IBUS1101 Lecture Notes - Lecture 9: Foreign Direct Investment, People Skills, Offshoring
18 Jul 2018
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Document Summary
Australian firms often choose britain, new zealand, or the united states as their first foreign market. As managerial experience, knowledge, and confidence grow, firms expand into more complex and culturally distant markets, such as china or japan. Other firms are more venturesome and target nontraditional, higher-risk countries. Ongoing globalization, as well as advances in communication and transportation technologies, have reduced the foreignness of most countries, hence the cost and risk of entering them. Often, the firm may target a geographical region or a group of countries rather than individual countries. This approach is usually more cost effective, particularly in markets with similar characteristics e. g. the european union includes 27 countries that are relatively similar in income levels, regulations, and infrastructure. When entering europe, firms often devise a pan-european strategy. It is expensive and impractical to target all the nearly 200 countries worldwide. Management must choose markets that offer the best prospects.
