Internationalisation

Question 1

What is proactive internationalisation?

Answer 1

Looking to evolve a business model through value creation in non-home locations

Question 2

What is reactive internationalisation?

Answer 2

Adapting in response to environmental pressures upon the business which push the firm to operate in non-home locations

Question 3

Why go international/drivers and motives?

Answer 3

Porter’s Diamond -

Firm strategy

demand conditions

related and supporting industries

factor conditions

Question 4

What are factor conditions?

Answer 4

Factor conditions include the nation’s production resources, including infrastructure, labor force, land, and natural resources.

Question 5

Drivers of internationalisation?

Answer 5

Market demand, potential for cost advantages, government pressure and inducements, and the need to respond to competitor moves

Question 6

What are the reasons to go international?

Answer 6

Better international legal framework - less risky to deal with unfamiliar partners

Improvements in communications

Success of BRICs, and rise of MINTs generating new opportunities

Question 7

Reasons against internationalisation?

Answer 7

Trade barriers still exist, certain companies are not welcome in some countries (Huawei in US)

Many countries protect their leading companies from takeover by foregin competitors.

Question 8

International strategy considerations

Answer 8

Market drivers
Cost drivers
Competitive drivers
Government drivers

Question 9

What are market drivers for internationalisation?

Answer 9

Similar customer needs
Global customers
transferable marketing

Question 10

What are government drivers for internationalisation?

Answer 10

trade policies
technical standards
host government policies

Question 11

what are competitive drivers for internationalisation?

Answer 11

interdependence between countries
competitors’ global strategies

Question 12

what are cost drivers for internationalisation?

Answer 12

scale economies
country-specific differences
favourable logistics

Question 13

Why is it difficult to enter and survive in a foreign market?

Answer 13

They start with a liability of foreign-ness and face additional costs of doing business as dont have relationships with customers, suppliers and authorities which local companies will

Question 14

What is the value of Porter’s diamond?

Answer 14

To identify the extent to which companies can build on home-based advantages in relation to others internationally.

Question 15

International Value Systems

Answer 15

Cost advantages - labour and transportation costs, communication costs, taxation and investment incentives.

Unique local capabilities - such as expanding into countries where can form relationships with universities and research labs

Question 16

How to enter foregin markets/Entry strategies

Answer 16

Export

Licensing and franchising

joint venture

wholly owned subsidiaries

Question 17

What is exportation (entry strategy)

Answer 17

Advantage of requiring relatively less resources and risks while offering speedy entry and possiblities to fully exploit production economies in prevailining facilities
Disadvantage - transportation costs and possibility that products can be

low tradability, broad competitive advantage

Question 18

What is licensing and franchining (entry strategy)

Answer 18

contractual agreement where a local firm receives the right to exploit a product technology or a service concept commerically for a fee over a period of time.

Question 19

Advantages of licensing and franchising

Answer 19

Resource commitments can be kept low as local partners bear the primary financial and political risks while entry can be relatively quick

Question 20

Disadvantage of licensing and franchising

Answer 20

Potential lack of control over technologies and product and service quality

low tradability and narrow competitive advantage

Question 21

Market selection/where to compete?

Answer 21

The CAGE framework

Question 22

What is the CAGE framework

Answer 22

Talks about the cultural distance, administrative distance, geographical distance and economic distance between home and host country

Question 23

What are demand conditions?

Answer 23

the size and nature of the customer base for products

Question 24

what are related and supporting industries

Answer 24

upstream and downstream industries that facilitate innovation through exchanging ideas

Question 25

what is a joint venture

Answer 25

a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task

high tradability, narrow competitive advantage

Question 26

what is a wholly owned subsidiary

Answer 26

a corporation with 100% shares held by another corporation, the parent company

high tradability, broad competitive advantage

Question 27

How to compete in foreign markets/geographic advantage

Answer 27

Global strategy
Transnational Strategy
International Strategy
Multidomestic strategy

Question 28

Global strategy

Answer 28

Geogrpahically centralised value chain for standardised products

Economies of scale

Cross-cultural learning

Question 29

Transnational Strategy

Answer 29

Geographically dispersed stages of a unified value chain

Move material, people, ideas across national boundaries

Question 30

International Strategy

Answer 30

Centralised core competencies with minimum local adjustments

Import/export or licence existing products

Question 31

Mutlidomestic strategy

Answer 31

Geographically dispersed core competencies with extensive local adjustments

Franchise, joint venture, subsidiaries