INTERNATIONAL BUSINESS FOR KIM WOODS ONLY
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assignment_guide.pptxIndividual essay assignment 50%
Understand the nature of internationalisation process of business.
Perform an international business analysis. In doing so, you will need to understand some international business theories from this course. Not strategic management or marketing concepts.
Apply what you learn from the IB course to this essay. From your research and analysis, you will be able to ‘learn’ and ‘apply’ key international business theories from the course to a ‘real-life’ MNC.
Step 1: Choose a company and give an overview of the company as an MNC
Select a Fortune 500 company that from your industry and country. For example, you may choose to analyse Huawei’s entry into India for mobile phone industry.
Step 2: Country/industry analysis
Analyse a few key macro environmental factors in the foreign country during the period the MNC enters that foreign market. (e.g. Huawei decide to enter India’s phone industry in the year 2000).
Step 3 : Analyse MNC’s internationalisation process and entry strategy.
Internationalisation process of this MNC (how? why? with whom? key challenges?)
Reflections (What have you learnt?)
Step 4 : Online submission to RMIT blackboard before deadline on 15 April, 2016 Singapore time. 11 p.m. Maximum 2 attempts
No hard copies required.
Areas to cover – suggested format
1. Introduction – 1/2 page
Explain the purpose of this essay or assignment (what is the objective of this essay, what do you hope to achieve?), scope, what will you be covering in terms of scope and depth), and methodology (how did you get the information for this essay)
2. Overview of the MNC– 1/2 page
Year established, business or industry involved in, Fortune 500 ranking in 2015, recent sales and profit performance/figures, global sales/profits, key competitive advantage, markets or countries served,( milestones in appendix) if relevant to show its internationalisation trends
Which country and which industry will this essay focus on.
Areas to cover – suggested format
3. Country/industry analysis – 2-3 pages
Country/industry analysis is not a generic PESTEL or SWOT or Porter’s five forces analysis.
Using Huawei’s entry into India market, e.g.
Analyse macro environmental factors in depth to support your argument why that particular factor has positive or negative impact on India’s mobile phone industry and Huawei’s choice of entry mode at the later part of the essay.
Market entry can refer to selling to Indian consumer market or manufacturing or setting up R&D in mobile phone industry in India for the first time.
Use good reference websites Global Edge and General references, Passport Monitor (RMIT database)
Focus on relevant issues and time frame. Some websites provide very detailed information.
Areas to cover – suggested format
Industry analysis of mobile phone for investors in India.
Investment climate of the mobile phone industry in India can include statistics and research articles that show size and growth trends of this industry.
Level of competition and key players that dominate the industry. Is the industry growing or maturing?
Availability of relevant work force (skills) or availability of key factors of production that makes it competitive to manufacture and/or market mobile phones in the country.
Special incentives or development that enhance the attractiveness of this industry.
Country’s political risk analysis
Focus on the period Huawei enters India market. E.g.in 2000
Government policies or regulations on business e.g. business licenses or permits for the mobile phone industry, any tax, price control or import restrictions .
Pay attention to special requirements or restrictions for foreign owned businesses.
Transparency and consistency of government policies and regulations. Corruption - rating ? Cronyism?
Political stability. Are there any threats or possible events that can affect smooth operations of business
Identify events or policies that impact on Huawei’s operations, costs, revenue, growth etc.
Country’s political risk analysis
Ruling government’s attitude towards FDI and free trade during the period it enters India market?
Free or open policy on trade allows access to variety of goods and services.
Any danger of confiscation or expropriation?
To what extent does poor infrastructure hinder Huawei’s operations?
Quality of legal framework? Effective system? Level playing field or bribe needed?
How much red tape or bureaucracy?
Intellectual Property rights? How well defined?
Country’s political risk analysis
Look for country rating for comparison. Euromoney Country risk rating – allows free trial for 48 hours
http://www.euromoney.com/Poll/10683/PollsAndAwards/Country-Risk.html
http://bmo.businessmonitor.com/BM4/help/methodology_ratings.html
High investment risk (political risk) means higher chance of failure
Country’s economic analysis
Information analysed should be around the period it enters the India market.
Identify economic conditions that increase risk, lower profits, increase operational costs or lower efficiency, or vice versa
Negative economic conditions include recession or market down-turns, currency crises, or sudden bursts of inflation.
Most of these factors arise from imbalances in the under-lying economic fundamentals of the host country, such as a balance of payment crisis.
Market potential (demand for mobile phones in India) can be gauged from population size and growth, per capita income or spending power, growing economy, imports for those products.
Country’s financial risks
Focus on the period it enters India market
The origins of currency crises could be a progressively deteriorating trade imbalance (e.g., India in the late 1980s)
Declining exchange rate (look at trends) will lead to a fall in revenues and profits
Poorly developed banking infrastructure, access to loans or capital – affect mergers and acquisition entry mode
Ability to remit funds or profits to home country or make payments overseas. Weak currency countries often have restrictions by imposing remittance tax or strict limits on US or other hard currency conversions.
Areas to cover – suggested format
4. Internationalisation process of the firm - 2-3 pages
How? Use one or two internationalisation theories or models to explain the MNC’s internationalisation process to this country. (Uppsala, OLI, Porter’s Diamond, Goshal and Bartlett and if relevant Born Global)
Why? See Dunning’s 4 motives for FDI
Market seeking motives? Efficiency seeking? Resource seeking? Or Strategic Asset Seeking?
How do you apply IB and internationalisation concepts and theories?
We looked at the concept of ‘internationalisation’ of firms and rationale behind their decision-making process.
Uppsala internationalization model
Strategic choices for competing in international marketplace: international, multi domestic, global and transnational strategy - Goshal & Nohria
OLI paradigm (also known as Eclectic theory) – Dunning
Becoming MNC to search for competitive advantage through exploiting national differences in factors costs, economy of scale and economy of scope
4. Internationalisation process of the firm –cont’d
With whom? Which entry mode did it use?
Is it with a licensing agreement? Joint Venture? Acquisition? Or Wholly owned subsidiary?
Timing – first mover or late entrant? Large or small or incremental scale of entry, speed of expansion into that foreign market.
Key challenges
Was it successful? What obstacles did the MNC encounter due to its entry mode decision and the investment climate of this country for foreign investors in this industry.
Which IB theories or IB concepts support your argument.
Questions to consider
Appropriateness of entry mode:
Motives or reasons for expanding overseas. E.g. seeking new markets, efficiency seeking? Response to cost pressure or local requirements? Entry mode need to align with company's strategy – global strategy means looking for location economies conducting production or R&D at the most cost efficient country and then export standard products globally
Degree of control or risk the company is willing to undertake. This affects entry mode, timing of entry and scale of entry.
Available resources (financial, human, core competency or knowhow etc) for choice of entry mode.
Appropriateness need not mean absolute success.
RMIT University©yyyy
School/Department/Area
17
FACTORS AFFECTING THE CHOICE OF ENTRY MODE BY MNCs
This is an example of academic reference to support your analysis.
Risk, Return, Investment commitment, Control and Speed
Risk of failure and financial losses is associated with failed operations in the foreign country due to lack of knowledge of the country (culture, business climate, political environment, economic environment)
Control is associated with the amount of control the company has over its operations, technology and its core competencies
Investment in terms of financial resources, human resources, capital outlay etc.
Joseph Johnson & Gerard J. Tellis Drivers of Success for Market Entry into China and India - What is considered a successful entry mode?
Reflection – 1 page
5. Experience/lessons learned
What insights did you gain about international business in the contemporary context?
Critique on the relevance of various internationalisation theories used in this example.
Critique on the factors that affect entry mode choice and whether it is applicable in this case. Cite academic findings to support your argument.
The learning objective for this assignment is your mastery on various issues relating to entry modes and internationalisation theories.
Your reflection would show how much you really know about these two main topics.
We are not interested in any form of marketing issues or strategic management issues.
Areas to cover – suggested format
6. Conclusion 1/2 page
From your research and analysis in this essay and your objective you have outlined for this essay, what is your conclusion?
How to obtain better grades
A good assignment is well researched.
20-30 reference sources from academic research articles, academic or business reports, write ups in business journals or newspapers including statistics and trends.
Organise the flow of discussion in a sequential and logical order.
Avoid repetitive information or analysis. You don’t have to follow the sequence set out in the essay guide as long as it makes logical sense.
Analysis of macro environmental factors relating to country and industry should be during the period it enters the foreign market for this essay.
For a particular idea, have more than one view or perspective to have a balance view.
Do not make unsubstantiated claims or conclusion. Cite credible and relevant references. Support your claims with evidence using statistics, (quote and/or analyse the statistics), IB theories/concepts from textbooks, and research findings from relevant articles/sources.
All references / citations must be completed without error using Havard referencing style.
Do not side track into marketing (4ps). Remember this is IB. Especially if you chose journal articles from Marketing or Strategic Marketing journals
