International strategy

Question 1

What does Ansoffs growth matrix contain?

Answer 1

Market penetration consolidation, New products and services, Market development & diversification.

Question 2

Internationalization as One Form of Market Development?

Answer 2

Market development refers to a strategy by which an organisation offers existing
products to new markets.

Question 3

Internationalization by Diversification?

Answer 3

Diversification refers to a strategy by which an organisation pursues new product offerings and new markets.

Question 4

Main Motivations for Internationalization

Answer 4

▪ Access to Customers
- Existing customers where these are already international, e.g., if you sell to Coca-Cola, you may have to internationalize your sales and production.
- New customers abroad.
▪ Economies of Scale
- e.g. through large-volume production, industrial giants were able to achieve the lowest possible cost per unit of production.
▪ Economies of Scope
- Scope refers to the number and variety of products and services a company offers, and the markets it operates.
▪ Low-Cost Production Factors
- e.g., in search of lower cost of capital, cheap energy, reduced government restrictions

Question 5

Drivers of internationalisation

Answer 5

Governance Drivers, Market drivers, Cost drivers & Competetive drivers

Question 6

Governance Drivers (and barriers)

Answer 6

• Barriers to trade – Tariffs
  – Quotas
• Standards
• IP/Patent regime
• Protectionism (subsidies, taxes)
• Currency controls
• Regulation
• Political stability
• Peace

Question 7

Market Drivers

Answer 7

• Similar customer needs (uniformisation of tastes)
• Global customers (globalised supply chains)
• Transferable marketing

Question 8

Cost Drivers

Answer 8

• Economies of scale
  – Small countries tend to have more
  international firms
• Absolute cost advantages
  – For example differences in the cost of
  labour
• Transport and shipping costs

Question 9

Competitive Drivers

Answer 9

• Growing interdependence ofcountries
  – In a globalized world it becomes crucial to have a strong int. strategy
• Globalized competitors
  – Big foreign competitors force you to think global

Question 10

What is Global Sourcing?

Answer 10

Global sourcing refers to purchasing services and components from the most appropriate suppliers around the world regardless of their location.

Question 11

Market selection theories / models

Answer 11

Pestel
Political, economic, social, technological, environmental & legal
& porters five forces

Question 12

Modes of entry

Answer 12

Exporting, Joint ventures and alliances, Licensing & owning.

Question 13

Exporting

Answer 13

Advantages
* No need for operational facilities in host country
* Economies of scale
* Internet facilitates exporting
opportunities

Disadvantages
* Lost location advantages
* Dependence on export intermediaries
* Exposure to trade barriers
* Transportation costs

Question 14

Joint Ventures and Alliances

Answer 14

Advantages
* Shared investment risk
* Complementary
resources
* May be required for market entry

Disadvantages
* Difficult to find good partner
* Relationship management
* Loss of competitive advantage
* Difficult to integrate and coordinate

Question 15

Licensing

Answer 15

Advantages
* Contractual source of income
* Limited economic and financial
exposure

Disadvantages
* Difficult to identify good partner
* Loss of competitive advantage
* Limited benefits from host nation

Question 16

Owning

Answer 16

Advantages Disadvantages
* Full control
* Integration and coordination possible
* Rapid market entry through acquisitions
* Greenfield investments

Disadvantages
* Substantial investment and commitment
* Acquisitions may create integration/ coordination issues
* Greenfield investments are time consuming and unpredictable