8 Modes Of Internationalization Flashcards
(48 cards)
Four steps of classic internationalization process
- export through agent/distributor
- export through sales rep/sales and logistic subsidiary
- local assembly or packaging
- foreign direct investment
From passive exporter to active marketeer: examples
- Toyota
- Benetton
- Mateus rose
What influences choice of export market?
- vicinity
- cultural identification
- past experience
- opportunity (e.g. export contract)
- rational analysis (market research)
Difference passive exporter and active marketeer
To sell in markets yourself you need:
- knowing customers/competitors
- understanding distribution
- anticipating trends
Traditional motivations for internationalization
1) need to secure key supplies
2) market seeking
3) access low cost factors
Emerging motivations for internationalization
1) scale economies
2) increasing R&D investments
3) shortening product life cycles
=> those three due to global interconnected structures
4) scanning opportunities/learning on global scale
5) competitive positioning (cross-subsidization)
Cross subsidization
Use profits from one market to offset losses/higher prices of other market
Born global companies
= instant international, micronational, international new venture
Immediately step onto world stage, without engaging in a sequence of dissimilar foreign markets first
When are firms born multinational?
- when nature of business/ownership/past legacy makes them international right from start
1) nature of business: Facebook, amazon
2) ownership: critical techworks
3) past legacy: AutoEuropa (VW automobile manurfacturing plant in Portugal), efacec (Portugueses multinational engineering)
What factors to consider when evaluating countries for international operations
- purpose
- modes of entry
- location factors
- where?
- information for decision
Purpose/modes of entry - evaluation criteria for internationalisation
- greenfield
- acquisition
- licensing
- start-up
- joint venture
Purpose/modes of entry - evaluation criteria for internationalisation
- greenfield
- acquisition
- licensing
- start-up
- joint venture
Greenfield - mode of entry
Build factory/office
Acquisition of a company is opposite of what in terms of mode of entry
Greenfield
Joint venture
Companies get tgt to explore specific business e.g. partnering with local business to create local business
Where to locate - evaluation of countries
-> spurious (irreführend) factors used
- knowing local partner
- cultural identification
- geographic proximity
- past experience
Where to locate - evaluation of countries: Two most used techniques, based on assessment and not spurious factors
- Scanning
- detailed analysis
Scanning - where to locate
Comparing several countries based on statistics and critical business variables (unacceptable conditions)
- speedy
- long list -> short list (for detailed analysis)
Detailed analysis - where to locate
Concentrate on the short list, deepen analysis (risks, opportunities)
- country visits with local distributors
- interview analysts
- evaluation possible partners
=> feasibility study: decision points before escalation of commitment/investment
Does scanning involve qualitative info or quantative
- quantative
Does a detailed analysis involve qualitiatve or quantitative info?
Quantitative and Qualitative info
Escalation of commitment
Choosing alternative due to having invested a lot of resources and not based on its merits
Information for decision - evaluation of countries
- opportunities for sales expansion
- needs of allocation of resources
- risks
- costs
Opportunes for sales expansion - information for decision
- Economic/demographic variables:
1. product obsolescence
2. prices
3. competitors
4. social inequalities
5. cultural factors
6. consumer tastes
