4. Uppsala internationalization model
Johanson and Wiedersheim-Paul, 1975
No regular
export
(sporadic)
Independent
representatives
(export modes)
Foreign sales
subsidiary
Foreign
production
and sales
subsidiary
Market A
Market B
-
Market N
Increasing market commitment
Increasinggeographic
diversification
6. The transaction costs analysis model
Coase, 1937, Williamson, 1985)
Organization of international activities
and the choice of international market
entry mode
1
„If the transaction costs through externalization (e.g.
through and importer or agent) are higher than the
control cost through an internal hierarchical system, then
the firm should seek internalization (hierarchies) of
activities, i.e. implementing the global market strategy in
wholly –owned subsidiaries. Or… if the friction between
buyer and seller is too high then the firm should rather
internalize, in the form of its own
suubsidiaries.“(Hollensen, S., 2007)
2
26. National Competitiveness “policy clusters”
External
Competitiveness
•Openness to
international trade
Regulatory
Competitiveness
•Attractiveness of
the domestic
business
environment
•Regulation
supportive of
efficient markets
Public sector
Competitiveness
Investment in
infrastructure
Security
Education
Dangers: ideological bias (“liberalisation”) lack of economic analysis
Source: Weymouth and Feinberg
46. History
• Founded in Shenzhen in 1987 by Ren Zhengfei.
• Initially reverse engineering foreign technologies
rather than relying on importing lesser technology.
• Controversy when Huawei would pay “dividends” to
public officials who used Huawei equipment in their
networks.
• Phones and 5G
47.
48.
49. Forms of Government
One Party State/State Owned Enterprises
Nationalism
Targeted Fear and/or Animosity
Trade Disputes
65. Complementor
A player is a complementor if
customers value your product
more when they have the
other player’s product than
when they have your product
alone.
A player is your complementor
if it’s more attractive for a
supplier to provide resources
to you when it’s also supplying
the other player than when it’s
supplying you alone.
66. Competitor
A player is your competitor
(substitutor) if customers
value your product less when
they have the other player’s
product than when they have
your product alone.
A player is your competitor if
it’s less attractive for a
supplier to provide resources
to you when it’s also supplying
the other player than when it’s
supplying you alone.
70. Five forces of competition Five sources of collaboration
Firm’s distinctive competencies
Sustainable competitive
advantage
Sustainable collaborative
advantage
Composite strategy
Maximize overall sustainable advantage
PORTER BURTON
71. Slide 4.16
Figure 4.2 Illustration of customer value (perceived value)
Source: adapted from Anderson et al. (2007, 2008); McGrath and Keil (2007); Smith and Nagle (2005)
75. Game Theory & Strategy
Game theory is a tool for understanding
how decisions/actions by players in the
value net affect each other.
• - Play out all the actions/reactions into the
future and then reason backward to determine
appropriate actions today (assumes rational
behavior).
1
The main practical use of game theory is
to help a firm decide when to compete
and when to co-operate.
2
78. Changing
PARTS of the
“Game” to
Add/Capture
Value
• Players: customers, suppliers, substitutors (competitors),
complementors, you (e.g., HSC asking for pmt to play)
• Added Values: what each player brings to the game—
raise your value added (e.g., TWA Comfort Class)
• Rules: give structure to the game. Laws, customs,
practicality, contracts. Using and revising rules to
enhance the game. (e.g., MCC clauses)
• Tactics: moves used to shape the way players perceive
the game and hence how they play. (e.g., IB fee structure)
• Scope: the boundaries of the game. It is possible to
expand or shrink the those boundaries. (e.g., multi-
market competition)
83. Host Country Actions
Government subsidies Ownership restrictions Operating conditions
Work permits
Local content requirements
84. Takeovers
Takeovers
• Host-government actions that result
in a firm’s loss of ownership or direct
control
Expropriation
• a formal seizure of an operation
Confiscation
• an expropriation without
compensation
85. Home Country Actions
Guided by the same six interests as host
countries
Often home countries seek multilateral
actions to increase their bargaining power
87. Human Nature Orientation
(HNO)
• Positive HNO
• assume people can be trusted to obey the
rules
• Negative HNO
• assume people cannot be trusted to obey
the rules
88. Attitudes Toward Rules
• Attitudes toward rules are affected by two criteria:
1.Level of power distance
2.Type of human nature orientation
90. Political Risk
Political risk is the possibility that an
unexpected and drastic change due to political
forces will result in adverse circumstance for
business operations
91. Regulatory Change Versus Political Risk
Regulatory Change
More moderate and predictable changes in the
business environment
Political risk
More unexpected and drastic changes
92. Managing Political Risk
• Fighting the battle on two fronts:
1. Perfect intelligence systems to avoid being
caught unaware when changes disrupt
operations
2. Develop risk-reducing strategies that help
limit their exposure, or the losses they
would sustain, should a sudden change
occur
93. Terrorism
Affects
International
Marketing
Starbucks pulled out of Israel because they
feared a terrorist attack
GE criticized by a senator for taking “blood
money” from a state that supports terrorism
(Iran)
Global tourism and education are affected
Governments and companies spend lots of
money to protect infrastructure, plant,
equipment, and people
94.
95. Arguments for
Protectionism
• maintain employment and reduce unemployment
• increase of business size, and
• retaliation and bargaining
• protection of the home market
• need to keep money at home
• encouragement of capital accumulation
• maintenance of the standard of living and real wages
• conservation of natural resources
• protection of an infant industry
• industrialization of a low-wage nation
• national defense
97. The Impact of
Tariff (Tax)
Barriers
• Tariff Barriers tend to weaken:
• Balance-of-payments positions
• Supply-and-demand patterns
• International relations (they can start trade wars)
• Tariff Barriers tend to restrict:
• Manufacturer’ supply sources
• Choices available to consumers
• Competition
98. Six Types of
Non-Tariff
Barriers
• (1) Specific Limitations on Trade:
• Quotas
• Import Licensing requirements
• Proportion restrictions of foreign to domestic goods
(local content requirements)
• Minimum import price limits
• Embargoes
• (2) Customs and Administrative Entry Procedures:
• Valuation systems
• Antidumping practices
• Tariff classifications
• Documentation requirements
• Fees
99. Six Types of
Non-Tariff
Barriers
• (3) Standards:
• Standard disparities
• Intergovernmental acceptances of testing methods
and standards
• Packaging, labeling, and marking
• (4) Government Participation in Trade:
• Government procurement policies
• Export subsidies
• Countervailing duties
• Domestic assistance programs
101. Three Types
of Monetary
Barriers
• Blocked currency
• Blockage is accomplished by refusing to allow
importers to exchange its national currency for the
sellers’ currency.
• Differential exchange rates
• It encourages the importation of goods the
government deems desirable and discourages
importation of goods the government does not want
by adjusting the exchange rate. The exchange rate for
importation of a desirable product is favorable and
vice-versa
• Government approval
• In countries where there is a severe shortage of foreign
exchange, an exchange permit to import foreign goods
is required from the government
