International businessLesson 2 of 2 in the course International Management

Internationalization Paths and Foreign-Market Entry Strategies

5 flashcards · 5 quiz questions · 5 match pairs · 5 fill-in sentences · English

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Summary

Companies consider international markets to reach customers, pursue growth, and build durable competitive advantages. This lesson explains the forces that make internationalization attractive and introduces the trade-offs managers must consider when choosing how to enter a market.

A company that depends on one national market is exposed to the limits and uncertainties of that market. International expansion can provide access to more customers and allow a firm to spread its commercial activity across multiple markets. Improvements in information technology and the growth of online commerce have made it easier for companies of different sizes to reach international buyers.

All flashcards

Sustainable competitive advantage
The ability to create value and compete effectively over time.
Emerging-market opportunity
Potential demand created as economic growth and rising incomes increase purchasing power.
Exporting limitation
Reliance on intermediaries can reduce a firm's influence over local selling and product presentation.
Political risk in foreign direct investment
The possibility that political decisions will affect a firm's operations or investment.
Born-global success factors
Differentiated products, effective marketing and distribution, customer relationships, and international experience can support early global activity.

Quiz questions

  1. What can exporting allow a company to do without building production facilities abroad?Answer: Test demand in foreign markets with a relatively low commitment.
  2. What is one way international strategic alliances can benefit their partners?Answer: They can combine complementary capabilities and provide access to markets.
  3. Why is growth potential in an emerging market not proof that a company will succeed there?Answer: Success also depends on local needs, competition, rules, and operating resources.
  4. How should managers interpret research reporting higher profitability among exporting firms?Answer: It reports an association, not a guarantee that exporting causes higher profits.
  5. What can information technology do for companies seeking international customers?Answer: Make it easier to reach buyers and coordinate across borders.

Based on Principles of Management by David S. Bright, Anastasia H. Cortes, Eva Hartmann, K. Praveen Parboteeah, Jon L. Pierce, Monique Reece, Amit Shah, Siri Terjesen, Joseph Weiss, Margaret A. White, Donald G. Gardner, Jason Lambert et al. (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.

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