Globalisation Flashcards
What is globalisation?
The widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social, cultural and financial aspects (Held & McGrew, 1993).
How many steps are there to internationalisation?
6 steps
What are the steps to internationalisation?
- Casual Involvement: Does no try to internationalise: one off trades.
- Indirect Export: does no intent to go internationally but is then by resellers.
- Direct Export: Firm has an export department.
- Foreign Involvement w/o Investment: Launch a product in a foreign market but doesn’t want to establish production but uses a domestic investor.
- Foreign Involvement w/ Investment: Firm finance the establishment of production facilities.
- Multi-national operations: Firms see globe as their market place with production & establishment all over the world.
According to Yip (2002) what 2 factors need to be balanced in order to have a good strategy to globalisation?
- The globalisation of the potential industry
2. The degree of standardisation which needs to be adopted to the selling strategy/product
What might influence the standardisation/adaption of a product trying to globalise?
- Political & regulatory elements may differ
- The economic development of the country
- Culture & market segments
- How the consumers, channels & advertising may differ
- Industry contains
- Product life cycle stage
What might influence the standardisation/adaption of a product trying to globalise?
- Political & regulatory elements may differ
- The economic development of the country
- Culture & market segments
- How the consumers, channels & advertising may differ
- Industry contains
- Product life cycle stage
What might influence the choice of a firm to globalise? And affect the choice to standardisation/adaption of the product/service.
- Political & regulatory elements may differ
- The economic development of the country
- Culture & market segments
- How the consumers, channels & advertising may differ
- Industry contains
- Product life cycle stage
PESTLE
What are some benefits of standardisation?
- Economies of scale; reduced costs
- Keeping brand image intact
- Might be no need to standardised
What are some elements that are considered when thinking about standardisation/adaption?
- Distribution channels
- Local tastes
- Demographic profiles
- Packaging (language/info requirements)
- Marketing
Explain Doole & Lowe’s 2008 risk and control to market entry?
- Indirect exporting: piggybacking/trading companies (LOWEST RISKxLOWEST CONTROL).
- Direct exporting: Distributors, agents, direct marketing.
- Cooperation Strategies: Joint ventures, strategic alliances
- Direct Investment: Acquisition (HIGHEST RISKxHIGHEST CONTROL)
Explain globalisation and the level of cashflow.
- More markets a business is in the more potential volume of sales
- Reduced costs through economies of scales = higher margins
Explain globalisation and the duration of cashflow.
- Product life cycles can be extended (incremental .v. radical, i.e. new product flavours)
Explain globalisation and the timing of cashflow.
- Has the potential for the rapid growth of new products (i.e. franchises)
Explain globalisation and the risk of cashflow.
- The risk is spread throughout various markets
- There is greater access to different types of technologies
What are some of the risks of globalisation?
- Higher competition
- Faster followers
- Vulnerable supply chains
- Political and economic instability
