Introduction to Internationalization, International Business Video Lecture | International Business - B Com

hey guys it's anagen here and welcome to
week five of the business strategy this
week we're moving on from our broader
generic business level strategies that
we talked about last week and we're now
considering those strategies are
relevant when the firm decides to expand
internationally and this broad process
is known as the internationalization of
the firm we're going to go through quite
a few key issues that come with this
internationalization process today why
firms do it and potentially also some of
the issues that may arise from it all
right so first of all looking at this
types of triggers what sort of things
cause firms to expand internationally in
the first place and what are some of the
benefits therefore that may arise from
that international expansion we're going
to look at why companies expand into
particular countries what sort of what
we call determinants of national
competitive advantage will cause a firm
to expand into one country over another
as well as looking at the three broad
international strategies that firms may
adopt once they have multiple businesses
across multiple countries will then look
at the different entry modes that firms
can use that the different ways in which
they will enter these foreign markets as
well as finishing with some of the risks
that are associated with international
strategies alright so in terms of the
type of international strategy that
we're going to look at for this unit
unfortunately it has nothing to do with
our friends at prestes worldwide ashame
I know but the type of international
strategy that we are looking at is that
through which a firm sells its goods or
service outside its home country so
whenever a firm sells products or
delivers services outside of its native
country its engaging willingly or not in
an international strategy what you might
find and what you typically find these
days is that almost every firm certainly
except perhaps the very small firms in
their infancy stages are either
intentionally or not adopting an
international strategy the reason why
that is the case and if you think about
it if you as a
have a website then you typically are
able to engage in international business
if you spit this is especially the case
of course if you have an online store
that means that people in foreign
countries are able to buy your products
and often ship them abroad
internationally that means that you will
need an international strategy so with
that being the case what are the sorts
of triggers that we see that are causing
firms to expand internationally well the
first as you can see here is to extend a
product's life cycle now we find this is
especially the case if your firm is
operating in a domestic industry that is
which it reached rather its mature stage
that is usually to provide by things
like stagnant or potentially even
declining sales within that particular
industry if that is the case then you
are usually as a firm looking to expand
your sales in other ways and the most
obvious way to do that is to gain access
to additional customers in foreign
markets so if we take Australia for
example there are only so many people
within this particular country that you
can sell your products to so if you find
that your industry has rich reach that
mature stage where we find stagnant or
potentially even declining sales the
only way for you to increase in the
number of sales for your firm is to
expand internationally and gain access
to new groups of customers overseas
another key reason why we see firms
internationalizing is to gain access to
raw materials now this is especially the
case if your firm relies on certain raw
materials as key parts of its production
process and what we tend to find is that
at the time firms will expand overseas
to reduce the transportation times from
one country to another potentially if
you can establish your own operations in
that foreign country you don't have to
rely on somebody else
to supply that for you also we see
opportunities to integrate operations on
a global scale there is very much
borderless demand for globally branded
products today we see a lot of items
which can be sold across a number of
international borders without that much
adjustment needed
a good example here would be Apple a lot
of their products are pretty much the
same in terms of the differences from
one country to another so we see this
global met demand now that firms are
looking to take advantage of there are
also opportunities to better use rapidly
developing technologies the internet
being the obvious example here 2530
years ago for most firms there was no
such thing as an online store so these
days it's much much easier for firms to
utilize technologies like the Internet
to not only raise awareness of their
products but in many cases actually sell
it to those foreign markets finally we
also see gaining access to consumers in
emerging markets as another key reason
why firms will internationalize and this
is especially the case if you're an
Australian firm for example looking to
gain access into an emerging market and
typically those in Southeast Asia are
very common examples of the types of
markets types of emerging markets rather
that we see Australian firms targeting
alright so a good example of a firm that
is engaged in international expansion is
Procter & Gamble and now as you can see
on the side of your screens they do
produce a wide range of products in a
wide range of industries and this
expansion of their of their corporation
has been facilitated by their
internationalization
Procter & Gamble established themselves
as a company in 1837 originally in their
home market of the United States and as
you can see they originally produced
just soaps and candles as a relatively
narrow product range by 1915 they'd
expanded internationally into Canada
which is of course a separate country to
the United States by 1930 they purchased
heavily and sunt which was an English
firm and in doing so had expanded over
into the United Kingdom by 1948 that
established a specific overseas division
whose sole responsibility was managing
these overseas foreign divisions and by
1963 they had in fact established a
European
Eagle Center in Belgium whose
responsibility was to cater for the
specific needs of their European
customers by 1973 they entered the Asian
market through the more specific
Japanese market by 95 the sales outside
have actually reached a point where they
were 50 percent of their total
corporation sales so at least half of
their sales by this point we're not even
in their home country anymore despite
the u.s. remaining the largest market so
their organizational structure by now
had changed to four regional sectors as
you can see North America Latin America
Asia and Europe as well as the Middle
East and Africa
each of these different regional sectors
so important to their chief operating
officer who was located in the US but
you can see that they are now clear
almost organizations within
organizations as the company has
expanded and finally by 2004 Procter &
Gamble now has the workings of a global
firm in terms of its organizational
structure with what we call a matrix
structure put in place where the
organization responsibilities were
divided amongst regional marketing
product based R&D and manufacturing and
regional logistics so the firm has
become much more complicated and this is
one of the byproducts that we do see a
lot of firms when they engage in the
internationalization over the next few
videos we're going to talk about some of
the positive things that will come out
of that as well as some of the potential
negatives as well