Mangt 420 test 2 - Chapter 5 4 Levels of International...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 5 4 Levels of International activity that differentiate organizations ( level of activity from lowest-highest) Domestic business - a business that acquires all of its resources and sells all of its products or services within a single country. International business - a business that is based primarily in a single country but acquires some meaningful share of its resources or revenues (or both) from other businesses. Multinational business - one that has a worldwide marketplace from which it buys raw materials, borrows money, and manufactures its products and to which it subsequently sells its products. Global business - a business that transcends national boundaries and is not committed to a single home country. Entry Strategies: When an organization makes the decision to increase its level of international activity. *These approaches to internationalization are not mutually exclusive, most large firms use all of them simultaneously. Importing- bringing a good, service, or capital into the home country from abroad. (least committed) Exporting - making a product in the firm’s domestic marketplace and selling it in another country. (Importing or exporting (or both) is usually the first type of international business in which a firm gets involved. Advantages- little risk, easiest way to enter a market with a small outlay of capital. Products sold as-is, so no need to adapt product to the local conditions.) Licensing - (Franchising) An agreement whereby one company allows another company to use its brand name, trademark, technology, patent, copyright, or other assets in exchange for a royalty based on sales. (a company has a foreign company manufacture or market its products under a licensing agreement. Factors that may lead to this decision include excessive transportation costs, government regulations, and home production costs. Advantages- increased profitability and extended profitability. Frequently used for entry into less-developed countries where older technology is still acceptable and in fact may be state of the art. Disadvantages- primary disadvantage is licensing is inflexibility. A firm can tie up control of its product or expertise for a long period of time. If the licensee does not develop the market effectively, the licensing firm can lose profits. A second disadvantage is that licensees can take the knowledge and skill to which they have been given access for a foreign market and exploit them in the licensing firms home market. Business partner becomes a business competitor.) Strategic Alliances -a cooperative arrangement between two or more firms for mutual gain. Joint venture - a special type of strategic alliance in which the partners share in the ownership of an operation on an equity basis. (Advantages- they can allow quick entry into a market by taking advantage of the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/17/2008 for the course MANAGEMENT 420 taught by Professor Turnley during the Spring '08 term at Kansas.

Page1 / 8

Mangt 420 test 2 - Chapter 5 4 Levels of International...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online