• Why did Xiaomi go global?

• What was their entry strategy?

• What do you think Xiaomi gained
by going global?
• Suggest a strategy for you to
enter a new market?

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Why do we go global???
▪ Increase revenue potential: International expansion
offers a chance to explore markets and gain access to
millions of customers, thus increasing sales.
▪ Competitive pressure: Even if a company decides to
concentrate on its domestic market, it will not be
allowed to pursue its goals unhindered. Multinational
companies will enter its market and make a dent in
its market share and profit. The company has no
choice but to enter foreign markets to maintain its
market share and growth.
▪ New consumer base: It gives the opportunity to not
only sell your current product or service to a new
customer base but also to invest and introduce new
products/services.
Arun Chandran International Business Management 3
 Why do we global???
• Diversification: Keeping your business in the home market
can limit potential for profit. Taking your business
international allows you the opportunity to diversify your
markets, so your revenue is more stable.
• Selling in countries with different timing of business cycles can
decrease swings in sales and profits (e.g., increasing sales stability
through operations in countries that enter and recover from
recessions at even slightly different times).
• Moreover, by obtaining supplies of products or components both
domestically and internationally, companies may be able to soften
the impact of price swings or shortages in any one country.
• Finally, companies often go international for defensive reasons.
Perhaps they want to counter competitors’ advantages in foreign
markets that might hurt them elsewhere.
Arun Chandran International Business Management 4
 Why do we go global???
• Cost cutting: Developed markets have high cost
structures and companies may move their operations
to regions and countries where costs of production are
lower. Once a company starts operating in a
geographical region, it becomes easier and profitable
to market their products in that area due to availability
of cheaper labor costs and more affordable talent.
• Brand value: One of the reasons why businesses
expand globally is to be able to provide a reliable
service to their international clients. A good global
reputation will attract new customers. Expanding
abroad allows a company to build name brand
recognition and establish credibility internationally.
Arun Chandran International Business Management 5
 Why do we global???
• Talent pool: Hiring international talent can bring many advantages
including advanced language skills and diverse educational backgrounds.
In addition, expanding globally also allows companies to employ local
workers who have the expertise to communicate and serve your clients
(within the same time zone) without any complications.
• Gain competitive advantage: Go to market before your competitors do.
Expanding abroad allows you to get out of a competitive market.

Arun Chandran International Business Management 6

Arun Chandran International Business Management 7
Levels of International business activity

Arun Chandran International Business Management 8

 Deciding
how to
Deciding enter.
when to
enter.
Deciding
which
markets to
enter.
Deciding
whether to
go global.

Arun Chandran International Business Management 9

 Modes of Entry.
• Exporting: Exporting is the direct sale of goods and / or services in
another country. It is possibly the best-known method of entering a
foreign market, as well as the lowest risk. It may also be cost-effective
as you will not need to invest in production facilities in your chosen
country – all goods are still produced in your home country then sent to
foreign countries for sale.
• Licensing: Licensing allows another company in your target country to
use your property. The property in question is normally intangible – for
example, trademarks, production techniques or patents. The licensee
will pay a fee in order to be allowed the right to use the property.
Licensing requires very little investment and can provide a high return
on investment. The licensee will also take care of any manufacturing
and marketing costs in the foreign market.
• Franchising: Franchising is somewhat similar to licensing in that
intellectual property rights are sold to a franchisee. However, the rules
for how the franchisee carries out business are usually very strict – for
example, any processes must be followed, or specific components
must be used in manufacturing.
Arun Chandran International Business Management 10
 Modes of Entry.
• Joint venture: A joint venture consists of two companies establishing a jointly-
owned business. One of the owners will be a local business (local to the
foreign market). The two companies would then provide the new business
with a management team and share control of the joint venture. It allows you
the benefit of local knowledge of a foreign market and allows you to share
costs.
• Foreign direct investment: Foreign direct investment (FDI) is when you
directly invest in facilities in a foreign market. It requires a lot of capital to
cover costs such as premises, technology and staff. FDI can be done either by
establishing a new venture or acquiring an existing company. Byju’s, an online
Ed-Tech firm, raised USD 500 million in Silver Lake-led funding round in
September 2020. Silver Lake is a noted US equity and VC firm.
• Wholly owned subsidiary: A wholly owned subsidiary (WOS) is somewhat
similar to foreign direct investment in that money goes into a foreign
company but instead of money being invested into another company, with a
WOS the foreign business is bought outright. It is then up to the owners
whether it continues to run as before or they take more control of the WOS.

Arun Chandran International Business Management 11

Arun Chandran International Business Management 12
Questions.
• How will an idea, good, or service fit into the international market?
• Should trade or investment be used to enter a foreign market?
• Should supplies be obtained domestically or abroad?
• What product adjustments are necessary to be responsive to local
conditions?
• What are the threats from global competitors, and how can these
threats be counteracted?

Arun Chandran International Business Management 13

Activity.
• Identify 5 different brands.
• Create a report for each of these brands with the following parameters:
• Country of origin.
• Countries in which these brands are located.
• Where does it have the biggest market share?
• What was its entry strategy? List out the advantage and disadvantage of that
strategy.
• You can write, do a ppt or be creative and make a video.
• This is a group activity.
• Submission Deadline: 10/09/2021 E.O.D (Friday)

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 Thank you ☺

Arun Chandran International Business Management 15

Additional reads
• https://realbusiness.co.uk/technology-affecting-growth-international-
business
• https://www.finextra.com/blogposting/20768/starting-global-why-
international-business-presence-is-the-key-to-post-brexit-success
• https://www.bloomberg.com/news/articles/2021-08-30/facebook-
xiaomi-target-india-s-1-trillion-digital-loan-market

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