Internationalization
-defined as the process by which firms become more engaged in international markets.
-the process involves varying degrees of financial and other resource commitments to foreign markets and of course, various degrees of risk
Mode of Entry
central to the process of int...
Internationalization - ANSWER- -defined as the process by which firms become
more engaged in international markets.
-the process involves varying degrees of financial and other resource
commitments to foreign markets and of course, various degrees of risk
Mode of Entry - ANSWER- central to the process of internationalization is the
selection of an entry mode. These range from low commitment modes such as
exporting high commitment modes such as foreign direct investment
Motivation - ANSWER- the motivation for internationalization may either be
proactive (firm wants to) or reactive (firm has little choice)
Uppsala or U model - ANSWER- the firm first expands to a psychically close
market and having become familiar with that market, will target slightly more
distant markets. experiential knowledge is the major driver of its pattern of
internationalization. The Uppsala model has been criticized for its linear approach
to the internationalization process
Dunnings OLI framework - ANSWER- firms expand abroad to capitalize on
ownership, location and internalization advantages
Advantages of Dunnings OLI framework - ANSWER- -ownership of foreign assets
will confer on the firm a competitive advantage in the foreign market which is not
enjoyed by competing firms that do not own such assets
-location confers advantages in terms of tax or other investment incentives
offered by the gov't of the host country or a more favorable industrial relations
climate for the firm's operations
,-internalization of firm-specific advantages such as proprietary technology
confers benefits to the firm over alternatives such as licensing
Springboard or latecomer perspective - ANSWER- emerging market firms
internationalize in order to overcome limitations inherent in their home-country
environment, such as small market size, institutional immaturity or a relatively
unsophisticated consumer base. To accomplish this firms aggressively acquire
strategic assets from MNCs in developed countries
Macro Segmentation - ANSWER- -develop segmentation criteria
-apply to group countries
Preliminary screening - ANSWER- -develop additional criteria
-apply to reduce the # of candidate countries
Secondary screening - ANSWER- -firm assesses its own capabilities relative to
the market
Final security selection - ANSWER- -conduct site visit
Selecting Foreign Markets - ANSWER- the end result of the process is the
selection of one country from the universe of potential candidates by a process
of elimination
International consumer segmentation - ANSWER- consumers in cross-national
segments may have more in common with their counterparts in other countries
than they do with citizen of their own countries. If this is the case a two-stage
model may be appropriate in which segmentation is undertaken at both the
country and consumer levels
Country Level Screening - ANSWER- macro-segmentation based on overall
market attractiveness
Consumer level screening - ANSWER- micro-segmentation based on personal
and societal values
, Types of Entry modes - ANSWER- -export
-intermediate
-hierarchical
Export Modes - ANSWER- low risk-low return modes which provide limited
control for the exporting firm
Intermediate Modes - ANSWER- modes which provide for the sharing of the risks
and rewards of market entry commensurate with the share of ownership of each
partner
Hierarchical Modes - ANSWER- modes in which firm has complete control of the
operation but also exposure to a higher level of risk
Exporting - ANSWER- involves the manufacture of a product in one country and
its sale in one or more foreign countries
Two forms of exporting - ANSWER- -direct
-indirect
Direct Exporting - ANSWER- exporters transact with an intermediary based in the
foreign market
Indirect Exporting - ANSWER- exporter transacts with an intermediary based in
its home country. This intermediary takes responsibility for getting the exporter's
product into foreign country. Domestic transaction from standpoint of the
exporter
Advantages to exporting - ANSWER- -requires little by way of managerial skills or
knowledge of the foreign market
-carries with it minimal risk for the firm
-does not involve significant costs for the firm
Disadvantages to exporting - ANSWER- -lower returns relative to other entry
modes
-little control over how the product is positioned and sold in the foreign market
-little opportunity to develop a deep understanding of the foreign market
Types of Intermediaries - ANSWER- -export buying agents
-export import broker
-export management company
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