MGT240—INTERNATIONAL MANAGEMENT. MID-TERM EXAM. Business & Marketing

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Mid-Term Exam
1. Globalization & Internationalization
Typically, companies develop different market entry strategies to gain a foothold into one or more local and/or international markets. The expansion into international markets is, generally, a reflection of sustained local/national growth and could also be one way to overcome a range of challenges including, but not limited to, declining growth, stricter regulatory barriers, market saturation and/or surging import/export duties. For market expansion, companies, big and small, can adopt a globalization or an internationalization approach (Rooney and Chavan). In a conventional expansion form, companies usually move from an internationalization phase into a globalization one. The internationalization phase is characterized by separate market entry strategies whereby single (national) markets are considered stand-alone markets. More specifically, in an internationalization approach, companies develop an overall corporate strategy cutting across all business lines for each separate national market. In so doing, national markets are considered independent markets from one another and, usually, report to a main headquarter in country of origin. The maturation of several independent national markets could initiate a strategy change into globalization. That is, if a number of independent, national markets develop similar market patterns (e.g. converging consumer preferences, development of joint economic bloc agreements, and further integration of logistic, operation and/or business processes),
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companies move on to a globalization approach whereby a number of national markets are
considered as one single, independent market. In a less conventional approach market expansion,
companies could start global. This is now a more common pattern since early 2000s. Thanks to
more flexible rules and regulations on flow of people and goods and, of course, Internet, even
smaller companies can sell products and services, according to integrated, streamlined strategies,
to consumers, individual or corporate, at a global scale. Thus, internationalization and
globalization can be said to be different phases of market expansion process. In expanding
internationally, companies usually undergo an internationalization process whereby markets,
existing and potential, are considered, independent, stand-alone markets of different market
strategies. Upon maturity, several international markets could emerge as one, globalized market
sharing one and same overall corporate strategies although some localization elements could be
introduced in order to account for understandable local/national differences.
1 Jeffrey Sachs and Andrew Warner: Theory of Comparative Advantage
Trade liberalization is key to understand how Sachs and Warner characterize economic reform. In essence, Sachs and Warner underscores economic reforms aimed at broader liberation of national economies, particularly of closed and least developed economies, as a critical prerequisite to attain higher GDP and, more broadly, improved macroeconomic performance. To do so, less performing economies, argue Sachs an...