Week three - internationalisation Flashcards
when doees internationalisation start
when a company incorporates the foreign market as a reference market for planning or strategic decisions OR when a company starts business outside its natural geographic market
advantages of internationalisation
- diversification of risks
- increasing sales volumes
- reductions of costs
- better knowledge of foreign markets and customers
what are the pro-active reasons for internationalisation
- profit
- economies of scale
- unique products
- technological advantage
- exclusive info
- dynamic manager
what are re-active reasons to for internationalisation
- competitive pressure
- reduction in domestic sales
- exhaustion of domestic market
- overcapacity
- overproduction
what are the stages of internationalisation and their objective
1) internal analysis and decision to internationalise
- objective: identify firms strengths and weaknesses
2) external analysis and setting the strategic lines
- objective: identify opportunities and threats of foreign markets
what are the stages within the internal analysis for internationalisation
- firms human resources (e.g. language barrier)
- production capacity (adequate infrastructure)
- financial resources (to start exporting)
- logistic organisation
- capacity to adapt the firms product
what are the stages within the external analysis of internationlisation
- selection of a medium or long term market strategy (concentration vs diversification)
- selection of markets and their research
- selection of mode of entry
development of the international marketing plan
what is meant by concentration (market strategy)
the company focusses its resources on a small number of markets to get continuous and growing sales volumes in those markets
what is meant by diversification (market strategy)
this strategy is based on selling a greater number of markets at the expense of getting a less significant market share in each one
what are some items the firm can control for market research
- price
- product
- sales promotion
- distribution channels
what are some items the firm cannot control for market research
- existing supply
- demand
- commercial practises
- export mode + human resources
advantages of exporting directly
- control
- knowledge of market
- tracking customers
disadvantages of exporting directly
- cost
- initial investment
- difficult to cover all markets
advantages and disadvantages of exporting indirectly (intermediary in the exporter country)
advantages:
- cost of structure
- no risk
- saves time and work
- knowledge of the market
disadvantages:
- no control on channel
- no knowledge of market
- high dependence on intermediary
- initial difficulty
advantages and disadvantages of exporting indirectly (intermediary in the foreign market)
advantages:
- facilitating contacts
- allows permanent presence
- market knowledge
disadvantages:
- cost
- risk
- control
- exclusivity
- difficult to find ideal intermediary
