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Methods of Internationalization

Proiect Powerpoint engleza despre metodele de internationalizare, ASE, REI. Methods of internationalization

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89 views9 pages

Methods of Internationalization

Proiect Powerpoint engleza despre metodele de internationalizare, ASE, REI. Methods of internationalization

Uploaded by

Laura-Cristina CHIPER
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Chiper Laura Cristina

REI, 903A
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Methods of
internationalization
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What is internationalization?

 Internationalization refers to the process by which a company


expands its operations beyond its domestic borders and
becomes involved in international trade and commerce. This
can include a variety of activities such as exporting products or
services to foreign markets, establishing subsidiaries or joint
ventures in foreign countries, or engaging in cross-border
mergers and acquisitions.
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The importance of internationalization for
businesses in today's global marketplace
1. Access to new markets: Internationalization provides businesses with access to new
markets, which can help them expand their customer base and increase their revenues.

2. Risk reduction: Diversifying activities across different countries can help businesses
reduce the risk associated with economic and political fluctuations in a single country.

3. Improving competitiveness: Businesses that internationalize their activities can gain


access to new technologies and resources, which can help them improve their products
and services and become more competitive in the global marketplace.

4. Cost reduction: By moving some activities to countries with lower costs, such as
production or outsourcing services, businesses can reduce costs and increase profits.

5. Increasing brand awareness: Internationalization can help businesses increase their


brand awareness by entering new markets and reaching new customers, which can
lead to increased brand recognition and loyalty.
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Exporting
Exporting is one of the most common and traditional methods of internationalization for
businesses. It involves selling products or services produced domestically to customers in foreign
countries. There are two primary methods of exporting:

 Indirect exporting occurs when a


 Direct exporting occurs when a company sells its products or services to
company sells its products or an intermediary, such as an export trading
company, which then sells the products to
services directly to customers in
customers in foreign markets.
foreign markets.
 This approach allows businesses to enter
 Direct exporting gives businesses foreign markets with less investment and
greater control over the sales risk, as intermediaries typically handle the
process, customer relationships, and logistics, marketing, and distribution.
the overall market strategy.
 It can limit a company's control over the
sales process and customer relationships,
as well as reduce profit margins due to the
additional costs associated with working
with intermediaries.
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Licensing

 Licensing is a method of internationalization in which a company


licenses its technology, brand, or product to a foreign company in
exchange for royalties or other compensation. The foreign company,
in turn, can use the licensed technology or brand to produce and
sell products in the local market.

 The licensing process:

1. Identification of potential licensees

2. Negotiation of licensing terms

3. Implementation of the licensing agreement


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Franchising

 Franchising involves a company allowing a foreign company to use its brand,


trademark, products, services and business model in exchange for a fee.

 The franchising process:

1. Identification of potential franchisees: A company identifies potential franchisees who


have the necessary resources and capabilities to operate a successful franchise
business in the target market.

2. Negotiation of franchising terms: The franchisor and franchisee negotiate the terms of
the franchise agreement, including the initial franchise fee, ongoing royalties, and the
terms and conditions of the franchise relationship.

3. Implementation of the franchise agreement: Once the franchise agreement is signed,


the franchisee can begin operating the franchise business using the franchisor's
brand, products, and services.
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Joint Venture
The joint venture method of internationalization involves two or more companies collaborating to create a
new entity, typically with the goal of sharing risks and resources in a foreign market. In a joint venture, each
company contributes resources such as capital, technology, and expertise to the new entity, which is then
jointly owned and managed by the partners.

Advantages : Disadvantages :
 Shared resources and risks: they allow companies to  Complex decision-making: Joint ventures can involve
share the costs, risks, and resources associated with complex decision-making processes, as partners
expanding into a foreign market. may have different priorities, goals, and perspectives.
 Access to local market knowledge: it provide companies
 Limited control: they may limit the control that each
with access to the local market knowledge and expertise
partner has over the new entity, as management and
of their partners, which can help them adapt to local
ownership decisions must be made jointly.
market conditions.

 Improved competitive advantage: Joint ventures can help  Potential for conflict: they may be at risk for conflict
companies gain a competitive advantage in a foreign or disputes between partners if they have different
market by combining their strengths and resources to priorities or goals, or if they are unable to reach
create a stronger, more competitive entity. agreement on key issues.
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The foreign direct investment

The foreign direct investment (FDI) involves a company establishing a physical presence in a foreign
market through investment in a subsidiary or acquisition of a local company.

Advantages : Disadvantages :
 Complete control: FDI allows a company to have  High investment costs: FDI requires significant
complete control over its operations in a foreign market, upfront investment costs, including legal fees, market
including the ability to make decisions and implement research, and infrastructure development.
strategies independently.
 Political and regulatory risks: FDI involves
 Local market knowledge: FDI provides a company with navigating complex political and regulatory
the ability to gain firsthand knowledge of the local environments in foreign markets, which can pose
market conditions and develop tailored strategies to risks to the success of the investment.
meet local needs.
 Cultural challenges: FDI also requires companies to
 Long-term benefits like increased profitability and navigate cultural differences and language barriers,
market share, and greater stability in the face of which can pose challenges to effective
changing market conditions. communication and collaboration.
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Bibliography:

 https://www.mbaknol.com/managerial-economics/methods-
of-internationalization/

 https://www.studysmarter.co.uk/explanations/business-stud
ies/business-development/internationalisation/

 https://www.investopedia.com/terms/i/internationalization.a
sp

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