Management Risks Potential threat to a firms operations in a country due to the problems that
managers have making decisions in the context of foreign markets.
1. Several challenges such as culture, language, income level, preferences etc. exist when
1. Demand Conditions The nature of home-market demand for the industrys
product or service.
2. Related and Supporting Industries The presence or absence in the nation
of supplier industries and other related industries that are internationally
I. Bottom of the Pyramid (BOP)
It has $14 Trillion market (5 billion people)
Challenges of marketing to the bottom of the pyramid:
1. Must have more affordable product - i.e. Unilever: shampoo for 1 cent.
2. Must meet their needs (not our own) (how?)
1. Factor Conditions (Endowments): Factors that a company needs in order to operate.
Example: Skilled labor, infrastructure, education, capital, technology, and also other skills
such as: speed and efficiency (Japan JIT).
2. If a country has these fact
Although these countries are relatively poor, they are growing rapidly.
1. If the innovation does not come from first-world multinationals, there are any
numbers of local firms that are ready to grab the market with low-cost
2. As the consumers
1. Firms will have More Buyer Power - (why? MacDonalds)
2. Firms will have More Cost Reduction for their Manufacturing, R&D, Marketing
because they sent part of the operation to another place.
Example: Nikes decision to manufacture their ath
The Global Economy Overview
International trade has increased over time. In 2015, US has more trades across the
countries than across the nation.
2. Some industries such as semiconductor, telecommunication, computers etc. have already
more trade across
Chapter 7 International Strategy
Why Global Market? - Companies are attracted to the Global Market because it provides them
with many opportunities.
Not only the global market helps firms to cut cost but also it boosts their revenue.
2. Globalization H
Economical Risks Potential threat to a firms operations in a country due to economic policies
and conditions, including property rights laws, and enforcement of those laws.
Examples of Economical Risks - Copyrights, fake products: China is responsible
Advantages of the International Expansion:
1. Firms can Increase Market Size and it creates Economy of Scale:
The firm will increase the size of potential markets for their products and services.
2. The firm will also attain Economies of Scale, which h