Internationalisation Flashcards
Why do businesses operate abroad? 3 reasons
Expand into new markets
Expertise
Cheaper costs
What are 3 reasons that make an international market attractive to operate in?
Avoid tariffs
Growth opportunities
Higher productivity
What are the 4 ways of expanding/selling abroad?
Exporting
Licensing
Alliances
Direct Investment
What is exporting?
Selling goods from one country to another
What is licensing?
Business allows another company to make their product/use their brand in return for a fee
What are alliances?
Formal agreement between 2 companies
What is direct investment?
When one company buys another company
What is an advantage of exporting?
You get all the profits
What is a disadvantage of exporting?
Need to have a good distribution network
What is an advantage of licensing?
Increases brand visibility
What is a disadvantage of licensing?
Risk of reputation ruined
What is an advantage of alliances?
Share resources and they might have stuff you need e.g knowledge
What is a advantage of direct investment?
More control of the way you sell the product
What is a disadvantage of alliances?
Less control so risk of conflict
What is a disadvantage of direct investment?
High up front costs
What is offshoring?
When a company moves some of its business activities to another country
What is restoring?
The process of bringing back manufacturing or production operation to a company’s country of origin or nearby region
What are 2 challenges for reshoring?
Higher costs
Supply chain issues
What is an example of a business that did restoring?
Ford
