Better serve key customers that relocated overseas Economies of production and marketing Confront international competitors Nations: Facilitates industries and workers to be more productive Allows countries to achieve higher living standards Without international trade, most nations would be unable to feed, clothe, and house their citizens at current levels Not only do nations, companies, and stakeholders benefit from international trade, modern life would be virtually impossible without it Steps of internationalization: Domestic focus Experimental export asked to send product/services overseas – increased commitment Export/Import: tangible merchandise (clothing, computers, cars) as well services (intangible) such as banking, consulting, etc. FDI Foreign direct investment, most committed involvement, long term, direct – influence on production, distribution and service of one’s product, partial or complete ownership of acquired assets Four risks in internationalization: Cross-cultural risk: difference in language, lifestyle, mindset, customs, religion, etc. Country risk: political risk government intervention in companies operation and – performance caused by political, legal and economic environment in a foreign country, Venezuela Exxon Mobil example – Currency risk: adverse fluctuation in exchange rates causing the foreign denomination to rise sharply, or inflation, etc. potential loss or failure from poorly developed or executed business Commercial risk: strategies or procedures Advantage of Internationalization: Developing new business opportunities Access to foreign knowledge base Reduce poverty - Disadvantage of Internationalization: Loss of sovereignty ability to govern own affairs: Wal-Mart, Coca Cola, Sony; – Complex business structures, either centralized or decentralized Commitment of substantial funds Sharing of technical know-how Exchange Currency Offshoring or outsourcing results in job losses – Effect on the poor child labor: 250 million around the world (Nike, sweat shops) – Effect on natural environment Effect on national culture McDonaldization, Coca-Colonization erosion of local – – traditions, appetite for products across the world the same habits: “Western” – Hollywood
Better serve key customers that relocated overseas Economies of production and marketing Confront international competitors Nations: Facilitates industries and workers to be more productive Allows countries to achieve higher living standards Without international trade, most nations would be unable to feed, clothe, and house their citizens at current levels Not only do nations, companies, and stakeholders benefit from international trade, modern life would be virtually impossible without it Steps of internationalization: Domestic focus Experimental export – asked to send product/services overseas Export/Import: increased commitment tangible merchandise (clothing, computers, cars) as well services (intangible) such as banking, consulting, etc. FDI – Foreign direct investment, most committed involvement, long term, direct influence on production, distribution and service of one’s product, partial or complete ownership of acquired assets Four risks in internationalization: Cross-cultural risk: difference in language, lifestyle, mindset, customs, religion, etc. Country risk: political risk – government intervention in companies operation and performance caused by political, legal and economic environment in a foreign country, Venezuela – Exxon Mobil example Currency risk: adverse fluctuation in exchange rates causing the foreign denomination to rise sharply, or inflation, etc. Commercial risk: potential loss or failure from poorly developed or executed business strategies or procedures Advantage of Internationalization: Developing new business opportunities Access to foreign knowledge base Reduce poverty - Disadvantage of Internationalization: Loss of sovereignty – ability to govern own affairs: Wal-Mart, Coca Cola, Sony; Complex business structures, either centralized or decentralized Commitment of substantial funds Sharing of technical know-how Exchange Currency Offshoring or outsourcing – results in job losses Effect on the poor – child labor: 250 million around the world (Nike, sweat shops) Effect on natural environment Effect on national culture – McDonaldization, Coca-Colonization – erosion of local traditions, appetite for “Western” products – across the world the same habits: Hollywood
Review_F09_f.docx