Managing Internationalization Process

2. International Business Strategy 301REN Managing Internationalization Process Unit: 6 Knowledgecast:1

3. Module Learning Outcomes • Demonstrate a sound appreciation of current strategic management concepts • Communicate an in-depth understanding of the complexity of the environment and its applications on decision-making process • Assess current developments in the organisational environment and alternative responses related to strategy

4. INTERNATIONALIZATION • TRADING • SOURCING • INVESTMENTS • OTHER VALUE ADDING ACTIVITY ACROSS NATIONAL BORDERS ?

5. Evolving Mentality Strategies Emerging from the Integration Responsiveness Transnational Global International Multinational Refer to U2KI

6. Internationalization Decisions and Motive Firm’s decision to internationalize Organisational factors Environmental factors Decision maker characteristics Firm specific factors Unsolicited proposals Bandwagon effect Attractiveness of host country Foreign travel a & experience abroad Firm size e. g US Telecom. Cpy in Mexico e.g VW in China International appeal Foreign language proficiency e. g Ekomate in UK & US e.g Foreign bank in China Decision maker background Personal character

7. Internationalization Process • TIMING OF MARKET ENTRY • When a firm in approached by a customer • When competing firms enter into and important • market • When market is growing very fast • Other key strategic reason for timing-First mover Advantage • Cost advantage • Pre-emption of geographic space • Technological advantage • Differentiation advantage • Political advantage 5 generic advantages

8. Internationalization Process OBTACLES TO INTERNATIONALIZATION • OBJECTIVE • Liabilities of foreignness • difference in norms and rules • Liabilities of expansion • Problems of increased transportation, communication and coordination • Liabilities o smallness • resource limitation due to size of organisation • Liabilities of newness • Level of barriers to entry

9. Internationalization Process OBTACLES TO INTERNATIONALIZATION • SUBJECTIVE • Perception of Managers • Psychic Distance • The distance that is perceived to exist between characteristics of firm’s home country and a foreign country with which the firm is, or is contemplating doing business or investment • Child et al. 2009 • ................may be high of low

10. Internationalization Process OBTACLES TO INTERNATIONALIZATION • Managerial perception of Psychic Distance • Cultural differences • Geographical distance • Language • Religion • Education /literacy level • Level of industrial development • Logistics infrastructure • Political system • Legal system • Government regulation

11. Internationalization Process Internationalization through decreasing Psychic Distance Stage 1) no regular export activities; Stage 2) export activities via independent representatives or agents; Stage 3) the establishment of an overseas subsidiary; Stage 4) overseas production and manufacturing units. Johanson and Wiedershiem-Paul, 1975

12. Internationalization Path Uppsala Model The Uppsala Model suggests that a firm’s international expansion is a gradual process dependent on experimental knowledge and incremental step. It assumes that firms proceed along the internationalization path in the form of logical steps based on gradual acquisition and use of information gathered in foreign market and operations. Market Knowledge Leads to Market Commitment Leads to more Market Knowledge Leads to more Market Commitment AND SO ON Johanson and Vahlne, 1977

13. Knowledgecast Summary • Demonstrate a sound appreciation of current strategic management concepts • Communicate an in-depth understanding of the complexity of the environment and its applications on decision-making process • Assess current developments in the organisational environment and alternative responses related to strategy

15. Seminar Regular Assignment Group Presentation on Environmental audit

16. Group Activity Regular Assignment Group Presentation on Environmental audit