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International Business Entry and Development

This document discusses international business entry and development. It outlines key factors firms consider when deciding whether to enter foreign markets such as proactive reasons like profit advantages or reactive reasons like declining domestic sales. Firms must decide which markets to enter, when to enter, and the scale of entry which can be through various entry modes like exporting, licensing, or wholly owned subsidiaries. The steps to internationalization include becoming aware of opportunities, determining a firm's readiness, and deciding timing and pace of expansion. Advantages of early entry include first-mover benefits while disadvantages include pioneering costs. When choosing markets, firms consider political stability and economic policies.

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Suresh Sh
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36 views

International Business Entry and Development

This document discusses international business entry and development. It outlines key factors firms consider when deciding whether to enter foreign markets such as proactive reasons like profit advantages or reactive reasons like declining domestic sales. Firms must decide which markets to enter, when to enter, and the scale of entry which can be through various entry modes like exporting, licensing, or wholly owned subsidiaries. The steps to internationalization include becoming aware of opportunities, determining a firm's readiness, and deciding timing and pace of expansion. Advantages of early entry include first-mover benefits while disadvantages include pioneering costs. When choosing markets, firms consider political stability and economic policies.

Uploaded by

Suresh Sh
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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INTERNATIONAL BUSINESS ENTRY AND DEVELOPMENT

Proactive Reasons Profit advantage Unique products Technological advantage Exclusive information Tax benefit Economies of scale

Reactive Reasons Competitive pressures Overproduction Declining domestic sales Excess capacity Saturated domestic markets Proximity to customers and ports

A firm contemplating foreign expansion must make three decisions


Which When What

markets to enter? to enter these markets?

is the scale of entry?

ENTRY MODES
Exporting Turnkey Projects Foreign Direct Investment

Licensing
Franchising

Joint Ventures
Wholly Owned Subsidiaries
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THE STEPS TO DEVELOPING INTERNATIONAL COMMITMENT


Become aware of international business opportunities.

Determine the degree of the firms internationalization.


Decide the timing of when to start the internationalization process and how quickly it should progress.

Advantages and Disadvantages of entry modes

14-6

Advantages

in early market entry:

First-mover advantage. Build sales volume. Create switching costs. First mover disadvantage - pioneering costs. Changes in government policy.

Disadvantages:

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Which foreign markets


Favorable
Politically stable developed and developing nations Free market systems No dramatic upsurge in inflation or private-sector debt

Unfavorable
Politically unstable developing nations with a mixed or command economy or where speculative financial bubbles have led to excess borrowing

14-8

Development of Business

Opportunities.

Competencies.

Foreign Collaborations.

Expansion.

Technology.

Diversification.

14-9

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