ECP 6701 Competitive Strategies in Expanding Markets

1. ECP 6701 Competitive Strategies in Expanding Markets International Business: An Overview

2. Readings • Daniels, Radebaugh and Sullivan, International Business, Chapter 1

3. International Business: An Overview • Why companies engage in international Business? • Why the growth of international business has accelerated? • Patterns of international competition • The evolution of international competition and globalization • Patterns of international expansion and strategy.

4. Introduction • The Field of International Business • The goal of private business is to increase or to stabilize profits. • Success is influenced by • Foreign sales • Foreign resources • Government business (regulated companies or public companies) may or may not be profit-motivated

5. Introduction • Why firms engage in international business? • To expand their sales • To obtain resources • To diversify their sources of sales and supplies • To minimize competitive risk

6. Introduction • Reasons for Recent International Business Growth • Expansion of technology • Business is becoming more global because • Transportation is quicker • Communications enable control from afar • Transportation and communications costs are more conducive for international operations • Liberalization of cross-border movements • Lower governmental barriers to the movement of goods, services, and resources enable companies to take better advantage of international opportunities

7. Introduction • Development of supporting institutional arrangements • Institutional arrangements • Are made by business and government • Ease flow of goods • Reduce risk • Increase in global competition • More companies operate internationally because • New products quickly become global • Companies can produce in different countries • Domestic companies’ competitors, suppliers, and customers become international

8. Modes of International Business • Merchandise exports and imports • Tangible items (e.g., cars, televisions, e.t.c) • Service exports and imports • Tourism and transportation • Performance of services • Use of intangible assets

9. Modes of International Business • Investments • Direct investment : Key features are • Control • Access to foreign markets • Access to foreign resources • Higher foreign sales than exporting (often) • Partial ownership (sometimes)

10. Modes of International Business • Investments • Portfolio investment: Key features • It is used for diversification purposes • Noncontrol of foreign operations • Financial benefit (for example, loans)

11. Patterns of international competition • The pattern of international competition differs from industry to industry. • Multidomestic industries • Competition in one country does not affect competition in other countries. • Global industries • A firm’s competitive position in one country is significantly affected by its position in other countries

12. External Competitive Environment • Economic forces determine competitive advantage and comparative advantage. • The role of government is excessive in international markets. • The competitive environment created by other companies. • The next slide illustrates the international business environment.

13. International Business: Operations and Influences

14. International Strategy Evolution • Patterns of international expansion: • Strategies for heavy international commitments usually evolve gradually from • Passive to active expansion • External to internal handling of operations • Deepening mode of commitment • Geographical diversification • Leapfrogging of Expansion

15. The Usual Pattern of Internationalization

16. Summary • Companies engage in international business to expand sales, acquire resources, diversify sales and supplies, and minimize competitive risk. • International business transactions have been growing rapidly because of technological improvements and government policies.

17. Summary • A company can engage in international business through exports, imports, foreign investment. • There is gradual evolution of international business strategies.