This document discusses factors for companies considering expanding globally. It addresses why companies internationalize, how to search for new markets, what constitutes a target market, and if a company is ready. Key factors reviewed include the PESTEL analysis, Porter's Diamond model, Vernon's product life cycle theory, and conducting a SWOT analysis. Cultural considerations and avoiding cross-cultural blunders are also emphasized. Recommended reading on international business strategies and theories is provided.

1. Global Companies and the World
Marketplace
3 6 5 SA M I N T E R NAT I O NA L B U S I N E S S
2 0 1 5 - 2 0 1 6
Carmen Elena Dorobăț
C o v e n t r y U n i v e r s i t y B u s i n e s s S c h o o l

2. Overview
Why do companies go global?
How do we search for and approach new
markets?
What is the target market?
Is the company ready to internationalise?
SWOT analysis
Porter’s diamond
Vernon’s product life-cycle theory
Cross-cultural awareness

3. Quick reminder: PEST(EL)
Political
factors
Economic
factors
Social factors
Technological
factors
Legal
factors
Environmental
factors

4. Why do companies go global?
• Competitive pressure
• Saturated domestic market
• Foreign orders
• Proximity to international customers (geographical or
psychological)
Reactive
motives
• Managerial urges
• Profit and growth goals
• Uniqueness of the product or service
• Tax benefits
Proactive
motives

5. How do we search for new markets?
The factors in the PEST(EL) analysis become possible opportunities and/or challenges for
international businesses, or for companies that plan to internationalize their activity
Based on this and other internal analyses, companies devise strategies (Lecture 6)
The attractiveness of a country’s markets changes
◦ as time goes by
◦ as the macroenvironment changes
◦ as the company develops
Remember: No one is perfect

6. How do we approach a new market?
1. Look for a favourable macroenvironment
2. Look for your target market (who are you selling to?)
3. Are we ready to internationalise / expand?
4. Gain in-depth knowledge of the new market(s)
5. Beware of the competition (old and new) and local culture
6. Create connections with local business
7. Come up with a strategy
8. Keep control of the expanding business, manage costs and the growing
internal structure

7. What is the target market?
What need is your product/service satisfying?
How does your customer look like?
 age, gender
 marital status
 income level
 hobbies
What will they gain by using your product/service?
How can you become the best available option for
them?
Total available
market
Potential
market
Target market
Actual sales

8. Is the company ready to internationalise (1)
• What obstacles do you face?
• Are quality standards or
specifications for your products
changing?
• Is changing technology
threatening your position?
• Do you have bad debt or cash-
flow problems?
• Could any of your weaknesses
seriously threaten your business?
• What good opportunities
can you spot?
• What interesting trends
are you aware of?
• Where is the industry
heading?
• What could you
improve?
• What should you
avoid?
• What are people
in your market
likely to see as
weaknesses?
• What factors
lose you sales?
• What advantages does your
organization have?
• What do you do better
than anyone else?
• What unique or lowest-cost
resources can you draw
upon that others can't?
• What factors mean that
you "get the sale"? Strengths Weaknesses
ThreatsOpportunities
SWOT
analysis

9. Brainstorm!
Devise a quick SWOT analysis for Coca-Cola!

10. Is the company ready to internationalise (2)
SWOT
analysis
Porter’s
“diamond”
Demand
conditions
Related &
supporting
industries
Factor
conditions
Firm
strategy,
structure &
rivalry
Government
policies
Chance
Sources of competitive advantage
Competitive advantage is an advantage that a firm
has over its competitors, allowing it to generate
greater sales or margins and/or retain more
customers than its competition.
The more sustainable the competitive advantage,
the more difficult it is for competitors to
neutralize the advantage.
Competitive advantage can be located in the
firm's cost structure, its product offerings, its
distribution network, or its customer support.

11. Is the company ready to internationalise (3)
SWOT
analysis
Vernon’s Product Life-Cycle Theory
Introduction – R&D, and launch the
product
Growth – sales increase at the fastest
rate
Maturity – sales are near the highest
level, but the rate of growth is slowing
down (market is becoming saturated,
new competitors are entering the
market)
Decline –sales begin to fall

12. Culture in international business
Business success in a variety of countries requires cross-cultural literacy (language, values, attitudes,
preferences, religious views, political inclinations)
Culture and cultural differences are not static, they evolve in time

13. Cultural dimensions
F. Trompenaars (1996) G. Hofstede (1983)

14. Cross-cultural blunders

15. Recommended reading
Hill, C.W. (2012) International Business: Competing in the Global Marketplace, New York: McGraw Hill, pp. 98-133
Morrison, Janet (2009) International Business: Challenges in a Changing World, London: Palgrave Macmillan.
Griffin, Ricky and Michael Pustay (2014) International Business: A Managerial Perspective, 8th edition, Prentice Hall.
Rugman, Alan and Simon Collinson (2012) International Business, 6th Edition, FT Pearson/Prentice Hall, Harlow.
Oviatt, Benjamin M. and Patricia Phillips McDougall (1994)“Toward a Theory of International New Ventures,” Journal of International Business Studies, First
Quarter 1994, 47, available at http://aib.msu.edu/awards/25_1_94_45.pdf.
Amal, Mohamed, Gabriel Baffour Awuah, Henrique Raboch, and Svante Andersson (2013)"Differences and similarities of the internationalization processes of
multinational companies from developed and emerging countries", European Business Review, 25(5): 411 – 42.
3 Major Changes McDonald's New CEO Is Making to Save the Golden Arches, available at http://www.thestreet.com/story/13135948/1/3-things-mcdonalds-
new-ceo-just-admitted-about-the-golden-arches.html
Porter, Michael (1979) “How Competitive Forces Shape Strategy”, available at https://hbr.org/1979/03/how-competitive-forces-shape-strategy/ar/1
Apple and Google Seek to Defy the 10-year Smartphone OS Life Cycle, Forbes (2012), available at
http://www.forbes.com/sites/elizabethwoyke/2012/01/20/apple-and-google-seek-to-defy-10-year-smartphone-os-life-cycle/
Oraman et al. (2011) “The Firms’ Survival and Competition through Global Expansion: A Case Study from Food Industry in FMCG Sector”, available at
http://ac.els-cdn.com/S1877042811015497/1-s2.0-S1877042811015497-main.pdf?_tid=b7243214-f64c-11e4-890b-
00000aacb35d&acdnat=1431177188_4ac2d5967c562c71faa85db67a6bd231