International businesses invariably face decisions about whether they make all or just some of the components used in their final product and therefore buy in from other sources (outsourcing) those components they decide not to make. This make-or-buy decision is related to the degree to which a firm is vertically integrated: that is, the extent to which a firm is its own supplier and market. At one extreme a firm can make all of its own inputs and be its own supplier; at the other extreme, it can buy all its inputs and rely on external suppliers. Partial integration implies that some components are made and others bought. A major benefit of making inputs (backward or upstream integration) is the degree of control maintained over cost, quality and timeliness of delivery. Major drawbacks are the cost of investment and expertise needed to provide these inputs. A benefit of buying is Continue reading
International Business Basics
International Marketing Research – Definition, Categories and Process
International marketing managers make the same basic types of decisions as do those who operate in only one country. Of course, they make these decisions in a more complicated environment. As with marketing decisions, the basic function of marketing research and the research process does not differentiate between domestic and multinational research. However, the process is complicated almost exponentially as more and more countries are involved in the same decision. Marketing research practices and techniques have become truly global. For example, the world’s largest research firm, Nielsen, is headquartered in the U.S. but derives almost two-thirds of its revenue from outside the U.S. It is standardizing much of the data it routinely collects in 27 different countries. The main factors which influence marketing research in different countries are; Cultural differences. Culture refers to widely shared norms or patterns of behavior of a large group of people. It is the values, attitudes, Continue reading
Import Process
Importing refers to the purchase of foreign products for use or sale in the home market. Importing involves searching foreign markets for acceptable products and sources of supply, providing for transfer of the product to the home market, arranging financing, negotiating the import documentation and customers procedure, and developing plans for use or for resale of the item of service. Thus, successful importing depends on more than good buying; it requires planning for acceptance of the product and delivery of the promised benefits. The importing firm has the responsibility to determine whether the foreign product or service will meet the needs to the home market. Essentially the import process comprise the following five stages: Determining market demand and purchases motivation. Locating and negotiating with sources of supply. Securing physical distribution. Preparing documentation and customs processing to facilitate movement among countries and organizations. Development a plan for resale or use. 1. Continue reading
Country of Origin Effect in International Marketing
The Country of Origin Effect is the influence that the manufacturer country has on the positive or negative consumer judgment. Studies have shown that when a customer becomes aware of the country of origin of a product his/her image about the product is influenced either positively or negatively according to his perceptions. Consumers tend to have a stereotype about product and countries that have been formed by experience, hearsay, myth. These stereotypes are generally broad and vague according to which they judge a specific country or a specific product to be the best: French Perfumes, Italian Leather, Chinese Silk and Japanese Technology are all examples of such stereotypes. Therefore the country, the type of product, and the image of the company all its brand play a crucial rule in deciding whether the country of origin will engender a positive or a negative reaction. Country Image: Precursors to Country of Origin Continue reading
Globalization of an Existing Business – Need, Process and Impacts
Interdependence and integration of individual countries of the world is called globalization. The globalization integrates not only economies but also societies. The globalization process includes globalization of markets, production, technology and investment. However globalization has two important components, one is globalization of market and other is globalization of production. Today, a company can view the entire world as one country for its business operation. In fact the businessmen were doing their operations even in the past. History indicates that business operations were existing across the countries even in the old days. Therefore the concept of global business is as old as civilization. Crossing national and political boundaries for the purpose of business may be called as globalization. Globalization has the following features: Planning and operating to expand business throughout the world. Removing the differences between domestic and foreign markets. Buying and selling goods and services from one country to another Continue reading
Levels of International Strategy
The globalization of the economy, internationalization of businesses and emergence of new markets are all key themes in contemporary business. Whereas international business may once have been the province of organisations with sufficient scale and reach, these types of companies — typically multi-national corporations – no longer have a monopoly on this kind of business. Increasing numbers of firms, of varying scale, are confronted with compelling reasons for expanding their activities across multiple national boundaries. In some cases, such motivation includes the knowledge that success in international markets is a pre-requisite for survival; if competitor organisations succeed in international markets, they may achieve the scale and liquidity which affords them sustainable competitive advantage. There are mainly three levels of international strategy. They are; Corporate Strategy Business Strategy Functional Strategies Short description of these three are given bellow, 1. Corporate Strategy: Corporate strategy attempts to define the domain of businesses the Continue reading