International Business Strategy

LON301BUS

Entering and Operating in International Markets

Unit: 9 Knowledgecast: 1

• Integrate and apply strategic approaches to practical situations in various types of organisations

• Assess current developments in the organisational environment and alternative responses related to strategy

• Resolve management problems in the area of strategic management by evaluating alternative outcomes

Module Learning Outcomes

Internationalisation of the Firm

• Diverse motives for pursuing internationalisation

• Characteristics of firm internationalisation Push and pull factors Accidental involvement Balancing risk and return Learning experience Evolution

Typical Stages in Firm Internationalisation

Stages of Internationalisation Critical Management Activity

Domestic market focus Focus on home market

Preinternationalisation stage Research and evaluate the feasibility of undertaking international business activity

Experimental involvement Initiate limited international business activity, typically exporting

Active involvement Explore international expansion, including entry strategies other than exporting

Committed involvement Allocate resources based on intl opportunities

Exporting

“The strategy of producing products or services in one country (often the producer’s home country) and selling and distributing them to customers located in other countries.”

(Cavusgil 2007:382)

Exporting Analysis

• Advantages Growth (sales, profit etc) Economies of scale Diversification of customer

base Stabilise fluctuations in sales Lower cost foreign market

entry Leverage overseas

capabilities

• Disadvantages Less opportunity for learning Unable to identify

opportunities and threats from afar

Develop new capabilities Allocate resources Sensitivity to trade barriers

and x-rates

Countertrade

“An international business transaction where all or partial payments are made in kind rather than cash.”

(Cavusgil et al, 2007:382)

Types of Countertrade

• Barter• Compensation deals• Counterpurchase• Buy-back agreement

• Integrate and apply strategic approaches to practical situations in various types of organisations

There are a variety of market entry strategies available to businesses who seek to internationalise.

• Assess current developments in the organisational environment and alternative responses related to strategy

Export is opening up emerging markets, previously closed to foreign firms.

• Resolve management problems in the area of strategic management by evaluating alternative outcomes

Businesses who seek to internationalise for growth may consider the range of market entry strategies available to them.

Knowledgecast Summary

Managerial Challenge

The task of choosing the best export market is complex. Discuss thefollowing questions in your seminar and consider the strategyundertaken by your case study organisation (or other as selected byyour Module Tutor).

i) What makes an ideal market?ii) What market potential indicators should a manager consider?iii) What are the challenges of taking an ‘indicator led’ approach?

Seminar

End of Module Assessment – Evaluating Strategy (ManagementBrief) (Unit 10)

Preparation – Preparing the Final Draft

This session will provide you with the opportunity to discuss your final draftwith your module tutor and ensure all your questions are answered as youfinalise your submission.Although this is an independent piece of work giving and receiving feedbackfrom your peers is an essential skill, which will be of great value in theworkplace.Be prepared to provide constructive feedback on other’s work and receivefeedback which can inform your progress.

Group Activity