Initiation

• Internationalization of LSEs


  • Expand research and development (R&D)
  • Expand production
  • Expand selling and other business activities into international markets
  • Expand strategically in incremental steps over time
• Internationalization of SMEs


  • Often a relatively discrete process
  • Thinks about each internationalization venture as distinct and individual
• Internationalization Motives (According to John H. Dunning)


  • Market-seeking
  • Efficiency-seeking
  • Resource-seeking
  • Strategic asset-seeking
• Market-seeking


  Companies go abroad to find new customers
• Efficiency-seeking


  Companies go abroad to lower the costs associated with performing economic activities and/or with the aim of rationalizing their already existing operations in various locations
• Resource-seeking


  Companies venture abroad to access resources that are not readily available at home or that can be obtained at a lower cost abroad
• Strategic asset-seeking


  Companies go abroad to obtain strategic assets (tangible or intangible), which may be critical to their long-term strategy but that are not available at home
• Internationalization Motives: Proactive & Reactive

  • Proactive motives - Represent stimuli to attempt strategy change based on the firm's interest in exploiting unique competencies or market possibilities
  • Reactive motives - Indicate that the firm reacts to pressures or threats in its home market or in foreign markets and adjusts passively to them by changing its activities over time
• Managerial Urge


  A motivation that reflects the desire, drive and enthusiasm of management towards global marketing activities. Can exist simply because managers like to be part of a firm that operates internationally. A reflection of general entrepreneurial motivation – of a desire for continuous growth and market expansion.
• Internationalization Triggers


  Internal or external events taking place to initiate internationalization
• 3 Most Important Triggers for International Operations

  • Management's interest in internationalization
  • Foreign enquiries about the company's products/services
  • Inadequate demand in the home market
• Inward/Outward Internationalization


  Inward internationalization - Importing

  Outward internationalization - International market entry and marketing activities
• Trade Associations and Other Outside Experts


  • Export agents
  • Governments
  • Chambers of commerce
  • Banks
• Barriers Hindering Internationalization Initiation

  • Insufficient finances
  • Insufficient market knowledge
  • Lack of foreign market connections
  • Lack of export commitment
  • Lack of capital to finance expansion into foreign markets
  • Lack of productive capacity to dedicate to foreign markets
  • Lack of foreign channels of distribution
  • Management emphasis on developing domestic markets
  • Cost escalation due to high export manufacturing, distribution and financing expenditures
• De-Internationalization


  A process, determined by internal and external factors, where the multinational company shifts to a strategic configuration that has a lower international presence