Week three - internationalisation Flashcards

1
Q

when doees internationalisation start

A

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

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2
Q

advantages of internationalisation

A
  • diversification of risks
  • increasing sales volumes
  • reductions of costs
  • better knowledge of foreign markets and customers
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3
Q

what are the pro-active reasons for internationalisation

A
  • profit
  • economies of scale
  • unique products
  • technological advantage
  • exclusive info
  • dynamic manager
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4
Q

what are re-active reasons to for internationalisation

A
  • competitive pressure
  • reduction in domestic sales
  • exhaustion of domestic market
  • overcapacity
  • overproduction
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5
Q

what are the stages of internationalisation and their objective

A

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

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6
Q

what are the stages within the internal analysis for internationalisation

A
  • firms human resources (e.g. language barrier)
  • production capacity (adequate infrastructure)
  • financial resources (to start exporting)
  • logistic organisation
  • capacity to adapt the firms product
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7
Q

what are the stages within the external analysis of internationlisation

A
  • 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
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8
Q

what is meant by concentration (market strategy)

A

the company focusses its resources on a small number of markets to get continuous and growing sales volumes in those markets

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9
Q

what is meant by diversification (market strategy)

A

this strategy is based on selling a greater number of markets at the expense of getting a less significant market share in each one

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10
Q

what are some items the firm can control for market research

A
  • price
  • product
  • sales promotion
  • distribution channels
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11
Q

what are some items the firm cannot control for market research

A
  • existing supply
  • demand
  • commercial practises
  • export mode + human resources
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12
Q

advantages of exporting directly

A
  • control
  • knowledge of market
  • tracking customers
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13
Q

disadvantages of exporting directly

A
  • cost
  • initial investment
  • difficult to cover all markets
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14
Q

advantages and disadvantages of exporting indirectly (intermediary in the exporter country)

A

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

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15
Q

advantages and disadvantages of exporting indirectly (intermediary in the foreign market)

A

advantages:
- facilitating contacts
- allows permanent presence
- market knowledge
disadvantages:
- cost
- risk
- control
- exclusivity
- difficult to find ideal intermediary

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16
Q

characteristics of intermediary in the exporter country

A
  • independent agent
  • buyer agent in the foreign market
  • international trade society
  • piggy-back
17
Q

characteristics of intermediary in the foreign market

A
  • agent/representative
  • importer/distributor
  • international trade society
  • franchising