Chapter 2 - Process of internationalization of the company Flashcards
Determinants for selection of target countries
- Factors related to the firm itself: market positioning, new product development
- Factors related to country: cost of productive factors, economic policy
- Factors related to industry: level of rivalry between companies, suppliers
definition of competitive advantage & factors
characteristics of a firm that differentiates it from others by placing it in a superior comparative position
- must be related to key success factor in market
- must be substantial to make a difference
- must be sustainable facing changes in environment
Porter’s diamond - condition factors
endowment of relevant & specialized production factors that are scarce and difficult to immitate
Porter’s diamond - home demand conditions
domestic demand gives their companies a clearer or earlier picture of the new needs of customers
Porter’s diamond - related & supporting industries
presence of other sectors that supply, collaborate or provide their services to the reference sector
Porter’s diamond - firm strategy & structure
inner rivalry pressures competitiveness
definition of industrial districts and clusters
agglomerations to firms connected by the same economic activity and located in a specific geographic environment
on advanced economies
- definition: postindustrial countries characterized by high per-capita income, highly competitive industries and well-developed commercial infrastructures
- who: Australia, Canada, Japan, New Zealand, USA, most European countries
- purchasing power, few restrictions on international trade & investment & host the world’s largest MNEs
on developing countries
- definition: low-income countries characterized by limited industrialization & stagnant economies
- Africa, most of south Asia, Latin America
- highly developed in historical/cultural terms but hindered by high infant mortality, malnutrition, short life expectancy, illiteracy
on emerging market economies
- former developing economies that have achieved substantial industrialization
- mainly in Asia, Eastern Europe, BRIC
- rapidly improving living standards & growing middle class with rising economic aspirations
on ethnological/silent language
cultures differ in the way they communicate through non-verbal means
- perception of time: sequential and scarce (germanic culture) fluid, circular (arabic culture)
- perception of space: social distance
- material goods: importance of financial wealth as a sign of status
- friendship: short, superficial
- agreement: western in writing, eastern verbal
- context
HOFSTEDE’S research power distance definition
extent to which people in certain societies accept inequality in power distribution
HOFSTEDE’S research individualism/collectivism definition
individuals look after their own or immediate relative interests
HOFSTEDE’S research uncertainty avoidance definition
ambiguity & unpredictability is not accepted and there is a continual search to codify, plan, regulate the environment
HOFSTEDE’S research masculinity/femininity definition
high value given to assertive, competitive behavior
definition country clusters
grouping countries according to their degree of geographical, linguistic, religious, historical and social proximity
definition country risk
exposure to potential loss or adverse effects on company operations and profitability caused by developments in a country’s political or legal environments
definition globalizer forces
forces that lead companies to globalize their activities. this causes homogenization of its activities and concentration of resources
definition of fragmenter forces
other forces favor the dispersion of activites and adaptation to local markets
on global industry
there are a few major competitors that dominate global competition, the supply structure is specialized, there are no significant barriers
on multidomestic industry
competition is very fragmented, there are many competitors and are present in all countries
why is a country attractive?
it’s attractive if, in investing in that country, an investor gets a return equal or higher than his/her risk-adjusted weighted cost of capital
market opportunities are assessed based on…
based on
- market size
- market growth
- quality of demand
on industry assessment
industry assessment measures how easy it is to compete in the country:
- quality of competitive climate
- quality of industry competitive structure
- investment incentives granted by governments
the resources that attract foreign investors fall into 3 broad categories:
- natural resources:
- human resources:
- infrastructure and support industries:
on country image
IC (country image) = Product/country + Communicative action policy
dimensions of country image PEST
1) political
2) economic
3) social
4) technological
on brand Spain
- country’s image is evolving positively, but is mostly confusing, stereotyped and insufficient to clearly support the choice
- new positioning must take into account the need to convey that Spain is a country which is enthusiastic, creative and innovative
