Chapter 21 Summary/ Definitions
Global industry is an industry in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions.

global firm is a firm that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

Deciding Whether to Go Abroad
■ The company discovers that some foreign markets present higher profit opportunities than the domestic market.
■ The company needs a larger customer base to achieve economies of scale.
■ The company wants to reduce its dependence on any one market.
■ Global firms offering better products or lower prices can attack the company’s domestic market. The company might want to counterattack these competitors in their home markets.
■ The company’s customers are going abroad and require international servicing.
The company must weigh several risks:
■ The company might not understand foreign customer preferences and fail to offer a competitively attractive product.
■ The company might not understand the foreign country’s business culture or know how to deal effectively with foreign nationals.
■ The company might underestimate foreign regulations and incur unexpected costs.
■ The company might realize that it lacks managers with international experience.
■ The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate foreign property.
The internationalization process has four stages:8
1. No regular export activities.
2. Export via independent representatives (agents).
3. Establishment of one or more sales subsidiaries.
4. Establishment of production facilities abroad.
Deciding Which Markets to Enter
■ Market entry and market