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Lezione di strategia aziendale
 

Lezione di strategia aziendale

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    Lezione di strategia aziendale Lezione di strategia aziendale Presentation Transcript

    • University of Cagliari, Faculty of Economics, a.a. 2012-13Business Strategy and PolicyA course within the II level degree inManagerial Economicsyear II, semester I, 6 creditsLecturer:Dr Alberto Asqueraasquer@unica.itPhone: 070 6753399
    • Business Strategy and PolicyLecture 7Internationalisation Strategy
    • Introduction1. What is internationalisation?2. Where do firms go international? The “global shift”3. How do firms go international?4. What issues do international firms face?5. What kind of institutions do support internationalisation?- - - - - - - - - - - - -6. Summary
    • 1. What is internationalisation?Internationalisation is the process through which a firm expands itsbusiness outside the national (domestic) marketFirms go international:to enter new output marketsto reduce costs and enhance competitivenessto exploit their own core competences in new marketsto share risks over a larger marketto take advantage of lower labour cost, lower taxation, cheapernatural resources(sometimes, because the domestic market is just too small forcompany growth)
    • 1. What is internationalisation?Firms generally go international by exporting their products first, thenby establishing sale representatives in the foreign countries, andthen possibly setting up production facilitiesEventually, international firms may develop into:Multinational corporations (MNC): a firm that carries out its valuechains in more than one country. It is generally headquartered inone home country while it also operates in one or more hostcountries.Trans-national corporations (TNC): a MNC that does not identifyitself with any specific nation, but acquires truly international (i.e.,not country-dependent) features and high local responsivenessBritish East IndiaCompany, est. 1600Royal DutchShell, est. 1907Siemens, Berlin,est. 1847
    • 1. What is internationalisation?Example: Cobra beer1989Est. Fulham, LondonFirst brewed inBangalore, India,by Mysore BreweriesExported to the UK1990Licensed and brewedin the UK byWells & Youngs1997SubsidiariesExported toabout 45 countries2009Majority of the firmacquired by aUS-Canada brewer
    • 2. Where do firms go international? The “global shift”Theories about international trade and localisation:Absolute cost advantage (Smith, 1776)Comparative cost advantage (Ricardo, 1817)Size of economic activity and distance (“gravity model of trade”)Market imperfections to exploit (e.g., proprietary technology,exclusive control of inputs, scale economies, control of distributionchannels, etc.)Higher returns to scale and network effects that (possibly inconjunction with favourable government policies) shield industriesfrom international competition (“new trade theory”)
    • 2. Where do firms go international? The “global shift”
    • 2. Where do firms go international? The “global shift”
    • 2. Where do firms go international? The “global shift”
    • 3. How do firms go international?Entry strategies into foreign markets include:Merely exporting a firms products into a foreign market, possibly withthe support of trade brokersLicensing a firms production and marketing process, or asking forroyalties to be paid for the use of firms assets and resourcesFranchising a firms businessDirectly undertaking production and selling in a foreign countrya) through a multinational approach by adapting to local marketsb) through a global approach by mass-marketing the same productStrategic alliances and joint ventures with foreign firms
    • 3. How do firms go international?Entry strategies into foreign markets include:Merely exportingLicensing or asking for royaltiesFranchising a firms business“Multinational approach”“Global approach”Strategic alliances and joint ventures
    • 4. What issues do international firms face?Internationalisation strategy brings about some issues, for example:Managing cultural differencesFacing risk of exchange rate fluctuation(e.g., €/US$)Coping with unwelcoming host government policies
    • 5. What kind of institutions do support internationalisation?Among various institutions that support internationalisation, animportant role is played by theChambers of Commerce AbroadThey are business associations established as private sectororganisations, based on the principle of freedom of association,and that operate for the interests of their members without anyobligation to assist the government (i.e., CCA are akin to so-called Anglo-Saxon model rather than Continental model CC).
    • 5. What kind of institutions do support internationalisation?Among various institutions that support internationalisation, animportant role is played by theChambers of Commerce AbroadThey generally originate from the spontaneous gathering ofbusinessmen and/or business company executives based in thesame local area within foreign countries, that later apply forrecognition of CCA status from home country public authorities orhome national association of CC.The CCA play a silent albeit substantive role in trying to shapeinstitutions and regulations of foreign markets (e.g., AmchamBelgium; Cowles, 1996, 2001, and Peterson and Cowles, 1998),although they have not been largely researched so far.
    • The CCA perform various activities:influencing economic and social actors for creating and seizingnew business opportunities,working with rule-making organisations that affect internationaltrade and foreign investments,preventing potential conflicts with stakeholders and minimisingpolitical risk,and actively engaging the media and other public arenas forsafeguarding image and reputation of their members.The meaning of what they do – sometimes labelled “businessdiplomacy” – can be better defined by drawing some conceptualboundaries between their activities and those of other relatedconcepts (Lakoff, 1987).5. What kind of institutions do support internationalisation?
    • Field ofactivityOrganisationalvenuesDesiredperformanceObjectives ofthe activityMode ofoperationRole ofactor(s)Diplomacy(Lee andHudson,2004; Satow,1917; Saneret al., 2000)Inter-governmental The pursue ofpeaceful means forconducting businessbetween statesTo build and sustainpositive andconstructive relationsbetween statesAdvising, organising,negotiating, informationgathering and analysis,rules compliance,ambiguity handlingFacilitatorsEconomic/commercialdiplomacy(Rana, 2002;Lloyd, 2003;Coolsaet,2004; Yeung,2004)Inter-governmental orbusiness-governmentThe pursue ofeconomic gains andadvantages forcountriesTo promote exports,attract inward foreigninvestments, andstimulate othereconomic activitiesAdvising, networking,negotiating, gatheringinformation andanalysing it, and conflicthandlingProfessionalsalesmanshipBusinessdiplomacy(Saner et al.,2000)Inter-governmental orbusiness-governmentThe pursue ofeconomic gains andadvantages forbusiness companiesTo establishfavourable conditionsfor businesscompanies activitiesCreating and seizingbusiness opportunities,safeguarding image andreputation ofbusiness companies,affecting rule-making,conflict preventionEntrepreneurialbrokerPublicrelations(Hutton, 1999;Bernays,1955; Harlow,1977)Inter-organisationalor personalThe pursue of theinterests of theorganisation or of thepublicTo actively reapopportunities or reactto threatsCommunicating,cooperating, issuemanagement, gatheringinformation,defining responsibilities,embrace change,anticipate trends.Strategicrelationshipmanagers5. What kind of institutions do support internationalisation?
    • Let us look at CCA established by four main EU countries...Germany (Die Deutschen Auslandshandelskammern, AHK)about 40,000 companies associated in 80 countriesFrance (Union des Chambres de Commerce et dIndustrieFrancaises à lEtranger, UCCIFE)̧about 25,000 companies associated in 78 countriesItaly (Assocamereestero)about 24,000 companies associated in 49 countriesThe UK (British Chambers of Commerce Abroad)in over 90 countriesin 15 Asian countries (Bangladesh, Cambodia, China, India,Indonesia, Japan, South Korea, Laos, Malaysia, Philippines,Singapore, Sri Lanka, Taiwan, Thailand, Vietnam)5. What kind of institutions do support internationalisation?
    • Country of originHost Germany France The UK ItalyBangladesh 1996 1991Cambodia 1998China 1981 1992 1980s (1950s) 1991Hong Kong N.A. 1986 N.A. 1997 (1993)India N.A. 1977 N.A.Indonesia 1970 (1924) 1979 1990sJapan N.A. 1918 1950s 1972South Korea 1981 1986 1977 2000sLaosMalaysia N.A. 1991 1964Philippines N.A. 1919 1997 2011Singapore 2004 1979 1998 (1974) N.A.Sri Lanka N.A.Taiwan 1981 1991 N.A.5. What kind of institutions do support internationalisation?
    • Common membership services(access to members directory, subscription to newsletters and bulletin, access tosectoral industry publications and country reports, participation to social events,workshops, and seminars, attendance to language courses, benefits from CCAsmedia presence, and access to job seekers databases)“On demand” services for members(provision of information on specific companies or markets, the search and screeningof potential suppliers and business partners, the organisation of and assistance forbusiness meetings and trade missions, the organisation of and assistance forparticipating to trade fairs and exhibitions, the legal assistance for the establishmentof businesses, business domiciliation and secretary services, legal assistance andadvice, translation and interpreter services, advertisement and sponsorships, andemployment services)Consultative and policy advocacy functions(members committees focused on various thematic areas such as corporate socialresponsibility, industrial relations, education, young professionals, governmentrelations, policy and consultation, sustainable development, taxation and regulation;they also serve to share information and updates on legislation, policy initiatives,government officers political orientations, and turnover of key officers positions withinthe governmental bureaucracy)5. What kind of institutions do support internationalisation?
    • Type of CCA Activities OrientationProto-CCA Maintenance of registered address, at leastminimal networking between members, emergentvisibilityEstablishing membershipbase and enlargingmembershipTransit node Gathering data and providing general informationon the country and industries, facilitatingnetworking through social events and other venuesStrengthening ties betweenmembers and diffusinginformationService provider Providing legal assistance and advice,advertisement and sponsorship, translation andinterpreter services, organisation and assistancefor business meetings and trade missions, andorganisation and assistance for participating totrade fairs and exhibitionsMeeting business needs ofspecific membersProspector Gathering data and providing information onspecific companies and markets, searching andscreening potential suppliers and business partnersRealising businessopportunitiesPolicy advocate Managing issue-specific committees, formulatingpolicy issues, and communicating issues and policyproposals to policy-makersRepresenting policy positionson international trade andforeign investment issueswithin policy-making venues5. What kind of institutions do support internationalisation?
    • Type of CCA Activities OrientationProto-CCA Maintenance of registered address, at leastminimal networking between members, emergentvisibilityEstablishing membershipbase and enlargingmembershipTransit node Gathering data and providing general informationon the country and industries, facilitatingnetworking through social events and other venuesStrengthening ties betweenmembers and diffusinginformationService provider Providing legal assistance and advice,advertisement and sponsorship, translation andinterpreter services, organisation and assistancefor business meetings and trade missions, andorganisation and assistance for participating totrade fairs and exhibitionsMeeting business needs ofspecific membersProspector Gathering data and providing information onspecific companies and markets, searching andscreening potential suppliers and business partnersRealising businessopportunitiesPolicy advocate Managing issue-specific committees, formulatingpolicy issues, and communicating issues and policyproposals to policy-makersRepresenting policy positionson international trade andforeign investment issueswithin policy-making venuesEscalation at the EU, rather than domestic, level:Instance: establishment of European-ASEAN Business Centre inThailand, by Eurochambers and various EU member states CCA,under the patronage of the EU Commission.It aims to “drafting, publishing and dissemination of joint Europeanindustry position papers and lobby them to the Royal ThaiGovernment in regards to new and existing regulations; supportingwith trade related information, legal analysis and advisory services(IPR & Standard Helpdesk); organizing European Flagship events/conferences, seminars and EU pavilions at trade fairs to foster theEuropean dimension in the business community; and interacting asthe European business voice in Thailand” (EABC, 2011).5. What kind of institutions do support internationalisation?
    • Contemporary institutional and political context includes EUsefforts to intensify bilateral or regional trade relationships withAsia (Global Europe: Competing in the World, EU DG Trade,2006)The coming into force of the Lisbon Treaty (2009) movedinternational trade policy, including trade of services, trade-relatedintellectual property rights protection, and foreign investment, tothe exclusive competence of the EUInstance: Free Trade Agreement (FTA) between the EU andSouth Korea (signed 6.10.2010, come into force 1.7.2011). It isunprecedented in terms of scope and rapidity of tariff liberalisationand removal of non-trade barriers across several sectors(including automotive, pharmaceuticals, and consumerelectronics).Regarded as a “template FTA” for other similar negotiations5. What kind of institutions do support internationalisation?
    • 6. SummaryMain pointsInternationalisation - the process through which a firm expands itsbusiness outside the national (domestic) market – is pursued becauseof several reasonsThe rapid growth of Asian economies triggers a global shift oftraditional established patterns of international trade and FDISuccessful internationalisation calls for a careful entry strategy andcapacity to cope with various issuesInternationalisation of firms may be supported by various public andprivate organisations – including Chambers of Commerce Abroad