MBG774 – International Business

Course 2 – Firms response to

International Business Environments
MBA Global
Deakin Business School Program

Dr Ruby Ma
Sunday 28 July 2024
11:30am – 1:00pm (IST)
4:00 PM-5:30 PM (AEDT)

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Agenda

What we will cover today

• Welcome
• Unit Chair and Lecturer – Dr Ruby Ma
• Learning objectives
• A quick overview of course 2
• Resources overview
• Module 1 – International Business Strategy
• International Business Strategy
• Assessment Task for course 2
• Assessment Task for course 2
• Q&A session & Wrap up

2
Welcome
• Unit Chair & Lecturer – Dr
Ruby Ma
• Learning objectives
• A quick overview of course 1
• Resources overview
• Module 1 – International
Business Strategy
• Assessment Task for
course 2
• Q&A session & Wrap up

3
Introduction and
Welcome
• Dr Ruby Ma
• Learning objectives
• A quick overview of
course 1
• Resources overview

4
Welcome

Learning objectives
At the end of this session you will be able to:
• Understand what is in courses 1 and 2
• Define international business Strategy
• Describe the four different International Business Strategies
• The various Entry Modes
• Connect and become familiarise with your assessment task

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Dr Ruby Ma - a quick overview of course 2
Course 2: Firm’s response to International Environment
Course 1: International Business Environments
Course 2: Course 1:
Module 1: International Strategic Module 1: International Business and
Management and Entering Foreign Markets Globalization

Module 2: Organisation of International Module 2: Role of Culture in International

Business and Human Resource Management Business

Module 3: Global Marketing, Production, Module 3: Political, Economic, and Legal

Outsourcing and Logistics Management Environments, Economic Development and
Social Responsibility; and Trade,
Investment, and Cooperation between
Nations

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Course 2 - This course will cover the following:
Welcome to Course 2 on ‘Firm’s Response to International Markets’
• How companies decide on a strategy for international expansion and the mode of entry into a particular
country or region
• To describe the organisational architecture and its components and understand how an organisational strategy
can improve the performance of a company
• About the role marketing plays in the success of a firm that operates on a global scale and the four elements
that constitute the marketing mix
• About global production and supply chains, including outsourcing, logistics and operations

Module 1 - International Strategic Management and Entering Foreign Markets

• International Strategic Management
• Entry Modes
Module 2 - Organisation of International Business and Human Resource Management
• International Business Design
• Organisation of International Business
• International Human Resource Management
Module 3 - Global Marketing, Production and Logistics Management
• Global Marketing
• Global Production and Supply Chains
Readings – Textbook, Learning modules and resources on the UpGrad
platform

Learning Modules on the UpGrad platform

International Business: Competing in the global marketplace, Hill, C.W.L & Hult, G.T.M. (2019), 12th Ed,
New York, McGraw-Hill, Irwin.

Module 1: International Strategic Management and Entering Foreign

Markets – Chapters 13, 15 & 16

Module 2: Organisation of International Business and Human

Resource Management - Chapters 14 & 19

Module 3: Global Marketing, Production, Outsourcing and Logistics

Management - Chapters 17 & 18

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Introduction and
Welcome

Dr Ruby Ma

• Module 1 – International
Business Strategy and
Entry Modes
• Q&A session & Wrap
up

9
Course 1: International
Business Environments

Module 1 - International
EEdidittMaMasterster
Strategic Management and
tetextxtststyleyless
Entering Foreign Markets

10 2
What is International Strategic Management? (please refer to the learning
modules on the UpGrad platform for course 2)
Q. What is International Strategic Management?
• Organisations use different strategies in international markets to achieve their strategic goals.

• "A strategy is about how people throughout the

organization should make decisions and allocate
resources in order to accomplish key objectives." -
Watkins

Q. International strategies are influenced

by 2 types of pressures, what are they?
• Pressure for cost reduction, and
• Pressure for localisation.
These pressures will differentiate the following four
strategic alternatives.

Q. What are the four International strategic

choices (strategies)?

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The following graph maps these strategies according to pressures
for cost and localisation

These strategies help companies define their

goals and achieve growth accordingly.

Moving on, you will next learn how

companies use different decision strategies
to analyse and determine the international
strategy that best fits them.

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 Deciding Strategy – SWOT Analysis

Any decision made in a business should be backed by a proper analysis that considers the strengths,
weaknesses, opportunities and threats for a company.
It is important for a company to continuously evaluate its position in the market and make decisions
accordingly.
Companies use the SWOT analysis to compile the
This example by SME of using the SWOT framework to
internal and external factors that can determine
analyse a company’s position gives you a perspective and
their strategy. understanding of how this helps companies evaluate their
Q. What is SWOT analysis? strategies and position in the market.

• Strengths consider what the company is good at and

can build upon. Next , we will take a look at another tool used to analyse
• Weaknesses consider what the company is not so the attractiveness of an industry.
good at and should reconsider to minimise them.
• Opportunities consider the available alternatives that
companies can choose to improve their presence in the
market.
• Threats consider the political, economic, legal, and
various other factors that can influence the firm’s
growth.

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Deciding Strategy – looking at industry attractiveness

Q. When deciding on Strategy in IB, an industry analysis should be conducted.

Which model was recommended for use?
Developing any strategy cannot happen without
• Industry Analysis: Porter’s Five Forces Model
knowing what your competitors are doing. Some
o In addition to conducting the SWOT analysis, it is questions that may arise, include:
important to have a good understanding of the
• Who are your direct and indirect competitors?
industry in which you are operating.
• What does the competitor do? What is their
o This will help you determine the level of industry
focus?
attractiveness, that is, determine the potential for
making a profit. • What are their strengths and weaknesses?
o Understanding the strategy would not be complete • What is their market share?
without knowing about Michael Porter's famous Five • How do you differentiate your organisation or
Forces Model. You will recall that you learnt about product or service from those of your
this model in the business strategy course. competitors?

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Summary

Session Summary
You also learnt about the following decision strategies:
In this session, you learnt the international
strategy required and the strategic choices • The SWOT analysis weighs the strengths,
organisations have for entering into the weaknesses, opportunities, and threats for a
international markets: company.

1. International or Home Replication Strategy • Porter’s Five Forces evaluates the different factors
that have an impact on the company’s journey:
2. Multi-Domestic Strategy
• Threat of new entrants
3. Global Standardisation Strategy
• Threat of substitutes
4. Transnational Strategy
• Existing competition
• Bargaining power of suppliers
• Bargaining power of buyers

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 Entry mode
Q. While the choice of entry mode can be influenced by many factors, a tool can be
used to justify the choices made. What is the name of this famous model/theory (Hint: a
three-tier model for analysing the attractiveness of an international market).
• Dunning's Eclectic Paradigm Model
This model comprises the Ownership, Location,
Internalisation (OLI) framework. Here are more details on
• There is a wide range of entry mode the OLI framework:
options available when it comes to • Ownership advantages accrue to a company because it
international expansion. owns something tangible or intangible.
• Location advantages determine the market that is best
• While the choice of entry mode can be suited for production.
influenced by many factors, Dunning’s • Internalisation advantages affect the desirability of internal
Eclectic Paradigm Theory can be used as a production rather than contracting with a host country
tool to justify the choices made. company to produce the product, be they goods or services.

To understand Dunning's Eclectic Paradigm model through some

• British economist John Dunning created a examples, watch the video on the platform
three-tier model for analysing the
attractiveness of an international market.
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Dunning’s Eclectic Paradigm model

In your resources, there is a video of the SME analysing the entry of Starbucks in India based on
Ownership Advantages:
• Starbucks is a name that is trademarked in 10 Moving on, let us understand the entry modes available for
languages international expansion for a company.
• Other intangibles such as the concept of stores and
the lifestyle beyond the product
Location Advantages:
• Huge market potential and growth
opportunities in India
• Talent availability in employees
Internalisation Advantages:
• Training for services can be provided
internally

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Entry Modes - expanding internationally

Q. A wide range of entry mode options available when it comes to international

expansion. What are some of the entry modes you have studied in course 2?
Here are various modes of entry into foreign markets: • Wholly owned subsidiaries are when the firm owns
• Exporting is a way of selling goods or services 100% of the stock, and activity is internalised into the
from one market to another. organisational form of the firm.
• Mergers and Acquisitions:
• Licensing is the lease of rights by one firm licensor
of the use of its intellectual property to the licensee • An acquisition is the acquiring of an established firm in the
in return for a fee. host country.

• Turnkey projects are when the contractor agrees • A merger is when two companies come together to become a
combined entity.
to handle every detail of the project for a foreign
client, including the training of operating personnel.
• Franchising is a specialised form of licensing in The magnitude of the advantages and disadvantages
which the franchisor sells intangible property and associated with each entry mode is determined by several
the franchisee agrees to abide by strict rules as to different factors, including transport costs and trade
how it does business. barriers, political and economic risks, and organisational
strategy.
• Joint venture is the establishment of a firm that is
jointly owned by two or more otherwise
independent firms.

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Entry Modes - expanding internationally continued…

• Strategic Alliances have become more • An alliance may involve only limited activities,
frequent nowadays. They may be seen as one such as marketing or research and development,
way for firms to enter into cooperative or it may be comprehensive. The selection of a
agreements between actual or potential partner for such an alliance and the selection of
competitors. The term ‘strategic alliances’ is the appropriate form and scope of the alliance
often used rather loosely to include a wide are key questions for management.
range of arrangements between firms,
including cross-shareholding deals, licensing
arrangements, formal joint ventures, and
informal cooperative deals. They can facilitate
market entry, allow risk-sharing, and assist
synergy and competitive advantage between
partners.

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 Time and Scale of Entry

Let’s now consider the key decisions involved in deciding on a particular international market
and mode of entry.
Q. A firm has to consider the timing of entry after
choosing a market to expand into. What are the two • Q. Firms must decide on the scale of market
basic timings of entry? entry, what are the two types?
• Early entry - This is when the firm enters a foreign • Large scale entry is when firms enter a market on a
market before other foreign firms. By entering a market significant scale, making a strategic commitment to the
early, companies can: market.

• Acquire a higher market share. • Small scale entry is when firms have the advantage
of learning about a foreign market while simultaneously
• Establish a strong brand image.
limiting their exposure.
• Create switching costs for consumers.
• Late entry - This is when the firm enters the market after
To summarise, a firm should weigh the implications
firms have already established themselves in the market.
and opportunities with regard to the time and scale
By entering a market late, companies can:
of its entry into the host country as this has
• Reduce the costs of introducing and educating the consumers significant implications on its growth.
about the product.
• Have prior knowledge of consumer perception of the product
and the legal and political implications on the same.

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 The Strategy of IB - Entering Foreign Markets

The main motive behind any company’s existence is to create wealth for its shareholders. In the
process of creating wealth, companies have to make many decisions on a day-to-day basis. Such
decisions will have a huge impact on the way business ecosystems are built.
Companies enter foreign markets to maximise their value by
increasing profitability. Please look at this in detail from Dr Companies create different values:
Jane Menzies’s video on the UpGrad platform.
Tangible values: Examples include profits and sales and
In order to maximise profitability and achieve expansion, assets.
firms must first:
Intangible values: Examples include brand value and
• Expand the market by selling products and competencies in recognition in the market.
international markets,
The SME also summarised the different reasons for which any
• Realise location economies and cost economies, and company would expand into the foreign markets and the process of
• Leverage valuable skills for greater return. creating and maximising the value of a firm on the platform video.

Also, by realising location economies, firms can:

• Lower the costs of value creation and achieve a low-cost
position,
• Differentiate their product offering,
• Create a global web of value creation activities, and
• Locate where value is maximised or where the costs of value
creation are minimised.
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Session Summary

In this session, you have learnt about

Dunning’s Eclectic Paradigm model
You also learnt about the time and scale of the
that evaluates the attractiveness of entry for a company into an international
the international market based on market, that is late and early entry modes, and
large and small scale entry. These decisions
Ownership Advantages, define the objectives of any company
Location Advantages, and expanding internationally and how they
execute the same.
Internalisation Advantages.

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Course 1:
International Business
Environments
EEdidittMaMasterster
• Assessment
tetextxtststyleyless Task for
course 2

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Assessment for Course 2 discussion (also refer to
assessment video on the platform and assessment brief, case study and marking rubrics)
Students will receive an industry brief (case study - the internationalisation of Sims Metals into Indonesia) and
identify international opportunities and formulate recommendations for pursuing those opportunities in line with
organizational capabilities and which are socially and culturally responsible.

This second assessment is a 2500-words individual case study report that will look at internationalising ‘Sims Metals’ into
Indonesia .

The actual case study has been provided to you via the UpGrad platform. With the organization brief/case study you should:

• Identify the international business opportunities that you will pursue.

• Develop recommendations for the company which includes addressing:
• The appropriate international strategy chosen
• The entry mode chosen
• The international organisation design chosen
• The international marketing strategy chosen
• The international human resource strategy chosen.
Students should conclude their assignment, with articulating the key concerns/recommendations that they identified in their study.
• The assignment really follows course 2 in the international business course.
• So what do you have to do for this assignment?

Please pay attention to what I say today and refer to the assessment video on the platform and assessment brief, case study and marking
rubric for more details.
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 Assessment Overview
How should you approach your assessment task…?
First, reflect on what Deakin Faculty had mentioned in the video

Second, study your ‘Assessment module’ online via UpGrad platform, aim to get an understanding of your
assessment task we had prepared

Next, think about the Learning Outcome Details (Unit Learning outcome (ULO) and Graduate Learning
Outcome (GLO)

Then, gain a deeper understanding of the assessment task and requirements

Clarify and ask questions to your UpGrad teachers and Deakin staff in the final doubts resolution session

Conduct good research and analysis, before commencing on report writing, AND write your own assignment.

MUST provide proper referencing – NEED to provide both in-text citation and a full reference list using Deakin
Guide to Australian Harvard or Deakin Guide to APA7.

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Any questions ?

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Thank you everyone.
Enjoy your study of International
Business course 2.

Best wishes with your study and

assessments
See you in the final Live session

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