MGMT 425 Exam 3 Budden SELU

** Planning for International Business

Process of identifying and selecting the organization's objectives and how to achieve those objectives

** Strategy for International Business

Set of planned actions

** International Strategy at the Corporate Level

1. Growth

2. Retrenchment

3. Stability

4. Combo

** Corporate retrenchment strategy

Downsize

** Corporate stability strategy

Same Size

** Corporate combo strategy

Combine other strategies

** International strategy at the Business level

1. Cost leadership

2. Differentiation

3. Focus

** International strategy at the Department level

1. Primary activities

   • ex: sales + marketing

2. Support activities

   • HR + tech

** Types of structures for international business

1. International division

2. International area

3. Global product

4. Global matrix

International Organizational Structures

• Centralization + Decentralization

• Coordination + Flexibility

Centralization

Decision made at the highest level

Decentralization

Decision made at lowest level

** Types of work teams

1. Self-managed

2. Cross functional

3. Global

** Cross Functional work teams

Different functional areas, put on team together

** Global work teams

Upper level managers and different countries work together

Strategic MGMT

• what managers do to develop an org.

  • planning

  • organizing

  • leading

  • controlling

** Four steps for screening potential markets

1. Identify basic appeal

2. Assess the national business government

3. Measure market / site potential (Income elasticity)

4. Select the market / site (Competitive analysis)

** Types of Data

Primary and secondary

Market Research

Collection + Analysis of info to assist the decision making concerning markets / sites

** Difficulties of Int’l Research

• Availability of Data

• Comparability of Data

• Cultural Problems

** Sources of international data (Secondary)

1. International organizations (World Bank)

2. Government agencies (CIA + TIC)

3. Industry and trade associations

4. Service organizations (Ernest Young: “Doing Business In..”)

5. Internet + world wide web

** Sources of international data (Primary)

1. Trade Shows + Trade Missions

2. Interviews + Focus Groups

3. Surveys

4. Environmental Scanning

Evaluating Investment Proposals

• Eliminating Future Cash Flows

  • present value

  • ROI

  • discount rate

• Risk

Evaluating Investment Projects

1. Home Country Considerations

   • employment

   • balance of payments

2. Host Country Considerations

   • wages + quality of life

   • domestic companies

   • local cost of borrowing

Entry Mode

• Institutional arrangement by which a firm gets its products, technologies, human skills, or other resources into the market

• Types

  • Exports

  • Contractual Entry Modes

  • Investment Entry Modes

Strategic Factors in Selecting Entry Modes

• Cultural Environment

• Political + Legal Environment

• Market Size

• Int’l Experience

** Exporting

• Send good to another country for sale. Cheapest, least risky, and most often used

• Why?

  • expand sales

  • diversify sales

  • gain experience

** Types of financial instruments used for exporting

1. Advanced payment

2. Documentary collection

3. Letter of credit

4. Open account

** Documentary collection (exporting)

• Bill of exchange/bill of lading

  • (agree to pay certain amt w/in certain amt of time)

** Letter of credit (exporting)

• Bank pays once you receive product

** Open account (exporting)

• Pay later

Degree of Export Involvement

1. Direct Exporting

   • sell directly to buyers

2. Indirect Exporting

   • sell to intermediaries

Four-Step Model for Developing an Export Strategy

1. Identify Potential Market

2. Match Needs to Abilities

3. Initiate Meetings to Build Trust

4. Commit Resources

3-5 yrs before profit on exports

** Types of Contractual Entry Modes

1. Licensing (manufacturing)

2. Franchising (services)

3. Management Contracts

4. Turn-key Projects (do most things for you)

** Types of Investment Entry Modes

1. Wholly owned subsidiaries

2. Joint Ventures

3. Strategic Alliance

4. Selecting partner for cooperation

** Joint ventures

Find company in that country and create together (Sharing risks and profits)

** Strategic Alliance

Work together on projects

** Selecting partner for cooperation

Make sure companies have same values

** Types of counter trade

1. Barter (no money involved)

2. Offset

3. Counter purchase

4. Switch trading

5. Buy back

** Offset

Unspecific product

• agree to buy some of your product if you buy theirs

** Counter purchase

Specific product at specific date

** Switch trading

Sells obligation to make purchase

** Buy back

Sell company equipment - they produce and you buy product back

Marketing

• Globalization’s Impact

• Standardization

• Adaptation

Managing Marketing Activities

• Product Policies

  • laws + regulations

  • cultural differences

** Types of product policies

1. Brand name

2. Product name

3. National image

4. Counterfeit goods and black markets (damage brand name)

5. Shortened product life cycles (ex: yearly iPhone)

** Promotional strategies

Push and pull

** Push strategy

Go to the retailer and get them to sell our product

** Pull strategy

Try to pull the product and create demand for it before stocking it

** Distribution strategies

1. Designing distribution channels

2. Influence of product characteristics

3. Special distribution problems

** Influence of product characteristics

How long or short - Weight and size compared to cost (Value density)

** Special distribution problems

Theft and corruption

** Pricing strategies

Worldwide and dual pricing

** Worldwide pricing

One selling price

** Dual pricing

Different selling price in export markets

** Marketing communication

The process of sending promotional messages about products to the target market

*Noise - Anything interferes you from getting info

Process of Marketing Communication

Company or source -> Media -> Potential Buyers ->

** Reinvestment

Reinvest in something profitable

** Divestment

Scaling back operations

** When would companies use divestment or reinvestment?

Companies don't invest in markets that have political, social, or economic problems

Factors Affecting Pricing

1. Transfer Prices

2. Arm’s Length Pricing —> depends on supply + demand

3. Price Controls —> upper + lower limits

4. Dumping —> sell product for less in export market

Managing Production Activities

1. Total Quality MGMT

   • continuous improvement

2. Int’l Logistics

3. Managing the Workforce

   • ethnocentric staffing

   • polycentric staffing

   • geocentric staffing