GMS 522 Final questions and answers
A+ rated already passed
Internationalization
-defined as the process by which firms become more engaged in international markets.
-the process involves varying degrees of financial and other resource commitments to foreign
markets and of course, various degrees of risk
Mode of Entry
central to the process of internationalization is the selection of an entry mode. These range
from low commitment modes such as exporting high commitment modes such as foreign direct
investment
Motivation
the motivation for internationalization may either be proactive (firm wants to) or reactive (firm
has little choice)
Uppsala or U model
the firm first expands to a psychically close market and having become familiar with that
market, will target slightly more distant markets. experiential knowledge is the major driver of
its pattern of internationalization. The Uppsala model has been criticized for its linear approach
to the internationalization process
,Dunnings OLI framework
firms expand abroad to capitalize on ownership, location and internalization advantages
Advantages of Dunnings OLI framework
-ownership of foreign assets will confer on the firm a competitive advantage in the foreign
market which is not enjoyed by competing firms that do not own such assets
-location confers advantages in terms of tax or other investment incentives offered by the gov't
of the host country or a more favorable industrial relations climate for the firm's operations
-internalization of firm-specific advantages such as proprietary technology confers benefits to
the firm over alternatives such as licensing
Springboard or latecomer perspective
emerging market firms internationalize in order to overcome limitations inherent in their home-
country environment, such as small market size, institutional immaturity or a relatively
unsophisticated consumer base. To accomplish this firms aggressively acquire strategic assets
from MNCs in developed countries
Systematic four-step process
1)Macro segmentation
2)Preliminary screening
3)Secondary screening
4)Final security selection
,Macro Segmentation
-develop segmentation criteria
-apply to group countries
Preliminary screening
-develop additional criteria
-apply to reduce the # of candidate countries
Secondary screening
-firm assesses its own capabilities relative to the market
Final security selection
-conduct site visit
Selecting Foreign Markets
the end result of the process is the selection of one country from the universe of potential
candidates by a process of elimination
International consumer segmentation
consumers in cross-national segments may have more in common with their counterparts in
other countries than they do with citizen of their own countries. If this is the case a two-stage
, model may be appropriate in which segmentation is undertaken at both the country and
consumer levels
Country Level Screening
macro-segmentation based on overall market attractiveness
Consumer level screening
micro-segmentation based on personal and societal values
Types of Entry modes
-export
-intermediate
-hierarchical
Export Modes
low risk-low return modes which provide limited control for the exporting firm
Intermediate Modes
modes which provide for the sharing of the risks and rewards of market entry commensurate
with the share of ownership of each partner
A+ rated already passed
Internationalization
-defined as the process by which firms become more engaged in international markets.
-the process involves varying degrees of financial and other resource commitments to foreign
markets and of course, various degrees of risk
Mode of Entry
central to the process of internationalization is the selection of an entry mode. These range
from low commitment modes such as exporting high commitment modes such as foreign direct
investment
Motivation
the motivation for internationalization may either be proactive (firm wants to) or reactive (firm
has little choice)
Uppsala or U model
the firm first expands to a psychically close market and having become familiar with that
market, will target slightly more distant markets. experiential knowledge is the major driver of
its pattern of internationalization. The Uppsala model has been criticized for its linear approach
to the internationalization process
,Dunnings OLI framework
firms expand abroad to capitalize on ownership, location and internalization advantages
Advantages of Dunnings OLI framework
-ownership of foreign assets will confer on the firm a competitive advantage in the foreign
market which is not enjoyed by competing firms that do not own such assets
-location confers advantages in terms of tax or other investment incentives offered by the gov't
of the host country or a more favorable industrial relations climate for the firm's operations
-internalization of firm-specific advantages such as proprietary technology confers benefits to
the firm over alternatives such as licensing
Springboard or latecomer perspective
emerging market firms internationalize in order to overcome limitations inherent in their home-
country environment, such as small market size, institutional immaturity or a relatively
unsophisticated consumer base. To accomplish this firms aggressively acquire strategic assets
from MNCs in developed countries
Systematic four-step process
1)Macro segmentation
2)Preliminary screening
3)Secondary screening
4)Final security selection
,Macro Segmentation
-develop segmentation criteria
-apply to group countries
Preliminary screening
-develop additional criteria
-apply to reduce the # of candidate countries
Secondary screening
-firm assesses its own capabilities relative to the market
Final security selection
-conduct site visit
Selecting Foreign Markets
the end result of the process is the selection of one country from the universe of potential
candidates by a process of elimination
International consumer segmentation
consumers in cross-national segments may have more in common with their counterparts in
other countries than they do with citizen of their own countries. If this is the case a two-stage
, model may be appropriate in which segmentation is undertaken at both the country and
consumer levels
Country Level Screening
macro-segmentation based on overall market attractiveness
Consumer level screening
micro-segmentation based on personal and societal values
Types of Entry modes
-export
-intermediate
-hierarchical
Export Modes
low risk-low return modes which provide limited control for the exporting firm
Intermediate Modes
modes which provide for the sharing of the risks and rewards of market entry commensurate
with the share of ownership of each partner
