
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5
Q

Descriptive Approach

Description of the types of international companies

4 Phases / Stufen der Internationalisierung

A

Phase 1:
National Company
- everything within home country

Phase 2:
Export Company
- everything within home country but they export to and import from other countries

Phase 3:
International Company
- Foreign subsidiaries with all activities or at least some activities (e.g. subsidiary that only does procurement)

Phase 4:
Global Company
- Marketing and sales in every country but the other activities only in certain countries for all subsidiaries
- e.g. procurement in South Africa, production in Hungary, Finance in Switzerland

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6
Q

IMTG concept (Barlett/Ghoshal)

Definition: Export company

A

10% of the revenue made abroad

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7
Q

IMTG concept (Barlett/Ghoshal)

What does IMTG mean?

A

International Company
Multinational Company
Transnational Company
Global Company

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8
Q

IMTG concept (Barlett/Ghoshal)

International Company

Key characteristic

A

Strategic role of foreign business

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9
Q

IMTG concept (Barlett/Ghoshal)

International Company

Forces for local responsiveness and global integration

A

local responsiveness: low
- there’s no need to adjust to the local market

global integration: low
- everything is done in a centralized/standardised way everywhere over the world

Beispiel: McDonald’s

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10
Q

IMTG concept (Barlett/Ghoshal)

International Company

Characteristics

A
  • Managers tend to think of their foreign activities as remote outposts whose main role is to support the parent company by contributing incremental sales
  • focus on exploiting knowledge, new products or processes of the parent company by transferring them to foreign markets
  • foreign activities not systematically integrated in the MNC
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11
Q

IMTG concept (Barlett/Ghoshal)

Multinational Company

Key characteristic

A

Home country less important

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12
Q

IMTG concept (Barlett/Ghoshal)

Multinational Company

Forces for local responsiveness and global integration

A

local responsiveness: high
- Adjusted to local markets

global integration: low

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13
Q

IMTG concept (Barlett/Ghoshal)

Multinational company

Definition

A

A set of legally independent companies, sited in different countries, but affiliated with each other by capital investments, building an economic entity and ruled by a homogeneous business intention.

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14
Q

IMTG concept (Barlett/Ghoshal)

Multinational company

Characteristics

A
  • internationalization mainly by direct investments
  • holding company coordinates, integrates, and controls subsidiaries based on its participation rights
  • leadership and control are not dominated by one nationality
  • decentralized decision-making
  • shareholders from many nationalities
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15
Q

IMTG concept (Barlett/Ghoshal)

Transnational company

Key Characteristic

A

Network-like organization

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16
Q

IMTG concept (Barlett/Ghoshal)

Transnational company

Forces for local responsiveness and global integration

A

local responsiveness: high

global integration: high

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17
Q

IMTG concept (Barlett/Ghoshal)

Transnational company

Characteristics

A
  • strict, complex control and coordination
  • strategic decisions are not taken single-handedly by the holding (jointly developed)
  • lively exchange of technology, capital, employees and material
  • interdependent units
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18
Q

IMTG concept (Barlett/Ghoshal)

Global company

Key characteristic

A

Considers the world market as its market and generates a substantial share of its turnover worldwide

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19
Q

IMTG concept (Barlett/Ghoshal)

Global company

Forces for local responsiveness and global integration

A

local responsiveness: low

global integration: high

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20
Q

IMTG concept (Barlett/Ghoshal)

Global company

Characteristics

A
  • effect and benefit of the global orientation
  • economies of scale -> learning/experience curve effect
  • systematic usage of the advantages of site
  • exchange of skills and knowledge between the sub-systems of the company
21
Q

IMTG Concept

The Global Integration / Local Responsiveness Framework (I/R Framework)

Global integration

A

Forces for integrations:
Goal to decrease costs and to optimize ROI

Centralized management of geographically distributed activities

Further drivers: high technology intensity, established reputation, strategic coordination

(drives economies of scale)

22
Q

IMTG Concept

The Global Integration / Local Responsiveness Framework (I/R Framework)

Local responsiveness

A

Forces for responsiveness:
Preferences of consumers, market structure, legal regulations

Autonomous decisions of foreign subsidiaries, which satisfy local needs

Predominantly in sectors, where goods and services have to be adapted to local needs

(drives economies of scope)

23
Q

IMTG Concept

The Global Integration / Local Responsiveness Framework (I/R Framework)

Reasons for global integration

A
  • bigger markets
  • lower costs
  • economies of scale
  • sharing technology, sharing knowledge
24
Q

IMTG Concept

The Global Integration / Local Responsiveness Framework (I/R Framework)

Reasons for local responsiveness

A
  • law
  • taxes
  • extend customer segments -> adjust to local markets
25
Q

IMTG Concept

The Global Integration / Local Responsiveness Framework (I/R Framework)

Example: Applying the I/R Framework to the Retailing Sector

A

LR high / GI low:

  • furniture
  • home improvement
  • books

LR high / GI high:

  • food
  • Media (music, movies)
  • cosmetics
  • drug stores
  • telecommunication

LR low / GI high:

  • consumer electronics
  • appliances
  • fashion
26
Q

IMTG Concept

The Global Integration / Local Responsiveness Framework (I/R Framework)

Example: Applying the I/R Framework to the Retailing Sector

Forces for global integration and local responsiveness

A
  • converging customer needs
  • costs
  • trade liberalization
  • global competitors
  • ICT technologies
  • heterogeneous demand
27
Q

IMTG Concept

Classification of Marketing Strategies

International Marketing Strategy

A

Undifferentiated use of the same marketing mix in all countries

28
Q

IMTG Concept

Multinational Marketing Strategy

A

Each country/market has its own marketing mix

29
Q

IMTG Concept

Global Marketing Strategy

A

Headquarter: Development of global marketing strategy

Undifferentiated use of global marketing mix in all countries

30
Q

IMTG concept

Transnational Marketing Strategy

A

Headquarter: Pattern standardization guidelines for marketing strategy

Patterns are transferred to each country/market (adaption only if necessary)

31
Q

IMTG concept

What means glocalization?

A

Think globally, act locally

32
Q

EPRG Model (Perlmutter)

What does EPRG stand for?

A

Ethnocentric Company
Polycentric Company
Regiocentric Company
Geocentric Company

33
Q

EPRG Model (Perlmutter)

Ethnocentric Company

A

Alignment to the home country

34
Q

EPRG Model (Perlmutter)

Polycentric Company

A

Orientation at the respective market

35
Q

EPRG Model (Perlmutter)

Polycentric company

Orientation:
Belief:
Working style:

A

Orientation:
Sensibility to the differences of the markets

Belief:
Worldwide diverse management methods, which are equally valide

Working style:
Subsidiaries develop their own procedures

36
Q

EPRG Model (Perlmutter)

Regiocentric Company

A

Orientation at homogeneous country groups

37
Q

EPRG Model (Perlmutter)

Regiocentric Company

Orientation:
Belief:
Working style:

A

Orientation:
Cluster of similar country markets

Belief:
As much standardization as possible, as much differentiation as necessary

Working style:
Regional-typical procedures

38
Q

EPRG Model (Perlmutter)

Geocentric Company

A

Orientation at the global market

39
Q

EPRG Model (Perlmutter)

Geocentric Company

Orientation:
Belief:
Working style:

A

Orientation:
World market

Belief:
Cultural differences are insignificant, optimization of the procedures of the entire company as priority

Working style:
Holding and subsidiary develop a common, company-typical style of working

40
Q

Comparison of concepts

Critical Evaluation

A
  • even within a company are different attitudes (e.g. marketing vs. production)
  • Stage model too rigid (international orientation can change)
  • geocentrism as “highest stage” always desirable or achievable?
  • EPRG-Model was developed on the basis of exploratory studies
  • no patent solution
41
Q

Uppsala-Model of Internationalization

Internationalization as learning process

A

Gradual Internationalization (by the interplay of knowledge, experience, and market attachment)

Dynamic factors:

  • current business activities
  • commitment decisions (commit to their markets)

Static factors:

  • Market commitment, intensify activities in this market (e.g. adaption)
  • Market Knowledge (perceived and objective)
42
Q

Uppsala-Model of Internationalization

Internationalization as learning process

Psychic distance chain

A

Psychologically close, e.g. Germany and Denmark

43
Q

Eclectic Theory of Dunning (1980)

Competitive advantages

A

Ownership Advantage
Advantage of internalization
Advantage of site of foreign location

(OLI - Paradigm: ownership, location, and internalization advantage)

44
Q

Eclectic Theory of Dunning (1980)

Competitive advantages

Ownership Advantage

A
  • product innovation
  • patents/brands
  • technological / Know-How lead
  • all advantages of established companies over newcomers (including economies of scale, advantages gained through specialization, economies of scope)

-> company should have something that other companies don’t have, otherwise no reason for going international

45
Q

Eclectic Theory of Dunning (1980)

Competitive advantages

Advantage of Internalization

A

Can the company take usage of the ownership advantages in the foreign market in a better way than through granting of licenses?

Avoidance of …
… transaction costs and negotiation costs
… costs of enforcement of property rights
… costs of control

Transaction costs - is it better to do everything in the company or go to the market?

46
Q

Eclectic Theory of Dunning (1980)

Competitive advantages

Advantage of site of foreign location

A

Does the foreign site offer better conditions for realizing the existing ownership and internalization advantages than the homeland market?

  • market size and market growth
  • political stability
  • infrastructure
  • tax system

Is there a specific reason for going to a different market?

47
Q

Eclectic Theory of Dunning (1980)

Decision process

A

Advantage -> market entry strategy

The advantage determines the market entry strategy

48
Q

Eclectic Theory of Dunning (1980)

Decision Process

Phases

A

Intention of realizing profits

  • > Internationalization
  • > Necessity of competitive advantage (because domestic competitors have an advantage on site)
Ownership advantage?
--> if no: no internationalization
--> if yes: 
Advantage of internationalization?
--> if no: Licensing (not much capital needed)
--> if yes:
Advantage of site of foreign location?
--> if no: Export
--> if yes: foreign direct investment

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