Module 11 internationalisation e-commerce_en

1. E-learning course on e-
commerce business in
rural sector
2016-1-ES01-KA202-025335
Module 11
Internationalisati
on and E-
commerce
TransForm@ - Game based learning course to boost digital transformation of rural commerce sector – Project number:2016-1-ES01-KA202-025335

2. • You should spend about 45 minutes for
implementation of this training module.
But remember that at any time you can
interrupt the training and return to the
place where it previously left off.
• To help you better organize time that you
spend on the implementation of this
training module, information about where
you are will be constantly visible on the
screen.
• We encourage you to actively participate
in the training. You can do this by clicking
“Next”, which is located in the lower right
corner of the screen. At the end of the
training module is the final test checking
your knowledge acquired during this
module.
Content
1. Internationalisation & Globalization
2. How to Internationalise?
1. Entry Modes
2. Market Choice
3. Internationalisation & E-commerce
1. Culture Aspects
4. Summary
5. Evaluation
Welcome to module No 11

3. Learning objectives
At the end of module 6 you will be able to:
 Understand internationalisation process
 Consider the most important aspects for selling product globally
 Develop internationalisation plan for your business
 Choose the right methods for internationalisation process

4. What is Internationalisation?
“the process of increasing involvement in
international operations” -Welch
and Luostarinen.
“the process of adapting firms’ operations
(strategy, structure, resources, etc) to
international environments" - Calof and
Beamish.
What is Globalization?
1. Internationalisation & Globalization
"the closer interaction of countries and peoples
of the world" – Joseph Stiglitz
"refers to the shift toward a
more integrated and interdependent world eco
nomy" – Charles Hill.
Why International Business? https://www.youtube.com/watch?v=lMdhfBQUhtI
The Strategy of International Business https://www.youtube.com/watch?v=wnOj3hP4hlE

5. In past recent years we have been extensively talking
about trade liberalization, but the recent trend of
economic globalization is the internationalisation
of the production processes.
More and more companies have production, logistics
and sales centres as well as suppliers distributed
globally. Thus, the organization of production occurs
now around the so called Global Value
Chains, which include design, production,
marketing, distribution – activities that create value.
More than internationalising the traditional way,
through exports, companies now buy factories, sales
subsidiaries, contract services as a way of
establishing a presence in foreign countries.... They
are entering foreign markets in distinct ways!
1. Internationalisation & Globalization
Nutella GVC from "MAPPING GLOBAL VALUE CHAINS”,
OECD, 2012, p. 17

6. There are several important issues when characterizing
internationalisation. One of the key aspects is choosing an
entry mode:
2. How to Internationalise?
2.1. Entry Modes
Exports
Contractual Modes (Licensing; Subcontracting;
Turnkey Contracts; Strategic Alliances…).
Foreign Direct Investment (FDI)
1. EXPORTS
• Cheap low risk entry mode.
• If well succeed it can then proceed to other
more complex and more resource consuming
entry modes such us FDI.
• Entry mode chosen when there are no
advantages in having the production
physically near to the market:
 Low transportation costs
 Low tariffs
 Standardize product
Ex: The increase in Mateus’ export sales, which started in the mid-1950’s, provided Sogrape Vinhos with the
necessary financial resources and market intelligence to advance the diversification of its portfolio. Mateus
Rosé was the first global Portuguese wine brand and is today sold in over 120 countries.

7. 2. Contractual Modes
2.1. Entry Modes
Subcontracting
• international subcontracting involves two
independent units located in different
countries.
• in a subcontracting arrangement, the
subcontractor provides the principal with
products/services on agreed terms and
conditions set by the principal.
• principal can provide specialized physical
equipment and/or on-going technical
assistance to the subcontractor to assure
product specifications and quality.
Ex: Apple subcontracts internationally
about 70% of its production:
• Ex: FoxConn (Taiwan)
• Apple allocates its internal resources to
the improvement of its operating
system.
Advantages:
• low resource commitment; more flexibility; reduces
the company’s cost structure; fast entry mode;
avoids problems regarding local properties.
Disadvantages:
• reduced control over the subcontracted operations;
dependent on the supplier; potential confidentiality
problems; selection of supplier.

8. 2.1. Entry Modes
3. FDI
Usually considered the most powerful
entry mode. It requires a great
engagement regarding resources
(financial, technological).
Depending on the control level desired,
the company can:
• Opt for a Joint-Venture - creation of
a foreign subsidiary jointly controlled
by the parent company and a foreign
partner.
• Opt for a 100% subsidiary - creation
of a foreign subsidiary wholly owned
(100%) by a parent company.
Joint-Venture (JV)
• Advantages: shared risks, costs; easily acquisition of
resources - knowledge about the market, access to
a specific technology and to resources available only in
local companies.
• Disadvantages: conflicting interests between the
partners regarding the daily management and the long
term strategy; risk of giving the technology control to
the partner.
100% subsidiary
• Advantages: Avoids aspects regarding conflicting
interests and shared decisions; full control
over operations and a stronger presence in the foreign
country.
• Disadvantages: Involves a bigger commitment
regarding resources, has bigger risks and low flexibility.

9. Exports Contract
Modes
JV 100%
Control low/mediu
m/high
low/medium medium high
Resources needed low low medium high
Risk
of knowledge disse
mination
low high medium low
Flexibility high medium low/mediu
m
low
To know more about entry modes: https://www.youtube.com/watch?v=D8-PkFgw2Yk
Choosing the best entry mode depends on:
• Level of control the company desires to
have over the internationalisation process;
• Resources available or that the company is
willing to spend;
• Strategic importance of the
activity/product and the risk of knowledge
dissemination associated to it;
• Flexibility - a company can easily stop
exporting, however if it has built/bought a
plant in a foreign country, it is a complex
process to close/sell it.
2.1. Entry Modes
Source: Morschett et al. (2010, p.245)
How to chose the best entry mode?

10. Selecting a market and the culture, economic, political,
administrative, legal aspects associated to it is one of the
biggest challenges of internationalisation. To make an
assessment of market demand globally, an evaluation of
potential markets and of the risks and costs involved in market
entries, as well as collect information are key elements for
selecting the best suited market.
To achieve this, it is essential to:
1. Scan international markets to identify and analyze the
opportunities,
2. Build marketing information systems to monitor
environmental trends;
3. Carry out primary research for input into the
development of strategies and to test the feasibility of
the possible options both in foreign country markets and
across a range of international markets.
Usually the lack of information and
knowledge are critical obstacles when
entering any foreign market.
That is why even big multinationals fail
when entering some markets.
McDonalds pulls out of
Iceland: http://news.bbc.co.uk/2/hi/8327185.
stm
2.2 Market Choice

11. 2.2 Market Choice
First step is to look for countries that meet three
criteria and make a first selection according to it:
• Accessibility – if there are tariffs, non-tariff
barriers, government regulations;
• Profitability– the availability of the currency, the
exchange regulations, government subsidies to
local competition, price controls;
• Market size - there are three types of markets,
the existing in which consumers are already
serviced by existing suppliers; the latent in which
there are recognized potential consumers, but no
company has yet offered the product and the
incipient that don’t exist at present, but trends
can be identified that indicate future emergence.
It is essential to conduct a detailed research in order
to understand the potential of these types of
markets.
After a preliminary scanning, the next stage is to
elaborate individual country profiles. The 12C is one
framework that helps such purpose.
Tips for entering foreign markets:
http://www.forbes.com/sites/yec/2011/09/22/a-5-step-primer-
for-entering-an-international-market/#390dffd3845f
Use with Doole & Lowe, International Marketing Strategy, 6th edn 978 -1-4080-4407-0
© Cengage Learning, 2012

12. 3. Internationalisation & e-Commerce
As e-commerce companies do business on the
Internet their web sites are of crucial
importance, as this is what is visible to the
customer. In other words, the web site is
immediately fundamental in the
establishment within new countries.
Although World Wide Web is touted as
"World Wide" and "Global", it remains
localized due to design and cultural
constraints, which can be overcome. Basic
tenets of usability, including learnability,
efficiency, and satisfaction combined with a
detailed audience analysis, take on a larger
meaning when thinking for an international
market.
The design, interactivity, and content reflect
a cultural sensitivity and understanding of the
targeted audience; indeed, the Global
Interface is culturally dimensional.
5 tips for global e-Commerce success:
http://www.forbes.com/sites/karstenstrauss/2013/07/26/5-tips-
for-global-ecommerce-success/#4ff345717f96

13. A strategic model that incorporates all the
important components of cultural contexts.
3. Internationalisation & e-Commerce
3.1. Cultural Aspects
Phase 1 Investigation – Identify how
people from the different cultures in the
various countries shop by doing an ethno-
methodologically informed ethnographic
study of the indigenous samples. Using this
study, the shopping behaviour of the
different cultures should be observed to
reveal ordinary and practical activities of
actual ‘real-life’ shopping. Shoppers should
also be asked to fill in questionnaires.
Identify social and cultural factors to
localize the interface on a cultural level
and also to avoid developing a culturally
offensive global site. Interview cultural
experts of the target culture.
Do a foraging study by categorising
eCommerce sites according to country,
language, visuals, colours, page layout etc.
This will reveal culture specifics of the
design elements when they are compared
and contrasted to identify the patterns.

14. To know more about cultural contexts: https://geert-hofstede.com/national-culture.html
3.1. Cultural Aspects
Phase 2 Translation– Create a cultural
model to identify similarities and differences
in the observed characteristics of the
indigenous samples’ particular practices and
systems of shopping and assess the degree of
localization necessary for e-Commerce.
Phase 4 Evaluation – Based on results of
usability test, analyse data to make amendments
to and implement working site.
Phase 3 Implementation – culturally sensitive
generic site that should be made adaptable
with the option of the various countries. When
selecting the country it should show up a
localized site designed with the appropriate
cultural and social factors in place including
national level formats such as language, time
and currency.
Phase 3 Implementation - Implement the
prototype and perform usability tests using
indigenous population of target markets.
Evaluate prototype using task analysis
procedures, usability questionnaires....

15. Translation is the most obvious
element of internationalizing a
website. When you develop a
multilingual interface by translating a
web site into other languages, you
should be aware that there are some
culturally sensitive elements in the
translated text that must be adjusted
to the specifics of the culture and
language in a given country:
• differences in spelling;
• differences in text length to express
the same things;
• variations in abbreviations and
acronyms; appropriateness of jokes
and idioms;
• appropriateness of colloquial
expressions.
Translation is more complex than
it at first seems:
many countries use the same
language, e.g. 70 countries use
English;
many countries are multilingual,
e.g. Belgium, Switzerland and
Canada;
different dialects exist within the
same language;
wordless signs, icons and pictures
may have different significance in
different cultures.
3.1. Cultural Aspects

16. Globalization continues to develop and it is deeply linked with internationalisation.
Besides trade liberalization, the internationalisation of production is now a reality.
Companies now enter markets not only by exporting, but also by using contract
modes and making Foreign Direct Investment. Choosing the best way to entry a
market depends on the control, resources, risk of knowledge dissemination and
flexibility the company has/desires.
Choosing a market is also a complex challenge. It is crucial that companies do
extensive research, following criteria such us accessibility, profitability and market
size. After a preliminary analysis, it is essential to create country profiles in order to
be able to compare the data and proceed to selecting the best suited market.
E-Commerce companies need to give special attention to their websites in the
internationalisation process, since its the main way they show the world what they
are selling.
Adapting a website according to localization and culture is essential and implies a
research process to achieve it successfully. Doing an ethno-methodologically
informed ethnographic study, creating a cultural model to identify similarities and
differences and implementing a website that offers national level formats such as
language and currency are some aspects that should be considered. Finally,
understanding the specificities of translation can determine if a website is well
adapted to the culture it aims to reach.
4. Summary

17. TRUE OR FALSE
1. Foreign Direct Investment is a low risk entry mode that requires a great commitment regarding resources.
2. Culture aspects greatly affect the success of the process of internationalisation.
3. Having logistics, sales centres and other activities distributed globally means having a GlobalValue Chain.
4. Translation is not considered when internationalizing a website.
5. Localizing a website according to different cultures is not an aspect considered, since we live in a globalized world.
6. Usually the lack of information and knowledge are critical obstacles when entering any foreign market.
7. Joint-Ventures involve a bigger commitment regarding resources and bigger risks than 100% subsidiary.
8. When these three conditions are present: low transportation costs; low tariffs; standardize product, the best entry
mode is exportation.
Evaluation

18. July 22, 2012 Footer text here18
TRUE OR FALSE
1. Foreign Direct Investment is a low risk entry mode that requires a great commitment regarding resources.Τ
2. Culture aspects greatly affect the success of the process of internationalisation.Τ
3. Having logistics, sales centres and other activities distributed globally means having a GlobalValue Chain. F
4. Translation is not considered when internationalizing a website. F
5. Localizing a website according to different cultures is not an aspect considered, since we live in a globalized world. F
6. Usually the lack of information and knowledge are critical obstacles when entering any foreign market.T
7. Joint-Ventures involve a bigger commitment regarding resources and bigger risks than 100% subsidiary. F
8. When these three conditions are present: low transportation costs; low tariffs; standardize product, the best entry
mode is exportation.T
Evaluation

19. 1.Explain the recent trend of economic globalization.
2.What are the 4 aspects to consider when choosing an entry mode?
3.What are the advantages and disadvantages of subcontracting?
4.Explain the necessity of adapting a website to different cultures.
5.Briefly explain what steps to follow in order to create a website that incorporates
all the important components of cultural contexts.
Evaluation

20. 1.Explain the recent trend of economic globalization.
internationalisation of the production processes
2.What are the 4 aspects to consider when choosing an entry mode?
Control
Resources needed
Risk of knowledge dissemination
Flexibility
3.What are the advantages and disadvantages of subcontracting?
Advantages:low resource commitment; more flexibility; reduces the company’s cost structure; fast entry mode; avoids problems regarding local properties.
Disadvantages:reduced control over the subcontracted operations; dependent on the supplier; potential confidentiality problems; selection of supplier.
4.Explain the necessity of adapting a website to different cultures.
differences in spelling;
differences in text length to express the same things;
variations in abbreviations and acronyms; appropriateness of jokes and idioms;
appropriateness of colloquial expressions.
5.Briefly explain what steps to follow in order to create a website that incorporates all the important components of cultural contexts.
Phase 1 Investigation
Phase 2Translation
Phase 3 Implementation
Phase 4 Evaluation
Evaluation