Internationalisation Theory & Practice

Question 1

What is the reason to internationalize

Answer 1

Mainly to take advantage of the location

Question 2

What are the two types of location advantages

Answer 2

Home and host country location advantages

Question 3

Home Country Location Advantage

Answer 3

Advantages that a firm has by the fact it is founded in this specific country and no other.

Question 4

Model Framework for Home Country Advantage

Answer 4

Porter’s Diamond Model

Question 5

What are a firm’s motivations of selecting a host country?

Answer 5

• Market Seeking
• Resource Seeking
• Efficiency Seeking

Question 6

The 2 Entry Mode Theories

Answer 6

The Uppsala Model
The Born Global Concept

Question 7

The Uppsala Model

Answer 7

This model describes entry as a process. Based on the Swedish research, the steps a company takes to internationalize are:
1. First gained experience in the domestic markets
2. Began to operate abroad in nearby markets and slowly penetrate away market
3. Chose to enter markets through export instead of using sales or manufacturing subsidiaries of their own
4. Only after several years of doing so the company establish wholly-owned or majority-owned operations.

Question 8

Main advantage of uppsala model

Answer 8

This model suggests increasing commitment to a market, but level of commitment can decrease or even cease if performance and prospect are not sufficiently met. This model allows us to to avoid large scale investment losses and test one market at a time.

Question 9

The Born Global Concept

Answer 9

With the increasing ease of access to informations, firms can directly enter even very distant markets almost immediately without having to build a domestic base.

Question 10

Features of Born Global Companies

Answer 10

• Born in small markets
• Supply Global Niche Market
• Have multinational customers and internationalize to follow them

Question 11

The three aspects of country attractiveness

Answer 11

• Country Risk Analysis
• Market Opportunities
• Industry Opportunities

Question 12

Types of Country Risks

Answer 12

• Political risks
• Economic Risks
• Operational Risks
• Cultural Risks

Question 13

Types of Market Opportunities

Answer 13

• Market Size
• Market Growth
• Market Quality

Question 14

Types of Industry Opportunity

Answer 14

• Industry Competitive Structure
• Resource Endownments
• Investment Incentives by the government

Question 15

CAGE model main idea

Answer 15

Firms from developed countries have less problems tapping into other developed countries compared to developing countries.

Question 16

Elongation of CAGE Model

Answer 16

• Cultural Distance
• Administrative and Political Distance
• Geographic Distance
• Economic/Wealth Distance