Assessing internationalisation

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Define off-shoring with an example
When companies outsource + subcontract business activities overseas. - This could involve moving in-house functions (i.e. a factory) overseas or involve outsourcing to an overseas supplier. Brexit = banks moving to Frankfurt + Dublin from UK.
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What are the costs of off-shoring?
Legislation makes it hard to set up, implications for CSR (damaged brand image), longer lead times for supply + risks of poorer quality, impact of exchange rates, communication costs + additional management costs.
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Define re-shoring
Transfer of business operations back to the country of origin. Clarks shoes along with many companies has re-shored back to the UK. Began partly because of the need to speed up order times, improve service and trade on the Made in Britain image.
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Why would a business re-shore its operations?
Easier to train staff, quicker turn around time, better communication, faster lead time, fluctuating exchange rates, high transport costs, import duties + transport disruptions.
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State the 4 ways that enable a business to enter into international markers
Export, Licensing, Alliance + Direct Investment.
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Define exports as a way to enter international markers
When goods/services produced in one country are sold in another.
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Define licenses as a way to enter international markers
A legal arrangement whereby one company authorises another to manufacture or sell their goods, services, technology or brand in return for a fee or royalty payment.
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Define alliances as a way to enter international markers
Agreements between two or more companies to pool their resources in order to undertake a specific project.
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Define direct investment as a way to enter international markers
When a company with its headquarters in one country has operations in another country.
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State the advantages + disadvantages of exporting
Reduces risk + little investment required. Speeds up entry to international trade. BUT, may face import tariffs + trade barriers, incurs transport costs + limits access to local info about the international market.
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State the advantages + disadvantages of alliances
Combines the resources + strengths of companies = can learn + benefit from each other. Less investment than going in alone. BUT, can be hard to manage, less control. Greater risk than exporting +licensing, partner in alliance may become a competitor.
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State the advantages + disadvantages of licensing
Reduces risk + little investment required. Speeds up entry to international trade. Avoids import tariffs + trade barriers. BUT, lack of control over marketing of products + licensee may become a competitor.
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State the advantages + disadvantages of direct investment
Greater knowledge of local markets, opportunities to make better use of specialist skills. BUT, method has highest level of risk, requires huge resources + LT commitment + well thought-out strategy for management.
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Define multinational corporations
A business that has operations outside of the country in which they are headquartered. Off-shoring makes a business multi-national, NOT outsourcing. i.e. Nike + Coca-Cola.
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How does Bartlett + Ghoshal's model of International Strategy illustrate the influences on buying, selling + producing abroad?
Outlines the strategies for operating a multinational company based on the pressure for local responsiveness + pressure for global integration.
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State the 4 types of international strategies in Bartlett + Ghoshal's matrix
Global strategy (LOW LR + HIGH GI) i.e. Microsoft. Multi-domestic strategy (HIGH LR + LOW GI)i.e. McDonalds. International strategy (LOW GI + LR)i.e. Starbucks. Transnational strategy (HIGH LR + GI)i.e. Haier.
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Explain how the example of Amazon Prime + Netflix differ in how they operate in India (internationally)
Netflix = little effort to 'localise' programme to suit the market. Pricing staying at global price of $8 a month (targeting affluent Indian's). Amazon = producing 'local' content for 2 years before launch (glocalisation). Price set $15 per year.
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Define internationalisation
Growing tendency of companies to operate across national boundaries.
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State the impact of internationalisation on the financial area of a business
Operating on a larger scale = lower avg. costs + benefits revenue (Amazon 33.1%). BUT, neg impacts = exchange rates (Brexit saw pound value drop, but benefitted share prices) + tax systems in the country (Amazon + Apple caught in EU tax crackdown).
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State the impact of internationalisation on the marketing area of a business
Common mistakes with global marketing: Failure to adequately research the local market. Reliant on only secondary research. Not adapting their marketing mix: price = local or global? product = may need to adapt to diff local laws, customs or tastes.
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State the impact of internationalisation on the HR area of a business
Culture has a large impact (Hofstede's Cultural Dimensions), communication becomes harder + costlier, employment rights must be considered (90's Nike sweatshops), coordination (new management styles + monitoring systems may be needed), demotivation.
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State the impact of internationalisation on the operations of a business
Common operational issues: delays + lead time, risk of counterfeiting, change in production process, reduced control (impacts quality + production schedule), deciding what to produce, location decisions, + security of intellectual property.
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State Examples of failures in global branding + its impact on the marketing department.
KFC slogan “its finger lickin’ good!” = translated in Chinese as “eat your fingers off”. Gerber selling baby food in Africa, used the same packaging as they did in the US = baby on the label. Africans have pics showing the ingredients = eating baby.
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States Examples of businesses operational department being impact through internationalisation
Primark "shocked" by their Bangladesh building collapse where their clothes were produced. Also a note found in a workers trousers as a 'cry for help'. Apple failed to protect Chinese factory workers + in very poor conditions.
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Other cards in this set

Card 2

Front

What are the costs of off-shoring?

Back

Legislation makes it hard to set up, implications for CSR (damaged brand image), longer lead times for supply + risks of poorer quality, impact of exchange rates, communication costs + additional management costs.

Card 3

Front

Define re-shoring

Back

Preview of the front of card 3

Card 4

Front

Why would a business re-shore its operations?

Back

Preview of the front of card 4

Card 5

Front

State the 4 ways that enable a business to enter into international markers

Back

Preview of the front of card 5
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