GMS 522 Final Exam Latest Update Graded A+

GMS 522 Final Exam Latest Update Graded A+ Internationalization -defined as the process by which firms become more engaged in international markets. -the process involves varying degrees of financial and other resource commitments to foreign markets and of course, various degrees of risk Mode of Entry central to the process of internationalization is the selection of an entry mode. These range from low commitment modes such as exporting high commitment modes such as foreign direct investment Motivation the motivation for internationalization may either be proactive (firm wants to) or reactive (firm has little choice) Uppsala or U model the firm first expands to a psychically close market and having become familiar with that market, will target slightly more distant markets. experiential knowledge is the major driver of its pattern of internationalization. The Uppsala model has been criticized for its linear approach to the internationalization process Dunnings OLI framework firms expand abroad to capitalize on ownership, location and internalization advantages Advantages of Dunnings OLI framework -ownership of foreign assets will confer on the firm a competitive advantage in the foreign market which is not enjoyed by competing firms that do not own such assets -location confers advantages in terms of tax or other investment incentives offered by the gov't of the host country or a more favorable industrial relations climate for the firm's operations -internalization of firm-specific advantages such as proprietary technology confers benefits to the firm over alternatives such as licensing Springboard or latecomer perspective emerging market firms internationalize in order to overcome limitations inherent in their home-country environment, such as small market size, institutional immaturity or a relatively unsophisticated consumer base. To accomplish this firms aggressively acquire strategic assets from MNCs in developed countries Systematic four-step process 1)Macro segmentation 2)Preliminary screening 3)Secondary screening 4)Final security selection Macro Segmentation -develop segmentation criteria -apply to group countries Preliminary screening -develop additional criteria -apply to reduce the # of candidate countries Secondary screening -firm assesses its own capabilities relative to the market Final security selection -conduct site visit Selecting Foreign Markets the end result of the process is the selection of one country from the universe of potential candidates by a process of elimination International consumer segmentation consumers in cross-national segments may have more in common with their counterparts in other countries than they do with citizen of their own countries. If this is the case a two-stage model may be appropriate in which segmentation is undertaken at both the country and consumer levels