September 19 Flashcards
Reasons to go international (8), (Damian)
- Bigger markets
- Higher revenues
- Higher recognition / brand awareness
- Potential customers / business partners
- Variation
- Decrease the costs
- Decrease taxes
- Labour markets, qualified personnel
Chances / Risk of going International
Chances:
- Economies of scale
- Make us of potential of foreign market
Riks
- Language differences
- Differences in marketing culture
- Political risks
- FX-Rates
- Business risk, localization risk
- ethical rates
- cultural risks
- regulation change
- corruption
Name the “Risiks in International Business” (exact Name)
- cross-cultural risk
- country risk
- currency (finanicial) risk
- commerical risk
Risks in Int.Bus.: cross-cultural risks (4)
- cultural differences
- negotiation patterns
- decision-making styles
- ethical practices
Risks in Int.Bus: Country Risk
- harmful or unstable political system
- laws and regulations unfavorable to foreign firms
- inadequate/underdeveloped legal system
- bureaucracy and red tape
- corruption (and other ethical blunders)
- government intervention, protectionism (trade, and investment barriers
- mismanagement or failure ot the national economy
Risks in Int.Bus: Commerical Risk
- weak partner
- operational problems
- timing of entry
- competitive intensity
- poor execution of strategy
Risks in Int.Bus: Currency (Financial) Risk
- currency exposure
- asset valuation
- foreign taxation
- inflationary and transfer pricing
Elements of international Business (6)
- Globalization of markets
- Foreign market entry strategies
- Participants (firms, intermediaries, facilitators, governments)
- International business risks
- International investments
- International trade
International Business vs. Domestic Business
International
business….
1.… is conducted across national borders.
2.… uses distinctive business methods.
3.… is in contact with countries that differ in terms of culture, language, political system, legal system , economic situation, infrastructure, and other factors.
–> Essentially, international business faces four unique types of risk
Reasons to go International (9), HS19
1. Growth opportunities through market diversification 2. Higher margins and profits 3. New ideas about products, services and business methods 4. Co location with international consumers 5. Proximity to supply sources, benefit from global sources advantages, or gain flexibility in product sourcing 6. Access to lower cost or better value factors of production 7. To develop economies of scale in sourcing, production, marketing and R&D 8. Effectively compete internationally or toward the growth of competition in the home market 9. Invest in a potentially rewarding relationship with a foreign partner
Begriffserklärung: Multinational Enterprises (MNE’s)
Firms that are headquartered in one country but have operations in one or more other countries
Begriffserklärung: Small & Medium (Int.) Enterprises (SM(I)E’s
- Smaller than MNE’s, but with an international presence, Usually suppliers for MNE’s
- Competitive advantage comes from innovation, technology, agility, talent and efficiency
Begriffserklärung: Born Global Firms
- young, entrepreneurial firms that undertake substantial international business at or near its founding
Begriffserklärung: Non-Government Organizations: NGO’s
-Pursue special causes and serve as advocates for social issues, politics, education, and research
Entry Modes: Pragmatic vs. Stategic Approach
Pragmatic Approach:
The manager uses a workable entry mode for
each foreign market, which means that the
manager use different entry modes depend on
the time stage or the business stage
Strategic Approach:
The manager systematically compares
all of the entry modes and evaluates the value
of each before any choice is made; requires
resources, capital and time
