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International Marketing > Chapter 1 > Flashcards

Chapter 1 Flashcards

Internationalization (strategic int. marketing)

1
Q

What is internationalization

A

the cross-border business activities of a company

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2
Q

What activities does internationalization refer to?

A

-import
-export
-establishing sales
-establishing production facilities

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3
Q

What is globalization?

A

-increase in international integration of national economies and cross border activities of companies

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4
Q

What are objectives/motives of internationalization?

A

1 maximize profit

-personal motivations of
management
-creation of competitive advantage: value creation: cost reduction, overall increase in value; value distribution
-utilization of competitive advantage

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5
Q

Reasons for engagement abroad

A

-sales: develop new sales markets,
establish/expand company
offices, competitive situation,
proximity to customer
-procurement: development of
procurement markets, good local
supplier situation
-production: establishment /expansion production facilities and branch for outsourcing activities
general: use of better framework conditions, additional pillar of operations during crisis, better exchange rate better R&D abroad

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6
Q

What are market entry strategies?

A

organizational paths that company chooses when offering products or services in foreign markets

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7
Q

What are methods of market entry strategies?

A

-export alliances: indirect exports, export syndicates/export consortia, direct exports
-provision of services abroad: direct investment (fully controlled foreign companies, international joint ventures), international contracts (licensing agreements, franchising, made-to-order production, management agreements)

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8
Q

What is the eclectic theory framework ?

A

Ownership advantages, Location advantages, Internationalization incentive advantages.

-framework used by companies to determine to pursue foreign direct investment

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9
Q

Whats questions to ask for ownership advantage?

A

-Do I have a strong brand name with great reputation?
-Do I have the capital resources?
-Do I have the management and organizational and technological capabilities?
-Can I achieve economies of scale?

If no, then remain domestic

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10
Q

What questions to ask for location advantages?

A

-Does the new location have availability of cheaper raw material, low cost skilled labor, lower rental & tax rates?

If no, Export from home country

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11
Q

What are question to ask for internationalization advantage?

A

-Can I avoid search and negotiation costs
-Can I protect company’s rep?
-Can I ensure product quality?
-Can I avoid problems when I draft renegotiating contracts?

If no, then consider licensing

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12
Q

What are disadvantages of Dunning’s eclectic theory?

A
  • no explanation of strategic approach (doesn’t explain why companies choose different market strategies at the same time)
    -theory doesn’t apply to service companies
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13
Q

What are forms of international market entry strategy?

A

-exports
-direct investment
-mergers and acquisition
-cooperations

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14
Q

What are exports?

A
  • a good or service sold abroad
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15
Q

What are the two forms of export?

A

-direct export
-indirect export

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16
Q

When is export unsuitable?

A

-low level demand for product
-a company already has monopolistic market position
-company has problems raising capital
-political or legal conditions prohibit production

17
Q

Advantages of export as market entry strategy?

A

limited knowledge of foreign market is required

18
Q

Disadvantages of export as market entry strategy?

A

-increased capital commitment and costs (establishment of export department, foreign sales department)
-increased need for qualified personnel
-increase of foreign specific risks

19
Q

What are export communities?

A

-voluntary associations of legally and economically independent companies interested in exporting.
-transitional stage between indirect and direct exports

20
Q

What are direct investments?

A

-cross-border investments intended to influence business activities of existing or new company
-serve to establish and expand production facilities abroad
-take the form of joint ventures

21
Q

What are fixed assets

A

tangibles (e.g. property, equipment)

22
Q

What are two types of joint ventures?

A

-contractual joint venture
-equity joint venture

23
Q

What are equity joint ventures?

A

bilateral cooperation that results from establishment of new, independent company

24
Q

What are contractual joint ventures?

A

classified as cooperations
-there is no merger of companies. purely agreements under the law of obligations

25
Q

What are mergers?

A

-when two companies combine economically and legally- after combination only one legal entity remains

26
Q

What are mergers by absorption?

A

-if only one of the companies gives up legal independence

27
Q

What are mergers by consolidation?

A

-if both companies transfer assets to newly formed company

28
Q

What are acquisitions?

A

-when company takes over ownership rights of another company and gains control
-transfer of capital shares or assets occur

29
Q

What are the different acquisitions types?

A

-horizontal
-vertical
-concentric
-conglomerate

30
Q

What are horizontal acquisitions?

A

both companies are active in the same industry
-synergies are exploited through better resource allocation

31
Q

What are vertical acquisitions?

A

-two companies have supplier-customer relationship
-depth of service is increased, transaction cost can be reduced

32
Q

What are concentric acquisitions?

A

target company is not related to existing product range but there are technical or marketing similarities

33
Q

What are conglomerate acquisitions?

A

two companies are operating in different industries
-when pursuing diversification strategies

34
Q

What are corporate cooperations

A

mergers with legal and economic independence
-restrictions imposed in certain areas to achieve objectives

35
Q

What are two forms of cooperations?

A

-contractual joint ventures
-strategic alliances

36
Q

What are strategic alliances?

A

-based on capital-related elements or contractual cooperation elements
-can be entered as precursor to merger or acquisition or alternative to traditional acquisitions or mergers

37
Q

What are reasons for strategic alliances?

A

-improved access to difficult markets
-improved capabilities through innovation
-financial benefits due to economies of scale or reduced costs

International Marketing (11 decks)

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