9 - Assessing Internationalisation

Question 1

What Is The Reasons & Importance Of Globalisation?
(4 Points)

Answer 1

~ Increase market size, selling more in other countries.

~ Extend the life cycle of their products.

~ Reduce costs, by getting cheaper raw materials from cheaper countries and wages.

~ Spreads risks over more markets.

Question 2

What Are The Methods Of Entering International Markets?
(4 Points)

Answer 2

~ Exporting and importing.

~ Direct investment.

~ Alliances.

~ Licensing.

Question 3

Describe ‘Exporting’ As A Method Of Entering International Markets
(4 Points)

Answer 3

~ Manufacturing stays in the UK, aiding quality control.

~ Less capital expenditure to set up abroad.

~ But, you may have limited knowledge of the international market.

~ But, protectionist policies may apply to the country you’re exporting too.

Question 4

What Is Direct Investment?

Answer 4

When a business sets up additional operations in another country, with its HQ in the existing country.

Question 5

Describe ‘Direct Investment’ As A Method Of Entering International Markets
(4 Points)

Answer 5

~ Business maintains control over its foreign operations.

~ Profits are kept + no need for investment to market its brand, due to existing market share.

~ But, it’s very expensive to set up in a different country.

~ But, different organisational structure, may put pressure on HR.

Question 6

What Are Alliances?

Answer 6

Business forms a partnership, with similar companies abroad.

Question 7

Describe ‘Alliances’ As A Method Of Entering International Markets
(4 Points)

Answer 7

~ Business partnered with may have local knowledge.

~ Synergies can be formed.

~ But, there is a share of profits.

~ But, there is a loss of control.

Question 8

What Is Licensing?

Answer 8

Getting foreign firms to produce a product, under the existing customers name.

Question 9

Describe ‘Licensing’ As A Method Of Entering International Markets
(4 Points)

Answer 9

~ Business gains access to an existing distribution network.

~ Avoids protectionist barriers.

~ But, risk of brand being damaged.

~ But, only receive small proportion of the profits.

Question 10

What Are Factors Affecting The Attractiveness Of International Markets?
(6 Points)

Answer 10

~ Size of the market, such as population.

~ Economic growth and disposable income.

~ Degree of competition.

~ Political environment, such as legal systems in the country.

~ Exchange rates.

~ Infrastructure, such as transport and education.

Question 11

What Is Offshoring?

Answer 11

Business activities or processes, which are moved abroad.

Question 12

What Are The Benefits Of Offshoring?
(2 Points)

Answer 12

~ Reduces costs, by some countries having specialist skills in certain areas.

~ Increases revenues.

Question 13

What Are The Issues With Offshoring?
(3 Points)

Answer 13

~ Initial transition costs.

~ CSR risks.

~ Exchange rate risks.

Question 14

What Is Re-Shoring?

Answer 14

Bringing business activities and processes back to the home country.

Question 15

What Are The Benefits Of Re-shoring?
(2 Points)

Answer 15

~ Improved quality of products and processes.

~ Lower distribution costs and lead times.

Question 16

What Are The Benefits Of Being A Multinational Company?
(4 Points)

Answer 16

~ Increase potential customers.

~ Improved access to cheaper suppliers.

~ Improved access to cheaper labour.

~ Improved access to a wider range of skills.

Question 17

What Are The Pressure When Managing International Business?
(2 Points)

Answer 17

~ Pressure for local responsiveness.

~ Pressure for cost cutting.

Question 18

Describe ‘Pressure For Local Responsiveness’ As A Pressure For Management

Answer 18

Need to consider cultural factors.

Question 19

Describe ‘Pressure For Cost Cutting’ As A Pressure For Management

Answer 19

~ Need to be more competitive.

~ Without causing problems with cultures.