1. 1 The Internationalization Process Chapter Key Points Rationale
Dimensions
Course Content Overview

2. MOS 4404 International Enterprise
Professor: Trevor Hunter
Office: FB 303
Office Hours: Tues. 1:30-3:30pm
Office Phone: ext. 4338
Class Times: Tuesdays 10:30-11:30 (Lec.)
Thursdays 10:30-12: (Case)

3. Teaching Methodology Combination of lectures and cases
Lectures on Tuesdays, Cases on Thursdays
Cases based on lecture topics used to reinforce learning
Required Text: International Management, Beamish, Morrison, Inkpen & Rosenzwieg, 2003, 5th edition

4. Student Evaluation Individual work – Case write-ups (two) – 35%
Group Consulting Report (one) – 45%
Individual class participation (ongoing) – 20%
No mid-term test or final exam – poor way to evaluate performance
Integrative Consulting Report - a much better way of measuring understanding

5. Course Purposes Course Perspective:
Globalization is the pervasive force in our world and the mechanism through which globalization occurs is the MNC
Important to examine and understand how and why MNCs are created and what they do

6. Course Purposes
Examine and understand how to manage MNCs, globalization and the associated functions of international business
Examine and understand the forces that affect MNC operations and performance
Learn how to decide when and why a firm should internationalize and the optimal place to go

7. Rationale
Firms become international in scope for a variety of reasons:
Desire for continued growth
Unsolicited foreign orders
Domestic market saturation,
Potential to exploit a new technological advantage
The dominant reason relates to performance

8. Process Internationalization is the process by which
Firms increase their awareness of the influence of international activities on their future
Establish and conduct transactions with firms from other countries.

9. Process
International transactions can influence a firm’s future in both direct and indirect ways. Business decisions made in one country, regarding such things as foreign investments and partnership arrangements, can have significant impact on a firm in a different country—and vice versa. The impact of such decisions may not be immediately and directly evident.

10. Process
Development of an awareness and appreciation for the role of foreign competition becomes integral
This is key due to the “Liability of Foreignness” firms often face when entering new markets
Opportunities exist to turn the liability into an asset.

11. Dimensions of Internalization
Internationalization has both inward-looking and outward-looking dimensions.
The outward-looking perspective incorporates an awareness of the nature of competition in foreign markets

12. Dimensions of Internalization (cont.)
Includes the following modes of activities:
Exporting.
Acting as licensor to a foreign company.
Establishing joint ventures outside the home country with foreign companies.
Establishing or acquiring wholly owned businesses outside the home country.

13. Dimensions of Internalization (cont.)
Similar to the Sequential Approach theory of internationalization:
As firms build confidence, experience and success:
Existing Business
New Business
Partially Owned
Wholly Owned
(1) Capital Participation
(2) Joint Venture
(3) Acquisition
(4) Greenfield

14. Dimensions of Internalization (cont.)
Not all firms do or can follow the sequential process of internationalization:
Dependent upon industrial and environmental conditions
Need to coordinate operations in many countries and many value chain activities

15. Dimensions of Internalization (cont.)
Internationalization affects firms in equally important ways from an inward perspective.
The related modes of activity include:
Importing/sourcing.
Acting as licensee from a foreign company.
Establishing joint ventures (JVs) inside the home country with foreign companies.
Managing as the wholly owned subsidiary of a foreign firm

16. Dimensions of Internalization (cont.)
Many firms have an appreciation of the global environment but do not seek out international opportunities in countries that differ greatly
Questions to explore:
What products/services can be “global”?
How can a firm know if it has a globally competitive product?
How can the firm successfully take a product global?

17. Dimensions of Internalization (cont.)
Internationalizing is
Complex
Difficult
Risky
Uncertain
Time consuming
But it can be done and have huge rewards!

18. Course Content Overview
The Global Business Environment
The World of International Trade
Learning how to find an appropriate location for international expansion
What makes risks, opportunities, compatibility etc.
Understanding the international trade environment
STEP analysis
Comparative and competitive advantage

19. Course Content Overview
Managing Export Operations
To where should the firm expand?
What is the best way to enter a market?

20. Course Content Overview
Global Sourcing Strategy
Is it better to import a good/service or purchase or produce locally?
From where?
Degree of integration vs. importing
Organization structure – one plant or many, related or autonomous?
Where should R&D be located?

21. Course Content Overview
Licensing
Opportunity to leverage technology without costs of production and distribution
Core vs. periphery
Risks?

22. Course Content Overview
The Design and Management of International Joint Ventures
Why do them?
Advantages vs. risks
Types of cooperation
Guidelines for successful design and management

23. Course Content Overview
International Strategy Formulation
How do MNCs formulate product/market strategy to maximize international competitiveness?
Conflicting pressures to achieve global efficiencies and be locally responsive
Keeping on track despite all the environmental influences and uncertainty

24. Course Content Overview (cont.)
The Evolving Multinational
How do MNCs change over time and in response to environmental factors?
“Base-of-the-pyramid” marketing

25. Course Content Overview (cont.)
The Global Manager
Managing the New Global Workforce
Developing and leveraging global strategic skills
Manage change, transition, cultural diversity
Work in flexible structures
Fostering and leveraging diversity

26. Course Content Overview (cont.)
Strengthening International Government Relations
Non-market strategy – a key resource in overcoming the liability of foreignness
Opportunities exist to turn the liability into an asset