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Prof. A.K. Sengupta Former Dean, Indian Institute of Foreign Trade

Two Factors: Pull factors : Push Factors Pull factors: Proactive reasons ± forces of attraction ± pulls the business to foreign markets ± profit, growth etc. Push factors: Reactive reasons ± compulsion of domestic market prompts companies to internationalize ± saturation etc. Profit Motive: ‡International business ± profitable than domestic market ± investment in low cost locations.


Growth Opportunities ‡Economic growth in many foreign countries strong attraction. Domestic Market Constraints ‡Market for product tends to saturate or decline (happens frequently in advanced countries) ± Transfer of technology to developing countries. ‡Scale economies ± Need to enter foreign market in addition to domestic market ± Korea ± economic size plants Competition ‡Competition ± driving force behind internationalization ± A protected market motivates domestic sales ‡Economic liberalization in 1991 increased competition from foreign firms as well as domestic firms ± many Indian companies going international.

Government Policies and Regulations Incentives: ‡Incentives offered by government to export and invest in foreign countries. ‡Governments of many countries offer incentives to foreign investors. Obligations: ‡Foreign exchange needed to finance imports, payment of royalty, debt etc. ‡Companies are subject to specific export obligations ± export house, EOUs,


Spin off Benefits ‡International business may help companies to improve domestic business ± Helps to improve image of the company. ‡Foreign exchange earning may enable company to import capital goods, technology. Strategic Vision Systematic and growing internationalization of many companies is essentially a part of their policy.


Reasons for Entering International Markets
Strategic Vision Spin - off benefits Growth Profitability

Economies of scale Why Should a Firm Enter International Markets?

Govt. Policies & Regulations

Spreading Risk

Competition in Domestic market Spreading R&D Cost Marketing Opportunities Due to life Cycle

Access to Imported inputs Uniqueness of Product or services


Process of International Marketing
Commitment to Export


Internal Factors -Product -Resources
International Market Involvement Market Identification & targeting Entry mode selection Marketing Mix *Product *Price *Distribution *Promotion Set Targets Implement

External Factors Decide on -Market Environment -Competitive Profile

Organise Department Subsidiary Jt. Venture Export House

Export Review Modify Set new target

Allocate Resources *Product *Arrange Resources