Part 2 –Semi-Finals
Strategic Vision – The stimulus for
Why do Companies engage in International Business?
- In operating internationally, a company should
consider its mission (what the company will seek to
do and become over the long run), its objectives
(specific performance targets to fulfil its mission) and
strategy (the means to fulfil its objectives).
There are Three major operating objectives that may
influence companies to engage in international business.
 To achieve more sales/ Expand Sales:
Any company’s Sales are dependent on two factors:
1. The consumer’s interest in the product/ services
2. Consumer’s willingness and ability to buy.
The number of people and the amount of their
purchasing power are higher for the world as a whole
than for a single country so companies may increase
their sales by defining certain markets in international
terms.
 To Acquire Resources
Manufacturers and distributors seek out products,
services and components produced in foreign
countries. They also look for foreign capital,
technologies and information they can use at home.
For example, Disney relies on cheap manufacturing
bases in China & Taiwan to supply clothing to its
souvenir outlets.
 Diversify Sources of Sales & Supplies
a. Take advantage of the fact that the timing of
business cycles – recession and expansion.
Recession – decrease in sales of a country
Expansion – increase in one that is expanding
economically.
What are the push and pull factors of the environment
acting on the Global firm?
 Pull factors (Proactive reasons): These are those
factors of attraction, which pull the business to the
foreign markets. In other words, companies are
motivated to internationalize because of the
attractiveness of the foreign market. Such
attractiveness includes relative profitability and
growth prospects.
 Push factors (Reactive reasons): These are those
factors of the market & environment, which prompt
the companies to internationalize e.g. compulsions
of the domestic market like market saturation.
List of Push and Pull Factors:
a. Increased Profitability through Economies of Scale
b. Growth Opportunities
c. Competition
d.
internationalization comes from the urge to grow,
the need to become more competitive, the need to
diversify and to gain strategic advantages of
internationalization. The prospects & problems of
market selection, the modus operandi and the
business strategies to be adopted in different
markets, however, depend a lot on the international
business environment.
Nature and Recent Trends
Conducting and managing international business
operations – is a crucial venture due to variations in
political, social, cultural and economic factors, from
one country to another country. For example, most
of the African consumers prefer less costly products
due to their poor economic conditions whereas
German consumer prefer high quality and high
priced products due to higher ability to buy.
Foreign Trade – refers to the flow of goods across national
political borders. Therefore, it is refers to exporting and
importing by international marketing companies plus creation
of demand, promotion, pricing etc.
Language is an important factor in international business.
Even though “English Language” is a major language in
business operations in the world, there is still a large number
of “non English” speaking countries. Therefore international
business houses should train their employees in the local
languages of the host country.
Features of International Business Environment
 Value system
 Hierarchy of Strategic Intent
 Management structure & nature
 Internal Power Relationship
 Human Resources
Other Factors:
 Company Image & Brand Equity
 Physical Assets and Facilities
 Technological capabilities
 Marketing Resources
Micro Environment
 Suppliers
 Marketing Intermediaries
 Competitors
 Customers (Individuals, Households, Industries,
Commercial Establishment, Government and other
Institutions
 Publics
The International Technological Environment
Technology – refers to invention from applied science or
engineering research. Technological innovation can replace
existing products and companies.
Why is it so important?
 It brings new products, processes and materials.
 It directly impacts every aspects of our society
(transportation, energy, communications,
entertainment, health care, food and agriculture,
industry)
 It alters the rules of global and competition.
What is the Technology’s Impact on Customer Value?
 The cost of technology is causing customer
value assessment of technology based products
to focus on other dimensions such as quality,
service & relationship;
 Technology also provides value through the
development of new products and the way
existing products are produced;
 Many companies are using technological
developments to allow recycling products
through the manufacturing cycle several times;
 Another approach is pre-cycling – efforts by
manufacturers to reduce waste by decreasing
the amount of packaging they use.
Current Trends in the Technological Environment
 Globalization
 Time compression
 Shortened Product life cycle
 Shortened Development times
 Decreasing pay back periods
 Technology Integration
1. Combining technologies to develop new
products
2. Combining technologies to commercialize
products