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G3-[ABS2]Internationalization Strategy (Enter the foreign market by…
G3-[ABS2]Internationalization Strategy
The four of Internationalization
International Trade
High
#
Low
FDI
High
The Pros and Cons of FDI
Pros
Cost-efficient
Low Tariff
Capabilities to protect
Protect the way how we do things
Tight control over Operation
Easier to transfer
Cons
Political Issue
The Perception of being a Outsider
High financial Costs and Risks
The Obstacle to manage local employees
FDI entry mode
Greenfield
Advantage
Expanded incrementally
Lower appropriation risk
Keep in-house
Control
Marketing
Distribution
Technology
Disadvantage
Need to acquire additional knowledge
Local responsiveness
Acquisition
Advantage
Rapid entry
Foreignness
Political influence
Disadvantage
Costly
Merge( culture)
Enter the foreign market by
Licensing/ Alliances
Partnering approach
Allows us to be responsive to local market a liitle bit
Authorize a host-country firm to manufacture and sell its product
Pros and cons
Advantage
Low transit cost
Gain local taste
Gain local cost and production advantage
Disadvantage
Reduce profit potential
Lose control over quality
Specific asset in firm is difficulty transferring
Divergent goals appear between partners
Host country may acquire capabilities and compete
Take theme park of Harry Porter for instance
FDI
Direct operation in a new location
Exporting
Pros and cons
Advantage
Economies of scale
Rapidly enter the market
No extra need and cost to operate in other country
Distribution channel established
Disadvantage
High transportation cost
High tariff
Less advantage on capabilities elsewhere
Less control over marketing/distribution
Hard to product customization
Why exporting
Trading industry is the easiest way
Expand new customer base
International Industries
Sheltered Industries
Global Industries
Multi-Domestic Industries
Aerospace,Agriculture
Automobile, Oil
Railroads, Milk
Consulting, Hotels