Chapter 13-Assessing internationalisation Flashcards
what are international markets?
Markets outside the borders of the companys home country
what is the opposite of an international market?
a domestic market
in terms of international markets how may a business be involved with them?
target markets, operate in and trade in the country
what is targeting?
when a business focuses on a country to trade in prior to trading
what is operating?
having a physical base inside a country eg. shop or factory
what is trading?
Buying and selling in an international country
why might a firm voluntarily choose to work internationally
they may just want to grow inside another market
why might a firm have no choice to go international?
the market they are currently in may be saturated
why is internal trading possible?
- Internet/online trading
- Trading barriers reduced in EU countries and other trading blocks
- development of other markets leads to greater competition eg. china
what are the two reasons for why firms choose to internationalize
Strategic: Exploiting opportunities
Reactive: didnt plan to do so
what are some of the reasons for involving your business internationally in some way?
- reduces risk
- Taking advantage of economies of scale and the experience curve effects
- Boost profitability
- safeguarding domestic market share
- Making a competitive move
how moving your business internationally reduce the risk for your business?
if you are only competing in one market then anything that disrupts it will affect your overall market. However if you operate abroad as well then the effects of the disruption in your home market will not affect the business as much .eg 2011 earthquake in Japan would have more serious consequences for Toyota if it only operated in Japan.
how can moving your business into international markets allow you too take advantage of economies of scale and the experience curve effects?
as you grow you are able to produce more so can access better bulk buying deals etc and moving through the experience curve faster leads to costs being cut quicker
how can moving your business into international markets allow you to boost profitability?
- Lower wages for employees in developing countries
- Price advantages: Europeans are prepared to pay more for a car than in japan which is good for Toyota
- Might aswell make use out of your patented idea before it runs out
how can moving your business into international markets allow you to safeguard your domestic market share?
A business may have no choice to enter international markets in order to maintain its market share from other international firms
how can moving your business into international markets allow you to make a competitive move?
a competitor may be about to enter a new market which would allow it to gain a major advantage if it was allowed to operate there alone
what are some of the factors which influence the attractiveness of a market?
Size of the market Availability of finance Cultural and language barriers environmental restrictions political laws
what is off-shoring:
Where companies outsource or subcontract business activities overseas
what is re-shoring?
the reverse of off-shoring
what are the four ways of entering international markets?
Exporting
Licensing
Alliances
Direct investment
what is exporting?
when goods or services are produced in one country and sold in another
what are the advantages of exporting?
- reduces risk and little investment is required
- Makes use of existing factories etc so increases economies of scale
what are the disadvantages of exporting?
- may face import tariffs and other trade barriers
- transport costs
what is licensing?
A business arrangement where by one business gives another permission to manufacture its goods, offer its services etc for a specified fee
what is an alliance?
agreements between two or more firms to combine their strengths in other to undertake a mutually beneficial project
what is direct investment?
when a business takes over or merges with a business in a different country
what is a multinational?
a business that operates in several countries but is managed from one home country eg Nike
what does a pressure for local responsiveness mean?
means that a business needs to cater for the different lifestyles and expectations of consumers in different countries, this is likely to require a business to differentiate its products from country to country eg. in India Mcdonalds have the big tikka rather than the big mac
what do pressures for cost reduction mean?
Greater international competition means a firm must try to minimize its unit costs
how can a business reduce its costs?
offer a standardized product so that the business can benefit from economies of scale and experience curve advantages as quickly as possible
what are the four sections of Bartlett and Ghoshals multinational corporations grid?
International strategy, multi domestic strategy, Global strategy and transnational strategy
what does B+G say about their international strategy?
Involves taking products first produced for the domestic markets and selling them abroad with little customization available. Therefore local responsiveness and cost reduction are low
what does B+G say about their multi domestic strategy?
Focuses on increasing profit by customising a firms products so that they provide for the different tastes and preferences in different international markets. therefore high local responsiveness
what does B+G say about their global strategy?
Focuses on increasing profit by by benefiting from cost reductions that come from economies of scale , experience curve effects. therefore products will be standardised because there is a high pressure for cost reduction
what does B+G say about their transnational strategy?
Tries simultaneously to achieve lower costs through location economies, economies of scale and experience curve effects while also differentiating products across different international markets. High pressure for cost reduction and high pressure for local responsiveness
what international strategy is going to involve decentralisation?
multi domestic
what international strategy is going to involve centralisation?
global (and overall control of the business in international)
what are the impacts of internationalisation on the finance department?
- may have to adapt to work with different currencies if the business stays centralised
- Financial tasks may be spread around different branches in the world
- Trade laws limit the money a business can take out of a country
what are the impacts of internationalisation on the marketing department?
-If products need to be adapted for different countries then different advertising campaigns will be needed
what are the impacts of internationalisation on the operations department?
- If the business is producing standardised global products then the factories all need to work in the same way using the same materials and machinery in order to make products up to a consistent standard
- If the products are being adapted then the factories need to be made sure that each one runs efficiently even through they will have different processes
what are the impacts of internationalisation on the HR department?
- Appropriate strategies will need to be introduced to deal with inevitable redundancies that off-shoring is likely to bring
- Employment laws will need to be assessed in the different countries
give an example of a business which has offshored in ordered to get cost reductions?
Clarks
how has clarks responded to pressures for cost reduction?
- Shifted production abroad to countries with cheaper labour eg. China
- New tech lowers unit costs
how has clarks responded to pressures for local responsiveness?
- Delivery services aim to get products to the customer with 48 hours where ever they are in the world
- 24 hour helpline
- Localised websites for Spain, Franc, Germany, Netherlands, India, UK, Australia and the US
- Has native speakers which make sure all messages are appropriate for each international market
- Market shoes using data for that country eg. Germany buy their sandals in feb while france buy there late
