Transcript Document

OHT 2.1
Internationalisation
Process
Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004
OHT 2.2
Methods of internationalisation
• Export based
– Direct exporting
– Indirect exporting
• Non-equity based
– Licensing
– Franchising
• Equity based
– Joint ventures
– Foreign direct investment (fdi)
– Consortia, Keiretsus and Chaebols
Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004
OHT 2.3
Why invest abroad?
• Supply factors
– Production costs
– Distribution costs
– Availability of natural resources
– Access to key technology
– Incentive schemes to reduce costs
Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004
OHT 2.4
Why invest abroad?
• Demand factors
– Saturation of home market
– Avoidance of trade barriers
– International product life cycle
– Demand from business customers now abroad
– Demand from overseas governments for
inward fdi (incentive schemes)
– Strategic issues: e.g. matching rivals; seeking
more ‘local’ responsiveness.
Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004
OHT 2.5
Theories of internationalisation
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Ownership – specific advantages
Location – specific advantages
Eclectic theory
Sequential theory
Simultaneous theory
Network theory
International product life cycle (IPLC)
Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004