Firm Internationalization Through Trade Flashcards
Ways internationalisation has become easier
- trade liberalisation
- gatt agreements
- international chamber of commerce
- OLI paradigm
Trade liberalisation definition
The removal or reduction of restrictions or barriers on the free exchange of goods between nations. Eg tariffs, quotes
What is he GATT agreement
- Form after the war in 1948
- Is international trade agreement to boost economy’s after the war
- purpose to remove tariffs and quotas whilst retaining regulations
What is the international chamber of commerce
-A diverse group of companies around the world.
- has hundreds of members
It observes
-country’s openness to trade
-trade policy
-FDI openness
What is the Oli Paradigm
Stands for Owndership, Location and internalisation advantages
- believes all three are needed in order for a company to become successful
- if all three not present , a company should consider a different entry mode strategy
Company types
MNE
- bigger than 250 employees
- top 500 companies accounts for 60% of USA export
SME
- fewer than 249
- 2/3 exports have less than 20people
- 98% of exports are SME
Types of internationalisation
- incremental internationalisation
- born global firms
Incremental internationalisation definition
Exporting to most similar country
Characteristic of exports
- management commitment
- efficiencies
- cost structure
Why export
Profits
Productivity
Diversification
Types of importing
Input optimisers -price of goods/ quality Opportunistic -gap in the market Arbitrageurs -aces low cost vs high quality
Problems with importing
Finical risk
Customer management
Government regulation
Where firms get resources
Government agencies
Chamber of commerce
Export intermediaries
What is countertrade
Countertrade is where goods are exchanged instead of capital
What technology does
It helps advance the and level the playing field for SMEs through
- online platform
- software platform
- logistics platform
