International Business: Session 2

Seek opportunities for growth through market diversification; gain new ideas about products, services, and business methods; better serve key customers that have relocated abroad; be closer to supply sources, benefit from global sourcing advantages, or gain flexibility in the sourcing of products.
Nội dung trích xuất từ tài liệu:
International Business: Session 2International BusinessSession 2International vs. DomesticOPPORTUNITIES1. Seek opportunities for growth through market diversification2. Gainnew ideas about products, services, and business methods3. Better serve key customers that have relocated abroad4. Be closer to supply sources, benefit from global sourcing advantages, or gain flexibility in the sourcing of products International vs. Domestic OPPORTUNITIES5. Gain access to lower-cost or better-value factors of production6. Develop economies of scale in sourcing, production, marketing, and R&D7. Confront international competitors more effectively or thwart the growth of competition in the home marketFDI Based Explanations:Dunning’s Eclectic ParadigmThree conditions determine whether or not a company will internalize via FDI:1. Ownership-specific advantages – knowledge, skills, capabilities, relationships, or physical assets that form the basis for the firm’s competitive advantage2. Location-specific advantages – advantages associated with the country in which the MNE is invested, including natural resources, skilled or low cost labor, and inexpensive capital3. Internalization advantages – control derived from internalizing foreign-based manufacturing, distribution, or other value chain activitiesFactors Relevant to Choice ofForeign Market Entry Strategy1. The goals and objectives of the firm, such as desired profitability, market share, or competitive positioning;2. The particular financial, organizational, and technological resources and capabilities available to the firm;3. Unique conditions in the target country, such as legal, cultural, and economic circumstances, as well as distribution and transportation systems;4. Risks inherent in each proposed foreign venture in relation to the firm’s goals and objectives in pursuing internationalization;5. The nature and extent of competition from existing rivals, and from firms that may enter the market later;Participants in InternationalBusiness1. The focal firm – initiator of IB transaction, including MNEs and SMEs2. Distribution channel intermediary – specialist firm providing logistics and marketing services in the international supply chain3. Facilitator – a firm providing special expertise in legal advice, banking, customs clearance, market research, and similar areasTypes of Focal Firms  Multi-National Enterprise  Joint-Venture  SME  Born Global Firm  NGOs CommonCharacteristicsofBornGlobalFirms• Emergenceoftenassociatedwithsignificant product/processbreakthroughorinnovation• Productsofteninvolveadvancedtechnology, substantialaddedvalue,superiorquality,and differentiateddesign• Internationalizationtypicallyviaexportingand facilitatedthroughnetworkrelationships• HeavyuserofadvancedITandcommunications technologies Foreign Market Entry Strategies of Focal FirmsCross-border business transactions can be grouped into three categories: 1. Trade: buying and selling of products 2. Contractual exchange of services or intangibles: buying and selling of services 3. Equity ownership in foreign operations: establishing foreign presence through direct investmentMODES of International BusinessActivities Exporting (importing) Global sourcing (out-s, in-s, offshore) Contract manufacturing Licensing and Franchising (mgmt. contract) Foreign Direct Investment (FDI) Strategic Alliances (Joint Venture) ExportingAdvantages Disadvantages Relatively low financial  Vulnerability to tariffs and NTBs exposure  Logistical complexities Permit gradual market entry  Potential conflicts with distributors Acquire knowledge about local market Avoid restrictions on foreign investmentExport Documentation quotation or pro forma invoice commercial invoice is the actual demand for payment issued by the exporter. It includes a description of the goods, the exporter’s address, delivery address, and payment terms. A packing list, indicates the exact contents of the shipment. Thebill of lading is the basic contract between exporter and shipper. The shippers export declaration (ex-dec”) lists the contact information of the exporter and the buyer (or importer), as well as a full description, declared value, and destination of the products being shipped. The certificate of origin indicates the countryIncoterms ...