Strategic International Marketing Flashcards
(34 cards)
Internationalization
This is the cross-border business activities of a company. This can refer to anything from importing and exporting goods and services to establishing sales and production facilities abroad.
In order for modern companies to be successful in the long term
they must expand their growth potential, enter into strategic alliances, or relocate their production to other countries, often with lower wage levels.
Internationalization represents a unique challenge for businesses:
On the one hand, they benefit from cultivating a global market for their products, but on the other hand, they face an increase in competitive pressure.
the fundamental objective of any company
is to maximize profits.
Internationalization:
- Definition: Cross-border business activities of a company.
- Importance: Increases economic opportunities, access to new markets, and growth potential.
Internationalization of Competition:
- Definition: Leads to lasting changes in the global economy, increases competitive pressure on companies.
- Impacts: Necessitates strategic alliances, production relocation, and expansion into foreign markets.
Benefits of Internationalization:
- Increased growth potential.
- Access to new markets.
- Strategic alliances and production efficiencies.
Challenges of Internationalization:
- Higher competitive pressure.
- Cultural and regulatory barriers.
- Operational complexities.
Forms of Internationalization Activities:
- Importing/exporting goods and services.
- Establishing sales/production facilities abroad.
- Entering strategic alliances/partnerships.
- Direct investments (wholly-owned subsidiaries, acquisitions).
Examples of Internationalization Activities:
- Importing cars from overseas markets.
- Establishing manufacturing plants in foreign countries.
- Forming joint ventures with local companies.
- Acquiring foreign competitors.
Primary Motives for Internationalization:
- Exploiting domestic competitive advantages.
- 2. Creating new competitive advantages.
- 3. Improving competitive position by influencing competitors’ value creation.
- Exploiting domestic competitive advantages.
Management-Induced Motives:
- Personal: Increasing salary, job security.
- Immaterial: Desire for self-fulfillment, prestige, power.
Common Reasons for Expanding Internationally (Surveys):
- Development of new sales markets.
- Development of low-cost purchasing markets.
Additional Motives for Internationalization:
- Exploiting domestic competitive advantages abroad.
- Creating new competitive advantages.
- Improving competitive position by influencing competitors’ value creation negatively.
Market Entry Strategies:
- Definition: Organizational paths chosen by companies when entering foreign markets.
- Importance: Determines how products/services are introduced into foreign markets and impacts success.
Dunning’s Eclectic Theory:
- Components: Ownership-specific advantages, location-specific advantages, internalization incentive advantages.
- Explanation: Determines a company’s international market entry strategies based on these factors.
Components of Dunning’s Eclectic Theory:
- Ownership-specific advantages.
- 2. Location-specific advantages.
- 3. Internalization incentive advantages.
- Ownership-specific advantages.
Advantages of Internalization:
- Avoiding search and negotiation costs.
- Protecting reputation.
- Ensuring product quality.
- Avoiding contract-related problems.
Export:
- Definition: Goods or services sold abroad.
- Types: Direct (delivered directly to foreign customers/intermediaries) and indirect (supplied to domestic intermediaries for market development abroad).
Conditions Suitable for Exports:
- Low foreign demand, monopolistic market position, difficulties raising capital, political/legal constraints in target country.
Advantages of Direct Exports:
- Minimize foreign market risks, require limited foreign market knowledge, advantageous for first-time market entry.
Disadvantages of Direct Exports:
- Additional costs, increased need for expertise, higher capital commitment and foreign-specific risks.
Advantages of Indirect Exports:
- Require less commitment, suitable for small companies.
Disadvantages of Indirect Exports:
- Lack of contact with foreign markets/customers, limited development of internationalization strategies.
