The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
Importance of international entrepreneurship,
1. Outline
• Different types of businesses
• Importance of international entrepreneurship,
• Strategic issues in international entrepreneurship,
• Challenges & Opportunities in international
entrepreneurship
• Dragon Den Episodes
3. Another Definition of IE
The process of creatively discovering and exploiting
opportunities that lie outside a firm’s domestic market in
the pursuit of competitive advantage.
5. Importance of International Entrepreneurship
International business has become increasingly important
to firms of all sizes
Successful entrepreneur is someone who fully understand
International entrepreneurship and differs from purely
domestic business and is able to respond accordingly
6. International Vs Domestic Entrepreneurship
International entrepreneurial decisions are more complex due to uncontrollable
factors such as the following;
Economics
A domestic business strategy is designed under a single economic system
Creating a business strategy for multiple countries means dealing with
different levels of economic development and different distribution systems
Political-Legal Environment
Multiple political and legal environments are opening some opportunities
while eliminating others
Differences in Value added-tax
Differences in Advertising campaign
Differences in labeling, ingredients, packaging
Laws governing business arrangements also vary greatly in the 150 different
legal systems and sets of national laws
7. International Vs Domestic Entrepreneurship
Cultural Environment
Understanding the local culture is necessary when developing worldwide plans
Language barrier
Bribes and corruption culture
Technological Environment
Technology varies significantly across countries
New products in a country are created based on the conditions and
infrastructure of that country
Example of cars based on roads and price of gasoline
8. Four Strategic Issues to Consider;
1. The allocation of responsibility between the U.S (host country) and
the foreign operation
1. Stage 1. Internationally Centralized business
2. Stage 2. Internationally Decentralized business when its expanding
3. Stage 3. Conflicts because of decentralization leads to pulling back certain
level of authority to US head quarter
2. The nature of the planning, reporting, and control system should be
used through out international operations
3. The appropriate organizational structure for conducting
international operations
4. The degree of standardization possible
9. Entrepreneurial Entry into International
Business
The modes of entering an international business in divided
into three categories;
1. Exporting
2. Non-equity arrangements
3. Direct foreign investment
10. Entrepreneurial Entry into
International Business
1. Exporting: selling goods made in one country to
another
Indirect exporting involves using a foreign purchaser( or
export management firm) in a local market or selling goods to
another country through a person in the entrepreneur’s home
market
Direct exporting uses independent distributors or selling
goods to another country by taking care of the transaction
Opening their own overseas office for sales
11. Entrepreneurial Entry into International
Business
2. Nonequity arrangement: Doing international business through an
arrangement that does not involve any investment
Licensing: Allowing someone else to use something of the Company’s
Entrepreneur who is a manufacturer(Licensee) giving a foreign manufacturer (licensor)
the right to use a patent, trademark, technology, production process or product in
return for the payment of royalty
Turn-Key Projects: Developing and operationalizing something in a
foreign country
Management Contracts: A method for doing a specific international task
Management techniques & skills
Acquiring foreign expertise without giving ownership of resources to foreigner
12. Entrepreneurial Entry into International
Business
3. Direct Foreign Investment: the percentage of ownership is
related to the amount of money invested, the nature of the
industry, and the rules of the host government
4. Minority interests: Having less than 50% ownership position
5. Majority Interest: having more than 50% ownership position
6. Joint Venture: Two companies forming a third company
13. The joint venture should have
synergy!
Synergy means that the whole
is greater than the sum of its
1+1= 3
parts or
The two parties having things
in common
14. Entrepreneurial Entry into International
Business
4. Mergers: An entrepreneur can obtain 100% ownership
Horizontal Merger: combination of at least two firms doing similar
business at the same market level (e.g.; 7 Eleven Stores)
Vertical Merger: Combination of at least two firms at different market
level (stabilizes supply & production e.g. walls & polka)
Product Extension Merger: Combination of two firms with
noncompeting products (related production/distribution activities e.g. Western
publishing (kids books) by Mattel (toys))
Market extension Merger: Combination of at least two firms with
similar products in different geographical markets (e.g. Diamond chain: west
coast retailer by Dayton Hudson a Minneapolis retailer)
Diversified Activity Merger: Combination of at least two totally
unrelated firms (e.g. Hillenbrand (hospital furniture manufacturer by American
tourists (a luggage manufacturer))
15. Organizations overcoming Barriers to
International Trade
Trade barriers: Hindrances to doing
international business
Some countries (Japan) allegedly present barriers
due to their complicated distribution system
GATT (the General Agreement on Tariffs and
Trade) seeks to help overcome barriers
FTA’s (free trade agreements) such as NAFTA
reduce barriers and encourage investment between
countries (in this case the U.S., Canada and
Mexico)