Podcast
Questions and Answers
What is a key consideration when evaluating a product's competitiveness in foreign markets?
What is a key consideration when evaluating a product's competitiveness in foreign markets?
- Evaluating the product's branding strategy
- Understanding customer preferences in the domestic market
- Assessing the degree of novelty in the foreign market (correct)
- Determining the product's price abroad
Which of the following is essential for determining if a product satisfies needs in foreign markets?
Which of the following is essential for determining if a product satisfies needs in foreign markets?
- Assessing the marketing strategies used at home
- Analyzing the competitive advantages in the domestic market
- Evaluating the product's manufacturing costs
- Identifying current products meeting those needs (correct)
When selecting a product for internationalization, which aspect does NOT typically need consideration?
When selecting a product for internationalization, which aspect does NOT typically need consideration?
- Local market share of the competitor (correct)
- Availability of productive elements abroad
- Complementary services required
- Terms of use in foreign markets
What factor is crucial for the adaptation of a product for foreign markets?
What factor is crucial for the adaptation of a product for foreign markets?
Which question should be asked regarding the availability of productive elements outside the domestic market?
Which question should be asked regarding the availability of productive elements outside the domestic market?
What is an important aspect to consider when analyzing marketing channels for a product?
What is an important aspect to consider when analyzing marketing channels for a product?
Why is it important to analyze the competitive advantages of a product in foreign markets?
Why is it important to analyze the competitive advantages of a product in foreign markets?
Which consideration is generally least relevant when selecting a product for a target international market?
Which consideration is generally least relevant when selecting a product for a target international market?
What is a primary factor that defines a multinational company's operation in different national environments?
What is a primary factor that defines a multinational company's operation in different national environments?
Which component is critical in the organizational structure of international activities?
Which component is critical in the organizational structure of international activities?
What aspect of market entry strategies is primarily affected by cultural differences?
What aspect of market entry strategies is primarily affected by cultural differences?
Which of the following best describes 'country risk' in the international business context?
Which of the following best describes 'country risk' in the international business context?
When selecting geographical markets, which factor is essential for formulating an internationalization path?
When selecting geographical markets, which factor is essential for formulating an internationalization path?
How does political-economic distance influence multinational companies?
How does political-economic distance influence multinational companies?
Which strategy should a multinational company consider when entering new geographical markets?
Which strategy should a multinational company consider when entering new geographical markets?
What role does cultural distance play in the failure of international operations?
What role does cultural distance play in the failure of international operations?
What is one internal factor that can drive a company to start an internationalization process?
What is one internal factor that can drive a company to start an internationalization process?
Which strategy aims to strengthen a company's competitive position during internationalization?
Which strategy aims to strengthen a company's competitive position during internationalization?
What does the term 'efficiency search' imply in the context of internationalization?
What does the term 'efficiency search' imply in the context of internationalization?
In which stage of the International Product Life Cycle is a product usually introduced to the market?
In which stage of the International Product Life Cycle is a product usually introduced to the market?
What is a key factor to consider when selecting geographical markets for expansion?
What is a key factor to consider when selecting geographical markets for expansion?
Which of the following is NOT a reason for market search in internationalization?
Which of the following is NOT a reason for market search in internationalization?
What characteristic of the iPhone's international product life cycle demonstrates successful domestic growth?
What characteristic of the iPhone's international product life cycle demonstrates successful domestic growth?
What is commonly a goal during the strategic assets search in an international market?
What is commonly a goal during the strategic assets search in an international market?
Flashcards
Multinational Company (MNC)
Multinational Company (MNC)
A company that operates in multiple countries, facing different business practices and understandings.
Entry Strategy
Entry Strategy
The plan for how to enter a new geographical market.
International Expansion Process
International Expansion Process
The sequence and methods used to grow internationally.
Country Risk
Country Risk
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Cultural Distance
Cultural Distance
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Geographical Markets Choice
Geographical Markets Choice
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Internationalization Path
Internationalization Path
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Organizational Structures of International Activity
Organizational Structures of International Activity
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Internationalization reasons
Internationalization reasons
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Natural resource seeking
Natural resource seeking
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Efficiency search motives
Efficiency search motives
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Strategic asset search
Strategic asset search
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Market search reasons
Market search reasons
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Product life cycle
Product life cycle
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International Product Life Cycle (IPLC)
International Product Life Cycle (IPLC)
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iPhone case study
iPhone case study
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Product Competitiveness (Domestic)
Product Competitiveness (Domestic)
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Market Needs (Domestic/Foreign)
Market Needs (Domestic/Foreign)
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Product Competitiveness (Foreign)
Product Competitiveness (Foreign)
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Productive Elements (Foreign)
Productive Elements (Foreign)
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Product Use Conditions (Foreign)
Product Use Conditions (Foreign)
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Complementary Services (Foreign)
Complementary Services (Foreign)
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Product Adaptation (Foreign)
Product Adaptation (Foreign)
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Marketing Channels (Foreign)
Marketing Channels (Foreign)
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Study Notes
Section 2: Deciding Whether to Enter an International Market
- Contents:
- Reasons for internationalization
- Product selection
- Geographical market selection
1. Reasons Why a Company Should Start an Internationalization Process
-
Internal Factors (Dunning, 1979):
- Seeking (Natural) Resources
- Raw materials
- Qualified staff
- Intangible resources
- Efficiency Search
- Economies of scale
- Specialization and scope
- Production relocation (international)
- Strategic Assets Search
- Competitive positioning enhancement
- Business portfolio diversification
- Strategic synergies
- Market Search
- Access to local markets
- Adjacent market access
- Import substitution
- Seeking (Natural) Resources
-
External Factors:
- Unplanned opportunities
- Following suppliers and/or customers
- Domestic rivalry intensity
-
Internationalization Decision: A result of considering both internal and external factors.
2. Selecting the Product
-
Criteria for a Good International Candidate:
- Strong market acceptance in the home country
- Potential for increase in success outside the home country (e.g., Toyota Prius)
- Product life cycle in a saturation/decline phase in the domestic market but growing in foreign markets
- Necessary production resources readily available
- Ability to transfer marketing and experience/know-how
-
Main Questions about the Product:
- Competitiveness in the Own Market:
- Is the product competitive in the domestic market?
- What are its strengths and weaknesses?
- Satisfaction of Needs in the Market:
- What needs does the product satisfy in the domestic market?
- Are similar needs present in foreign markets?
- Can the product meet those needs if they exist in foreign markets?
- Does the product satisfy other needs in foreign markets?
- Competitiveness Abroad:
- Novelty degree in the foreign market
- Anticipated competition level
- Advantages and disadvantages for foreign markets
- Availability of Productive Elements:
- Are necessary resources (labor, technology, raw materials, etc.) available abroad?
- Do sufficient resources exist abroad to address growing demand?
- Terms of Use: Are use conditions similar in foreign markets to the domestic market?
- Complementary Services: Does the product require after-sale services? Are these services available abroad?
- Competitiveness in the Own Market:
-
Product Standardization/Adaptation Strategies:
- Standardization Strategy:
- Global approach
- Low adaptation costs, high promotional costs
- Suitable for industrial products
- Adaptation Strategy:
- Multiple domestic markets
- High adaptation costs, low promotional costs
- Customizable approach
- Hybrid Strategy: A mix of standardization and adaptation.
- Standardization Strategy:
-
Example: Starbucks' failure in Australia highlights the importance of understanding local market nuances.
3. Selecting the Geographical Markets
- Market Research:
- Size (population, GDP, growth rate, demographics)
- Sales potential
- Consumer profiles
- Product adaptability
- Psychic Distance: The difference due to cultural, institutional, and geographic factors between the domestic and foreign market.
- Geographic distance: Physical distance (km/hours of travel).
- Formal institutional distance: Differences in business structures, laws.
- Cultural distance: Cultural differences between the company's home country and target country
- Market/Country Selection: The process of choosing which foreign markets to target.
- Factors Affecting Selection: Political risk
- Political risk: Stability of the political/economic system and potential for future disruption, expropriation, nationalization, or actions restricting capital transfer.
- Administrative risk: Regulatory aspects of the foreign market, including restrictions related to market operation and factor mobility (e.g., difficulty to repatriate money, or difficulties importing/exporting materials)
- Sovereign risk: The likelihood that the foreign government cannot meet its financial obligations (e.g., national debt).
- Country Risk Index (CRI): A method for determining risk levels. It considers different factors, and assigns weights to these variables for calculating an overall risk index
- Sources of Country Risk Indices: Includes agencies like Bank of America, Moody's, Standard and Poor's, Fitch Ratings, and the Economist Intelligence Unit.
- Case Study: Fluidra is the leading Spanish company in the pool & wellness industry.
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Description
Explore the factors influencing a company's decision to enter international markets. This quiz covers the internal and external elements affecting the internationalization process, including resource seeking and market access strategies. Understand how these factors shape a business's global strategy.
