Chapter 9: Internal Analysis: Assessing Current State
Chapter 9 Summary
LO 9.1 How Organizations Can Determine If a Product Is Ready for an International Market
- A product that is ready for international trade should meet four criteria: It has to be successful domestically, competitively priced, unique in one or more ways and costly to imitate.
- Organizations can use the Resource Based View and VRIO framework to identify internal resources that can be a source of their sustainable competitive advantage.
LO 9.2 Determining if a Company Is Ready To Enter International Markets
- A company is most likely to succeed in the international market if it has competitive capabilities in its domestic market; the management of the company is committed to the international venture and is willing to allocate time, personnel, and capital to fund the new venture.
- The firm has the experience, training, skills, knowledge, and resources to go international. Organizations can use Porter’s Diamond theory framework to determine their competitive capabilities in their domestic market.
LO 9.3 Motivations Behind Decisions to Enter International Markets
- Firms should be motivated to expand to international markets. The motivation can be based on proactive reasons or reactive reasons.
- Proactive reasons are profit-seeking, risk diversification, economies of scale, and increased capabilities.
- Reactive reasons include market opportunities and the generation of new revenue streams, overproduction, competitive strikes, and political and economic changes in domestic markets.
