firms sometimes produce their own goods or develop and deliver their own services in foreign markets -US automakers produce cars and car parts in latin america, europe, and asia -firms sell the output of their VAC in downstream markets domestically and in other countries -all nations have firms making and selling different things worldwide -there are different approaches firms can take to enter foreign markets -the key to successful internationalization of value creation activities is finding the right fit between markets and strategies to penetrate them 4
Wednesday, September 12, 2018-four generic categories of internationalization strategies are: international, multinational, global, and transnational -international firms: are those that leverage their domestically successful home strategies across foreign markets where there are no competitors yet -do not need to tailor their products to be competitive or establish any local presence -strategies work well with little or no FDI since exporting does the job -multinational firms: domestically successful internationalize by recreating their entire VAC in each country where they do business -very welcome in each host nation, not cost effective -global firms: use cost effective, standardization strategies to internationalize -regardless of their location, consumers use their products exactly the same way -they view foreign markets as one large global market that they serve from one or very few big plants where they maximize cost savings -transnational firms combine elements of both the multinational and global strategies -standardize parts of their VAC wherever they can while localizing those elements that need to change from market to market -multinational enterprise or MNE is the largest of the giant firms engaging in international business -type of entity may use any or all various modes of entry, considers the world its playing field for both upstream and downstream activities and has holds in substantial FDI ignorer to control a number of VAC’s in multiple countries -size is not a restriction on who can be a player in international business -majority of businesses worldwide are small enterprises -small and medium sized multinational enterprises (SMEs) -a growing number that have internationalized their VACs after achieving success domestically -others go global even before achieving local market share 5
Wednesday, September 12, 2018-some firms that internationalize from conception rather than going through a longer evolutionary process are called born global firms -an example of an SME, but the difference is that BG internationalizes its VACS far earlier in its evolution -recent phenomenon made possible by the technological advances driving globalization -several ways firms can internationalize through collaboration -one firm possesses something the other lacks to make them viable competitors internationally -can commit resources to a new entity known as an international joint venture or IJV -this joint creation competes on its own for a finite period of time to accomplish a specific goal -
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