Case Study and Some specific Examples of International Business

A, Chaper I: Globalization:
No. Key concepts Specific Examples
1 Globalization Because of globalization, Apple can produce
and sell many of its models all over the
world with little or no modification. This
strategy lowers Apple's production and
marketing costs while supporting the
company's global brand strategy. Apple sells
its products in over 400 stores across 16
countries, as well as through its online store,
which is available in 40 countries.
2 Multinational Corporation Walmart employs 2.2 million people. When
(MNC) we compare the revenues of the Global 500
ranking of companies to the value of goods
and services generated by countries, we see
the enormous economic clout of
multinational corporations. If Walmart were
a country, it would be a wealthy one, ranking
only three places behind Norway.
3 Born Global Firm Vellus Products, based in Comombus, Ohio,
manufactures and sells pet grooming
products. A dog breeder in Spain became
Vellus' first distributor around 20 years ago
after receiving a request for more
information on Vellus' products from a man
in Bahrain. The company now has
distributors in 31 different countries.
 Vellus is similar to a global company
in that it quickly earned more than
half of its revenue from international
sales.

B, Chapter VII: Foreign Direct Investment (FDI):

I, Theories of FDI:
- FDI: purchase of physical assets or a significant amount of the ownership (stock)
of a company in another country to gain a measure of management control. (đầu tư
trực tiếp nước ngoài)
- Answer for the question “Why companies engage in FDI ?”
 1. International Product Life Cycle:
- Theory stating that a company will begin by exporting its product and later
undertake foreign direct investment as the product moves through its life cycle
- In the new product stage, a good is produced in the home country because of
uncertain domestic demand and to keep production close to the research department that
developed the product. In the maturing product stage, the company directly invests in
production facilities in countries where demand is great enough to warrant its own
production facilities. In the final standardized product stage, increased competition
creates pressures to reduce production costs. In response, a company builds production
capacity in low-cost developing nations to serve its markets around the world.
2. Market Imperfections (Internalization)
- Theory stating that when an imperfection in the market makes a transaction less
efficient than it could be, a company will undertake foreign direct investment to
internalize the transaction and thereby remove the imperfection.
- Trade barriers: Tariffs are a common form of market imperfection in
international business
Ex: The North American Free Trade Agreement stipulates that a sufficient portion of a
product’s content must originate with Canada, Mexico, or the USA for the product to
avoid tariff charges when it is imported to any of these three markets -> That is why a
large number of Korean manufacturers invested in production facilities in Tijuana,
Mexico, just south of Mexico’s border with the state of California and be able to skirt the
North American tariffs
- Specialized knowledge: This knowledge could be the technical expertise of
engineers or the special marketing abilities of manager. When the knowledge is technical
expertise, companies can charge a fee to companies in other countries for use of the
knowledge in producing the same or similar product
Ex: At one time, Boeing aircraft were made entirely in the USA. But today, Boeing can
source its landing gear doors from Northern Ireland, outboard wing flaps from Italy, wing
tip assemblies from Korea, and rudders from Australia. Shown here, the core wings
components of a Boeing 787 Dreamliner are loaded into a cargo jet at Japan International
Airport to be shipped to Washington for assembly. The winds were manufactured in
Japan by Mitsubishi Heavy Industry
3. Electic Theory
- Theory stating that firms undertake foreign direct investment when the features
of a particular location combine with ownership and internalization advantages to make a
location appealing for investment
4. Market Power
- Theory stating that a firm tries to establish a dominant market presence in an
industry by undertaking foreign direct investment.
 - One way to achieve the market power is through Vertical integration: Extension
of company activities into stages of production that provide a firm’s inputs (backward
integration) or that absorb its output (forward integration)

II, Management of issues and FDI:

No. Key Factors Explanation
1 Control – Many companies investing EX: The local government might
abroad are greatly concerned with intervene and require a company to
controlling the activities that occur in
hire some local managers rather than
the local market -> Yet for a variety of
bringing them all in from the home
reasons, even complete ownership office. Companies may need to prove
does not guarantee control a scarcity of skilled local managerial
talent before the government will let
them bring managers in from the
home country. Government might also
require that all goods produced in the
local facility be exported so that they
do not compete with products of the
country’s domestic firms.
2 Purchase-or-build Decision EX: Mexico’s Cemex, S.A., is a
Another important matter for multinational company that made a
managers is whether to purchase an fortune buying struggling, inefficient
existing business or to build a plants around the world and turning
subsidiary abroad from the ground up them around. Chairman Lorenzo
– called a greenfield investment. An Zambrazo has long figured that the
acquisition generally provides the overriding principle is “Buy big
investor with an existing plant, globally, or be bought”.
equipment, and personnel. The  The success of Cemex in using
acquiring firm may also benefit from FDI confounded, even rankled,
the goodwill the existing company has its competitors is developed
built up over the years, perhaps, the nations. Moreover, Cemex
existing firm’s brand recognition. shocked the global markets
when it carried out a $1.8
billion purchase of Spain’s two
largest cement companies,
Valenciana and Sanson
3 Production Cost EX: Consider the typical stuffed
One approach companies use to animal made in China whose
contain production costs is called components are all imported to China.
rationalized production – a system The stuffed animal’s eyes are molded
of production in which each of a in Japan. Its outfit is imported from
 product’s components is produced France. The polyester-fiber stuffing
where the cost of producing that comes from either Germany or the
component is lowest US, the pile-fabric fur is produced in
Korea. Only final assembly of these
components occurs in China.
4 Customer Knowledge EX: Uber goes to Vietnamese market
A local presence can help companies => consumers start to have an
gain valuable knowledge about understanding of some services
customers that could not be obtained After Uber fails and leave our
from the home market. When country's market => Grab comes to
customer preferences for a product market and this time customer has full
differ a great deal from country to of knowledge to use this service.
country, a local presence might help
companies better understand such
preferences and tailor their products
accordingly.

5 Following Clients EX: When Mercedes opened its first

The practice of “following clients” is international car plant in Tuscaloosa
common in industries in which County, Alabama, automobile-parts
producers source component parts suppliers also moved to the area from
from suppliers with whom they have Germany- bringing with them
close working relationships. This additional investment in the millions
practice tends to result in companies of dollars
clustering within close geographic
proximity to each other because they
supply each other’s inputs.

6 Following Rivals EX: This seems to have been the case

FDI decisions frequently resemble a for Pepsi, which went back into South
“follow the leader”’ scenario in Africa in the 1990s but withdrew three
industries that have a limited number years later after being crushed there
of large firms. In other words, many by Coke
of these firms believe that choosing
not to make a move parallel to that of
the “first mover” might result in being
shut out of a potentially lucrative
market

III, Governments intervene in FDI:

No. Key Reasons Explanations
1 Balance of Payments - A country’s balance of payments is a
national accounting system that
records all receipts coming into the
nation and all payments to entities in
other countries.
- International transactions that result
in inflows from other nations add to
the balance of payments accounts.
- International transactions that result
in outflows to other nation reduce the
balance of payment accounts.
=> EX: When a French company’s US
subsidiary sends its profit back to the
parent company in France, the
transaction is recorded as an “Income
payment” and is assigned a negative
value.
- Two major components—the current
account and the capital account.
+ Current account surplus: When a
country exports more goods and
services and receives more income
from abroad than it imports and pays
abroad.
+ Current account deficit: When a
country imports more goods and
services and pays more abroad than it
exports and receives from abroad.
+ Capital account: National account
that records transactions involving the
purchase and sale of assets
-> EX: Suppose a US citizen buys
shares of stock in a Mexican company
on Mexico’s stock market. The
transaction is recorded as an “Increase
in US assets abroad (capital outflow)”
and is assigned a negative value. If a
Mexican investor buys real estate in
the United States, the transaction
increases “Foreign assets in the USA
(capital inflow)” and is assigned a
positive value.
- The balances of the current and
 capital accounts should be
equal.
 Shows financial & economic
status of a country
 Helps the local authorities and
policy makers to adopt
develop and adopt new
policies.
 Provides understanding of the
economic dealings of a country
with foreign one.
Note:Foreign trade => an economy’s
exports & imports of goods
and services.

2 Reasons for Intervention by the -Control balance of payments: Many

Host Country governments see intervention as the
only way to keep their balance of
payments under control.
+ First, because FDI inflows are
recorded as additions to the balance of
payments, a nation gets a balance-of-
payments boost from an initial FDI
inflow.
+ Second, countries can impost local
content requirements on investors
from other nations for the purpose of
local production
 This gives local companies the
chance to become suppliers to
the production operation,
which can help the nation to
reduce imports and improve its
balance of payments.
+ Third, exports (if any) generated by
new production operation can have a
favorable impact on the host country’s
balance of payments
-Obtain resources and benefits:
Beyond balance-of-payments reasons,
governments might intervene in FDI
flows to acquire resources and
benefits such as technology,
 management skills, and employment.
+ Access to technology: Invest in
technology, whether in products or
processes, tends to increase the
productivity and the competitiveness
of a nation -> That’s why host nations
have a strong incentive to encourage
the importation of technology
EX: When German industrial giants
Siemens chose Singapore as the site
for an Asia-Pacific microelectronics
design center, Singapore gained
access to valuable technology.
Singapore also accessed valuable
semiconductor technology by joining
with US- based Texas instruments and
others to set up the country’s first
semiconductor-production facility.
+ Management skills and employment:
By encouraging FDI, these nations
can attract talented managers to come
in and train locals and thereby
improve the international
competitiveness of their domestic
companies.
3 Reasons for Intervention by the Home -Reasons for discouraging outward
Country – Home nations (those from FDI:
which international companies launch + Investing in other nations send
their investments) may also seek to resources out of the home country: As
encourage or discourage outflow of a result, fewer resources are used for
FDI for a variety of reasons development and economic growth at
home.
+ Outgoing FDI may ultimately
damage a nation’s balance of
payments by taking the place of its
exports:
EX: If a Volkswagen plant in the USA
fills a demand that US buyers would
otherwise satisfy with purchases of
German-made automobiles, payments
would be positively affected when
Volkswagen repatriates US profits,
which helps negate the investment's
 initial negative balance-of-payment
effect.
+ Jobs resulting from outgoing
investments may replace jobs at home:
This is often the most contentious
issue for home countries. The
relocation of production to a low-
wage nation can have a strong impact
on a locale or region. However, the
impact is rarely national and its effects
are often muted by other job
opportunities in the economy.
EX: If Hyundai of South Korea builds
an automobile manufacturing plant in
Brazil, Korean employment may
increase in order to supp,y the
Brazilian plant with parts

-Reasons for promoting outgoing FDI:

+ Outward FDI can increase long-term
competitiveness
EX: Japanese companies have become
masterful at benefiting from FDI and
cooperative arrangements with
companies from other nations. The
key to their success is that Japanese
companies see every cooperative
venture as a learning opportunity.
+ Nations may encourage FDI in
industries identified as “sunset”
industries: Sunset industries are those
that use outdated and obsolete
technologies or those can employ low-
wage workers with few skills. This
represents a trade-off for governments
between a short-term loss of jobs and
the long-term benefit of developing
workers’ skills.

C, Chapter XI: International Strategy and Organization:

I, Company Analysis:
- Planning is the process of identifying and selecting an organization’s
objectives and deciding how the organization will achieve those objectives.
- Strategy is the set of planned actions taken by managers to meet company
objectives.
- Mission statement: written statement of why a company exists and what it plans to
accomplish.
- Core competency: an ability of a company that competitors find extremely
difficult or impossible to equal. Refers to multiple skills coordinated to form a
single technological outcome.
- Value-chain analysis is the process of dividing a company’s activities into primary
and support activities and identifying those that create value for customers.

II, Strategy Formulation:

No. Key Factors Explanation
1 Multinational (multi- -The main benefit of a multinational
domestic) Strategy – Adapting strategy: Allowing companies to
products and their marketing monitor buyer preferences closely in
strategies in each national each local market and to respond
market to suit local quickly and effectively to emerging
preferences. buyer preferences.
-The main drawback of a
multinational strategy is: Companies
cannot exploit scale economies in
product development, manufacturing,
or marketing. The multinational
strategy typically increases the cost
structure for international companies
and forces them to charge higher
prices to recover such costs
2 Global Strategy – Offering the -The main benefit of a global strategy:
same products using the same Cost savings due to product and
marketing strategy in all marketing standardization. These cost
national markets. savings can then be passed on to
consumers to help the company gain
market share in its market segment. A
global strategy also allows managers
to share lessons learned in one market
with managers at other locations.
-The main problem with a global
strategy: Can cause a company to
overlook important differences in
 buyer preferences from one market to
another. A global strategy does not
allow a company to modify its
products except for the most
superficial features, such as the color
of paint applied to a finished product
or a small add-on feature. This can
present a competitor with an
opportunity to step in and satisfy any
unmet needs of local buyers, thereby
creating a niche market.

III, Corporate - Level Strategies:

No. Key Factors Explanations
1 Growth Strategy - Strategy designed to increase the
scale (size of activities) or scope
(kinds of activities) of a
corporation’s operations.
- Organic growth refers to a
corporate strategy of relying on
internally generated growth.
EX: Management at 3M strongly
encourages entrepreneurial activity,
often spinning off business units to
nurture the best ideas and carry them
to completion.
2 Retrenchment Strategy (Chiến - Strategy designed to reduce the
lược cắt giảm) scale or scope of a corporation’s
businesses.
- Corporations can also reduce the
scale of their operations by laying
off managers and salespeople in
national markets that are not
generating adequate sales
revenue.
- Corporations reduce the scope of
their activities by selling
unprofitable business units or
those that are not longer directly
related to their overall aims.
- Weaker competitors often resort
 to retrenchment when national
business grow more competitive.
3 Stability Strategy – Strategy - The company sees the business
designed to guard against change environment as posing neither
and used by corporations to avoid profitable opportunities nor
either growth or retrenchment threats.
- They have no interest in
expanding sales, increasing
profits, increasing market share,
or expanding the customer base ->
at present they want simply to
maintain their current positions.
4 Combination Strategy – Strategy EX: A corporation can invest in units
designed to mix growth, that show promise, retrench in those for
retrenchment, and stability which less exposure is desired and
strategies across a corporation’s stabilize others. In fact, corporate
business units combination strategies are quite common
because international corporations rarely
follow identical strategies in each of their
business units.

IV, Business - Level Strategies:

No. Key Factors Explanation
1 Low-cost leadership Strategy – - The strategy typically requires a
Strategy in which a company company to have a large market
exploits economies of scale to have share because achieving low-cost
the lowest cost structure of any leadership tends to rely on large-
competitor in its industry. scale production to contain costs.
- One negative aspect of the low-
cost leadership strategy is low
customer loyalty – all else being
equal, buyers will purchase from
any low-cost leader.
- A low-cost leadership strategy
works best with mass-marketed
products aimed at price-sensitive
buyers.
- EX: Two global companies vying
for the low-cost leadership
position in their respective include
Casio in sports watches and Texas
 Instruments in calculators and
other electronic devices.

2 Differentiation Strategy – - One way products can be

Strategy in which a company differentiated is by improving
designs its products to be perceived their reputation for quality
as unique by buyers throughout its  EX: Ceramic tableware for
industry everyday use is found at
department stores in almost every
country. But Japanese producer
Noritake differentiates the
ceramic tableware it makes from
common tableware by
emphasizing its superior quality.
- Other products are differentiated
by distinctive brand images.
 EX: Armani and DKNY, are
relatively pricey global clothiers
appealing to a young, fashionable
clientele. Each is continually
introducing new textures and
colors that are at once stylish and
functional.
- Another differentiating factor is
product design – the sum of the
features by which a product looks
and functions according to
customer requirements
 EX: The designs of Casio and
other makes of mass-market
sports watches stress
functionality. The sports watches
of TAG Heuer of Switzerland, on
the other hand, offer class and
style in addition to performance.
3 Focus Strategy – EX: Johnson & Johnson is commonly
Strategy in which a company thought of as being a single, large
focuses on serving the needs of a consumer-products company. Many
narrowly defined market segment individual J&J companies try to
by being the low-cost leader, by dominate their segments by producing
differentiating its product, or both. specialty goods and services. In so doing,
they focus on narrow segments by using
either low-cost leadership or
 differentiation techniques.

V, Organizational Structure:
Organizational Structure is a way in which a company divides its activities among
separate units and coordinates activities among those units.
1. Centralization versus Decentralization:
a, When to Centralize:
- Centralized decision making concentrates decision making at a high organizational
level in one location, such as at headquarters.
- Centralized decision making helps coordinate the operations of international
subsidiaries.
 This is important for companies that operate in multiple lines of business or in
many international markets.
 It is also important when one subsidiary’s output is another’s input
- EX: A company that manufactures steel filing cabinets and desks will need a great
deal of sheet steel. A central purchasing department will get a better bulk price on
sheet steel than would subsidiaries negotiating their own agreements. Each
subsidiary would then benefit by purchasing sheet steel from the company’s
central purchasing department at a lower cost than it would pay in the open
market.
b, When to Decentralize:
- Decentralized decision making disperses decisions to lower organizational levels,
such as to international subsidiaries.
- Decentralized decision making is beneficial when fast-changing national business
environments put a premium on local responsiveness.
- Decentralized decisions can result in products that are better suited to the needs
and preferences of local buyers because subsidiary managers are in closer contact
with local business environment.
2. Types:
No. Types Explanation + Example
1 International Division Structure – - The international
Organizational structure that division structure
separates domestic from concentrates
international business activities by international expertise in
creating a separate international one division, divisional
division with its own manager managers become
specialists in a wide
 variety of activities such
as foreign exchange,
export documentation,
and host government
relations.
- However, an
international division
structure can create two
problems for companies:
+ First, international
managers must often
rely on home-country
managers for the
financial resources and
technical know-how that
give the company its
international competitive
edge.
+ Second, the general
manager of the
international division
typically is responsible
for operations in all
countries.
2 International Area Structure – - The international area
Organizational structure that structure is best suited to
organizes a company’s entire global companies that treat
operations into countries or each national or regional
geographic regions market as unique. It is
particularly useful when
there are vast cultural,
political, or economic
differences between
nations and regions.
- On the other hand,
because units act
independently, allocated
resources may overlap,
and cross-fertilization of
knowledge from one
unit to another may be
less than desirable.
3 Global Product Structure – The global product structure is
Organizational structure that divides suitable for companies that
worldwide operations according to a offer diverse sets of products or
company’s product areas. services because it overcomes
some coordination problems of
the international division
structure.
4 Global Matrix Structure – - A main goal of the
Organizational structure that splits matrix structure is to
the chain of command between bring together
product and area divisions geographic area
managers and product
area managers in joint
decision making.
- The matrix structure
resolves some of the
shortcomings of other
organizational
structures, especially by
improving
communication among
divisions and increasing
the efficiency of highly
specialized employees.
- However, the global
matrix structure suffers
from two major
shortcomings.
+ First, the matrix can be
quite cumbersome (cồng
kềnh). Numerous meetings
are required simply to
coordinate the actions of the
various division heads, let
along the activities within
divisions.
+ Second, individual
responsibility and
accountability can become
foggy in the matrix
organization structure.
5 Work teams - Self-managed team:
Team in which the
 employees from a single
department take on the
responsibilities of their
former supervisors. The
benefits of self-managed
teams typically include
increased productivity,
product quality,
customer satisfaction,
employee morale, and
company loyalty.
- Cross-functional team:
Team composed of
employees who work at
similar levels in
different functional
departments. For the
same reason, cross-
functional teams can
help break down barriers
between departments
and reorganize
operations around
processes rather than by
functional departments.
- Global team: Team of
top managers from both
headquarters and
international subsidiaries
who meet to develop
solutions to company-
wide problems.
 EX: Nortel Networks of
Canada created a global
team of top executives
from Britain, Canada,
France and the USA that
traveled to Asia, Europe,
and North America
looking for ways to
improves product-
development practices.
D, Chapter XII: Analyzing International Opportunities:
I, Motivations to penetrate other foreign markets:
- Increasing global competition means that companies must undertake high-quality
research and analysis before selecting new markets and sites.
 Thus, companies are gaining a better understanding of both buyer behavior and
business environments abroad.
 Market Research is the collection and analysis of information used to assist
managers in making informed decisions.
- Market research data on new markets helps managers design all aspects of
marketing strategy and understand buyer preferences and attitudes.
- Market research also gives a snapshot of local business conditions, such as
employment levels, wage rates, and the state of the local infrastructure.
II, Basic Appeals and National Factors:
Step Names of Step Specifics
1 Identify basic appeal (Xác định điều  Suitability of climate, absolute
cơ bản) bans
 Access to materials, labor,
financing
2 Assess the National Business  Language, attitudes, religious
Environment beliefs, traditions, work ethic
 Government regulation,
government bureaucracy,
political stability
 Fiscal and monetary policies,
currency issues
 Cost of transporting goods,
country image
3 Measure Market or Site Potential  Current sales, income
elasticity, market potential
indicator
 Quality of workforce,
materials, infrastructure
4 Select the Market or Site  Field trips
 Competitor analysis
III, Market Research:
1. Secondary Market Research:
 Process of obtaining information that already exists within the company or that
can be obtained from outside sources.
- International Organizations:
EX: The International Trade Center, based in Geneva, Switzerland, also provides
current import and export figures for more than 100 countries.
- Government Agencies:
EX: The Trade Information Center (TIC), operated by the US Department of
Commerce, is a first stop for many importers and exporters. The TIC details
product standards in other countries and offers device on opportunities and best
prospects for US companies in individual markets. It also offers information on
federal export-assistance programs that can be essential for first-time exporters.
- Industry and Trade Associations:
+ Companies often join associations composed of firms within their own industry
or trade. In particular, companies trying to break into new markets join such
associations in order to make contact with others in their field.
EX: Two interesting examples are the websites of the National Pasta Association
and the National Onion Association.
+ Sometimes industry and trade associations commission specialized studies of
their industries, the results of which are then offered to their members at
subsidized prices.
EX: The National Confectioners Association of the USA, together with the state of
Washington’s Washington Apple Commission once hired a research firm to study
sweet tooth of Chinese consumers. The findings of the study were then made
available to each organization’s members to act on as they saw fit.
- Service Organizations:
EX: The accounting firm of Ernst & Young publishes a “Doing Business In”
series for most countries. Each booklet contains information on a nation’s business
environment, regulations regarding foreign investment, legal forms of businesses,
labor force, taxes and culture.
- Internet:
EX: LEXIS-LENIS is a leading online provider of market information. This
database of full-text new reports from around the world is updated continually. It
also offers special services such as profiles of executives and products and
information on the financial conditions, marketing strategies, and public relations
of many international companies.
 Problems with Secondary Research:
+ Availability of Data:
There tends to be plenty of excellent sources of secondary data in highly
industrialized countries. This is especially true in Australia, Canada, Japan, Western
Europe, the USA, and where government agencies and private research firms supply
 information. Three of these information suppliers are ACNielsen, Survey Research
Group,….
EX: Information supplier and pollster Gallup is aggressively expanding its operations
throughout Southeast Asia in response to the need among Western companies for
more accurate market research.
+ Comparability of Data:
Data obtained from other countries must be interpreted with great caution. Because
terms such as poverty, consumption, and literacy differ greatly from one country to
another, such data must be accompanied by precise definition.
EX: In the USA, a family of four is said to below the poverty line if its annual income
is $23.850 (2014). The equivalent income for a Vietnamese family of four wold place
it in the upper class.
2. Primary Market Research:
 Process of collecting and analyzing original data and applying the results to
current research needs.
a, Trade show and Trade Missions:
- Trade show: exhibition at which members of an industry or group of industries
showcase their latest products, study activities of rivals, and examine recent trends
and opportunity.
EX: Because of its large domestic market, shows in the USA tend to be oriented
toward business opportunities within the US market. In line with US culture, the
atmosphere tends to be fairly normal.
- Trade mission: international trip by government officials and businesspeople that
is organized by agencies of national or provincial governments for the purpose of
exploring international business opportunities.
EX: A trade mission for European businesspeople to Latin America may include
stops in Argentina, Brazil, Chile and Mexico. A trade mission to Asia for North
American or European companies might include stops in China, Hong Kong,
Japan, South Korea and Thailand.
b, Interviews and Focus Groups:
- Focus group: Unstructured but in-depth interview of a small group of individuals
(8 to 12 people) by a moderator in order to learn the group’s attitudes about a
company or its product.
- Consumer panel (Bảng người tiêu dùng): research in which peole record in
personal diaries information on their attitudes, behaviors, or purchasing habits.
c, Survey:
 Research in which an interviewer asks current or potential buyers to answer
written or verbal questions in order to obtain facts, opinions, or attitudes
d, Environmental Scanning:
 Ongoing process of gathering, analyzing, and dispensing information for tactical
or strategic purposes. (Quá trình liên tục thu thập, phân tích và phân phối thông tin
cho các mục đích chiến thuật hoặc chiến lược.)
E, Chaper XIII: Selecting and Managing Entry Modes: (Copy và tham khảo ở
Slides)
I, Exporting, Importing, and Coutertrade:
 Why companies export?
- Achieve economies of scale (Đạt được hiệu quả kinh tế nhờ quy mô): Expand total
sales when domestic markets become saturated (bão hòa)
- Diversify sales (Đa dạng hóa bán hàng): Offset slow sales in one national market
(perhaps due to a recession) with increased sales in another. (Bù đắp doanh số bán
hàng chậm ở một thị trường quốc gia (có lẽ do suy thoái kinh tế) với doanh số bán
hàng tăng ở một quốc gia khác.)
- Gain international business experience (Tích lũy kinh nghiệm KDQT): Use
exporting as a low-cost, low-risk way to gain international business experience.
 Developing an Export Strategy: A Four-step model:
1. Identify a potential market:
Discover whether sufficient demand exists
2. Match needs to abilities:
A frank assessment of a company’s ability
3. Initiate meetings:
Potential distributors, buyers and others to build trust, cooperation
4. Commit resources:
Define the export program’s objectives for at least 3-5 years.
 Forms of Export Involvement:
No. Key Direct Exporting Indirect Exporting
Terms
1 Definition Practice by which a Practice by which a company
company sells its products sells its products to
directly to buyers in a intermediaries who then resell
target market to buyers in a target market
2 Local Sales Agents: Individuals or
Representatives: A sales organizations that represent
 representative (whether an one or more indirect exporters
individual or an in a target market
organization) represents
only its own company’s
products, not those of other
companies
3 Distributors Indirect Export Management
Export: Distributors take Companies (EMC): Company
ownership of the that exports products on
merchandise when it enters behalf of indirect exporters
their country. As owners of
the products, distributors
accept all the risks
associated with generating
local sales.
4 Export Trading Companies
(ETC): Company that
provides services to indirect
exporters in addition to
activities related directly to
clients’ exporting activities

 Common reasons for exports and import blunders (Sai lầm trong xuất, nhập khẩu):
+ Failure to conduct adequate market research
+ Failure to obtain adequate export advice
 To avoid committing such blunders: Hire a freight forwarder (Đại lý giao nhận):
+ A specialist in export-related activities customs clearing, tariff schedules,
shipping fees, and insurance.
+ A freight forwarder can also pack merchandise for export and will accept
responsibility for getting a shipment from the port of export to the port of import.
 Counter trade (Mua bán đối lưu): Practice of selling goods or services that are paid
for, in whole or in part, with other goods or services:
- Barter (Hàng đối hàng): Exchange of goods or services directly for other goods or
services without the use of money
- Counter Purchase (Mua đối lưu): Sale of goods or services to a country by a
company that promises to make a future purchase of a specific product from thr
country.
- Offset (Mua bồi hoàn): Agreement that a company will offset a hard-currency sale
to a nation by making a hard- currency purchase of an unspecified product from
that nation in the future
- Switch Trading (Chuyển nợ): Practice in which one company sells to another its
obligation to make a purchase in a given country
- Buyback (Mua lại): Export of industrial equipment in return for products produced
by that equipment.
II, Contractual Entry Modes: (Giao kết hợp đồng)
 Licensing vs. Franchising:
Franchising (Nhượng Licensing (Cấp phép)
quyền)
Governed by Securities Law Contract Law
Registration Required Not required
Territorial Offered to franchise Not offered, license can sell
rights similar licenses and products in
same area
Support and Provided by franchiser Not provided
training
Royalty Yes Yes
payments
Use of Logo and trademark retained Can be licensed
trademark/Log by franchiser and used by
o franchise
Control Franchiser exercises control Licensor does not have control
over franchise over license
Examples McDonald, Subway, Dukin Microsoft Office
Donuts,……
Advantages - Low cost and low risk - Finance expansion
- Rapid expansion - Reduce risks
- Local knowledge - Reduce couterfeits (hàng
giả)
- Upgrade technologies
Disadvantages - Cumbersome - Restrict licensor’s
- Lost flexibility activities
- Reduct global consistency
- Lend strategic property

 Management Contract:
- Practice by which one company suppliers another with managerial expertise for a
specific period of time
- Advantages:
+ Few assets risked
+ Nations financial projects
+ Develops local workforce
- Disadvantages:
+ Personnel risk
+ Create competitor
 EX: ESB International of Ireland signed a three-year contract not only to manage
and operate a power plant in Ghana, but also to train local personnel in the skills
needs to manage it at some point in the future.
 Turnkey Projects (Chìa khóa trao tay):
- Practice by which one company designs, constructs, and tests production facility
for a client firm
- Advantages:
+ Firms specialize in competency
+ Nations obtain infrastructure
- Disadvantages:
+ Politicized process
+ Create competitor
 EX: Telecommunication Consultants India constructed telecom networks in both
Madagascar and Ghana – two turnkey projects worth a combined total of $28
million.
III, Investment Entry Modes: (Đầu tư đầu vào)
 Wholly Owned Subsidiary (Hoàn toàn thuộc công ty con):
- Facility entirely owned and controlled by a single parent company
- Advantages:
+ Day-to-day control
+ Coordinate subsidiaries
- Disadvantages:
+ Expensive
+ High risk
 Joint Venture (Hình thức liên doanh):
- Separate company that is created and jointly owned by two or more independent
entities to achieve a common business objective
- Advantages:
+ Reduce risk level
+ Penetrate markets
+ Access channels
- Disadvantages:
+ Partner conflict
+ Lose control
 EX: By combining resources the partners can construct a facility that serves their
needs while achieving savings from economies of sale production -> this was on
 reason behind the $500 million joint venture between Chrysler and BMW to buld
small-car engines in Latin America. Each party benefited from the economies of
scale offered by the plant’s annual production capacity of 400000 engines – a
volume that neither company could absorb alone. -> Buyback Joint Venture.
+ Forward Integration Joint Venture (Liên doanh hội nhập về phía trước):
. The parties choose to invest together in downstream business activities – activities
further along in the “value system” that are normally performed by others.
. The two companies now perform activities normally performed by retailers further
along in the product’s journey to buyers
 EX: Amazon’s purchase of Whole Foods:
- Here the company acquires or merges with a distributor
- The main objective of forward integration is to achieve larger market share
- Here the companies are looking forward to expand their distribution or improve
placement of their products in the market
- Gives control over supply chain
+ Backward Integration Joint Venture:
. Backward integration is a business model whereby a company takes direct control of
how its products are supplied
. Formed when a firm co-operate with another company to supply its raw material
. Backward integration is an approach by a company to increase its level of control on
its input
 EX: Netflix: a platform to distribute films and TV shows created by other content
creators, co-operate with Luc Besson’s Europa Corp studio to produce their own
original content.
+ Multistage Joint Venture (Liên doanh nhiều tầng):
. A joint venture that features:
- downstream integration by one partner and upstream integration by another
- results when one company produces a good or service required by another
 EX: Google and NASA developing Google Earth
Combining:
- Images and information from NASA (upstream)
- Power of Google technology (downstream)
 Provide public access to NASA’s vast information resource
 Strategic Alliances:
 - Selecting partners for Cooperation
- Cultural Environment
- Political and Legal environments
- Market Size
- Production and Shipping costs
- International experience
 The REASONS why we should study International Business:
- Increase profit
- Reduce risk (in case of economic downturn, war)
- Catch up with market competition
- Exploit other's countries potential resources, especially human, idea (really powerful)
- Sustanability (Tính bền vững)
ex: KFC (break commercial, doesn't have chicken), life-cycle products
- Be received by governments (but half)
(Sometimes, it can be not benefit, sensitive topics: Vingroup

F, Chaper XIV: Developing and Marketing products

G, Chaper XV: Managing International Operations
I. Elements to consider when formulating production strategies:
1. Capacity planning
- Process of assessing a company’s ability to produce enough output to satisfy market
demand
- If the capacity being used is greater than the expected market demand a company may
need to scale back production by perhaps reducing the number of employees or work
shifts at some facilities
- If market demand is growing, managers must determine in which facilities to expand
production or whether additional facilities are needed to expand capacity
2. Facilities Location planning:
- Selecting the location for production facilities
- Aspects of the business environment that are important to facilities location planning
include the cost and availability of labor and management, raw materials, component
parts, and energy.
- Service companies must consider a wide variety of customers’ needs when locating
facilities
- Supply issues are also important in location planning
- Taking advantage of location economies - economic benefits derived from locating
production activities in optimal locations
- An important consideration for production managers is whether to centralize or
decentralize production facilities. Centralized production refers to the concentration of
production facilities in one location. With decentralized production, facilities are spread
over several locations and could even mean having one facility for each national
business environment in which the company markets its products
3. Process Planning
- Deciding the process that a company will use to create its product
- Determinants:
+ firm’s business-level strategy
+ availability and cost of labor in the local market
+ decide whether standardization vs adaptation
4. Facilities layout planning:
- Deciding the spatial arrangement of production processes within production facilities
- Determinants:
+ availability of space and cost
+ company’s business-level strategy

II.