In today's world, "globalization" is a very commonly used term but there are many ambiguities with respect to its definition, when the phenomena was born and why is it so important for companies? Although this term is imprecise, literature enables us to define it using two very distinct schools of thought. The first phenomenon is called "internationalization" which portrays the growing interdependence among national markets for goods, services and factors which in turn has resulted in the liberalization of trade among nations. The second concept is associated with two aspects namely Foreign Direct Investment (FDI) and the Multinational Enterprises (MNE). In their annual World Investment Report, UNCTAD, the term "globalization" was used by the sense of integrated production activities and strategies adopted by the multinational enterprises. MNE are considered as agents of production for activities such as integration strategies, intra-firm trade, outsourcing and offshore production. This chapter concentrates mostly on trade and investment liberalization. The working definition used here is a marked increase in the movement across national boundaries of goods/services, investment, people and information.
[...] Indeed, theories of internationalisation process, methods of managing business abroad and factors influencing selection entry modes have been developed. The second part will analyse a case study of the company Tesco which is a supermarket. From this literature review objectives research can be given to make this case study. First, the author will analyse the internationalisation process of Tesco. The purpose is to know: - Which method did they choose to internationalise? - Why this method is the best for this company? [...]
[...] Johanson and Vahlne (1977) examined the internationalisation process by investigating the development of knowledge and the building of a commitment within the firm to foreign markets.” (Tayeb 2000, p 141). In fact, they made a basic assumption which is quite simple. For them, market knowledge and market commitment affect both commitment decisions and the way current decisions are performed, which in turn, affect market knowledge and commitment (see fig.2). In this process, the role of knowledge is very important. Indeed, internationalisation requires both general knowledge and market specific knowledge which is obtained mainly through experiences from specific markets. [...]
[...] Chapter II the different entry modes Companies can enter foreign markets in different ways such as exporting, use of agent or distributors, licensing and franchising, joint ventures, management contracts, contract manufacturing or direct foreign investment. (Roger Bennett 1999). In this chapter, it will be discuss the different methods of entering in foreign markets including their advantages and disadvantages. Finally, factors which influence companies to make the most appropriate choices for them, will be presented. Definitions, advantages and disadvantages Export as an entry mode Export is quite the most common entry mode used by companies especially for Small and Medium Enterprises (SMEs). [...]
[...] A licensing agreement is an arrangement whereby a licensor grants the rights to intangible property to another entity (the licensee) for a specified period of time, and in return, the licensor receives a royalty fee from the licensee. Intangible property includes patents, inventions, formulas, processes, designs, copyrights, and trademarks . (Hill 1997). Advantages One of the best advantages of a licensing is that the firm has the possibility of avoiding trade barriers such as quotas (limitation of the quantity) or tariffs and high transaction cost (Root 1994). [...]
[...] Disadvantages The Greenfield investment process is usually complex, need negotiations and it usually takes a lot of time (Hill et al.2003). Selecting a entry mode choice Analysis comparison between entry modes Advantages Disadvantages Risks Control Rapidity Commitment Resources Simple way to - High transport - Low - a low control - High rapidity - Low. Do not - Small start cost over the entry mode require business and international - trade barriers marketing and investment in limits business. - Problem with distribution of the target resources are Ability to local marketing firm's products country enough realize agents location and experience curve Low - lack of - Low and - Lack of - One of the - Low. [...]
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