2. OHT 2.1 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Internationalisation Process

3. OHT 2.2 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Methods of internationalisation Export based –Direct exporting –Indirect exporting Non-equity based –Licensing –Franchising Equity based –Joint ventures –Foreign direct investment (fdi) –Consortia, Keiretsus and Chaebols

4. OHT 2.3 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Why invest abroad? Supply factors –Production costs –Distribution costs –Availability of natural resources –Access to key technology –Incentive schemes to reduce costs

5. OHT 2.4 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Why invest abroad? Demand factors –Saturation of home market –Avoidance of trade barriers –International product life cycle –Demand from business customers now abroad –Demand from overseas governments for inward fdi (incentive schemes) –Strategic issues: e.g. matching rivals; seeking more ‘local’ responsiveness.

6. OHT 2.5 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Theories of internationalisation Ownership – specific advantages Location – specific advantages Eclectic theory Sequential theory Simultaneous theory Network theory International product life cycle (IPLC)