Presentation on theme: "Initiation of internationalization"— Presentation transcript:
1 Initiation of internationalization Lecture by Ewa Baranowska-Prokop, Ph.D.Initiation of internationalization
2 Learning objectives Discuss the reason why firms go international Explain the difference between proactive and reactive motivesAnalyse the triggers of export initiation
3 Learning objectives (2) Explain the difference between internal and external triggers of export initiationDescribe different factors hindering export initiationDiscuss the critical barriers in the process of exporting
5 Motives for internationalization ProactiveProfit and growth goalsManagerial urgeTechnology competenceForeign market opportunitiesEconomies of scaleTax benefitsReactiveCompetitive pressuresDomestic marketOverproductionUnsolicited foreign ordersExtend sales of seasonal productsProximity to international customers
6 What is this? Internationalization triggers Internal or external events taking place to initiate internationalization are known as ______.There follows an explanation of some key terms:Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness.Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries.Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions.Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.Internationalization triggers
7 Triggers of export initiation Internal triggersPerceptive managementSpecific internal eventImporting as inward internationalizationExternal triggersMarket demandCompeting firmsTrade associationsOutside experts
10 Barriers hindering export initiation Insufficient financesInsufficient knowledgeLack of foreign market connectionsLack of export commitmentLack of capitalLack of productive capacityLack of foreign channels of distributionManagement emphasis on developing domestic marketsCost escalation
11 Barriers hindering the process of internationalization General market risksCommercial risksPolitical risks
12 General market risks Comparative market risks Competition from other firmsDifferences in product usageLanguage and cultural differencesDifficulties in finding the right distributorDifferences in product specificationsComplexity of shipping services
13 Commercial risks Exchange rate fluctuations Failure of export customers to pay due to contract disputes, bankruptcy, refusal to accept product, or fraudDelays and/or damage in the export shipment and distribution processDifficulties in obtaining export financing
14 Political risks (1) Foreign government restrictions National export policyForeign exchange controls imposed by host governmentsLack of governmental assistance in overcoming export barriersLack of tax incentives
15 Political risks (2)High value of domestic currency relative to export marketsHigh foreign tariffs on imported productsConfusing foreign import regulations and proceduresComplexity of trade documentationEnforcement of national legal codes regulating exportsCivil strife, revolution, and wars disrupting foreign markets
16 Risk-management strategies Avoid exporting to high-risk marketsDiversify overseas marketsInsure risks when possibleStructure export business so that buyer bears most risk
17 For discussion (1)Export motives can be classified as reactive or proactive. Give examples of each group of export motives. How would you prioritize these motives? Can you think of motives other than those mentioned in the chapter? What are they?What is meant by ‘change agents’ in global marketing? Give examples of different types of change agent.
18 For discussion (2)Discuss the most critical barriers to the process of exporting.What were the most important change agents in the internationalization of Haier (Exhibit 2.2)?What were the most important export motives in Japanese firms (Exhibit 2.1)?