Students, we talked about the motivation and prerequisites for enterprises to internationalize, and the question of what enterprises will gain in internationalization.

Now we're done.

"Our next question is how to translate the potential benefits into the right entry model, that is, how to globalize the enterprise, what strategy and organizational structure we want to implement.

Simply put, it means that there are different ways in which we can participate in internationalization.

What are they?

We have direct and indirect exports, licensing, joint ventures, alliances and foreign direct investment, etc.

Professor Zhao continued, "Students, I was a little shocked when I entered every definition of this pattern in my head. Because getting into mode is just too crucial. ”

Because it's easy for our company to choose the wrong model and fail because of it.

"I don't think companies should think about just one way to enter the market, they should be selective, and likewise you can't use the same entry model for all foreign markets, depending on which of the three benefits we talked about earlier.

For example, in order to achieve economies of scale in production or to improve the utilization rate of production equipment, the pursuit of cost advantages, then the best mode of entry is likely to be export, if you feel that the interests of the network are the most important, then not export, but foreign direct investment and mergers and acquisitions are more appropriate, because you have to be present in the local market abroad, if internationalization is to obtain learning opportunities, joint ventures and alliances, perhaps the first model you should choose.

Each entry pattern reflects a different behavioral risk and a different view of time, if we consider the risk and the ability of the business to retain options.

Export, then, is the lowest-risk mode of entry, with low investment and exit costs.

So we have to think about whether it's a direct export or a foreign direct investment.

In addition, the cost of licensing exit is higher, because a license is a statutory commitment that can be maintained for a given period of time, and the riskiest mode of entry is OFDI, which costs a lot of investment and time, which exposes the enterprise to a higher opportunity cost, and the investment is almost impossible.

I think the best example of this analysis is the case of the Belgian Dynamics Group.

"Mr. Steve, I would like to ask you what the Belgian Dynamics Group used to enter the international mode at that time. ”

"In the beginning, we didn't think much about internationalization, we just knew how to build and run a power plant. That can be the key to our success in the world and in the economies of some developing countries in particular. ”

"We have the machines, we have the joysticks, we are confident that we have a lot of experience, we have brought a lot of good things to the table in those projects, and we have learned a lot of good things in our company, and that has been influencing our international operations. We always try to learn from the countries that we go into, most of the time, almost all the time, we are with your collaborators, local collaborators, because they can tell us about the local culture, and we can also take care of the local characteristics, and our group will often work with another local manufacturer like us, so that we can combine the advantages of internationalization and localization.

Okay, thanks to Mr. Steve for sharing again, we know that Belgian Dynamics takes the form of direct investment and alliances.

"Let's talk about one of the most important issues in the internationalization strategy, what kind of internationalization strategy and organizational structure should be used. ”

"Professor Kafuya, please share it. ”

"Okay, let me tell you, there's actually a lot of debate on this issue, whether it's localization, or globalization, or centralization, or decentralization. But we are generally looking for a balance between localization and globalization strategies.

Internationalization if you want to use economies of scale, then it is not wise to adopt a multi-region strategy in one country, the potential benefits of globalization are cost advantages and network benefits, from the pressure of cost, not only to promote enterprises to the world, they will also stimulate enterprises to standardize production, otherwise the cost advantage will be lost.

In the process of internationalization, we see that benefits and benefits are two different things, and the best benefits of internationalization are economies of scale.

But it's hard to have a globally consistent production model, and can you imagine how much P&G would have earned if they had only one formulation and one packaged cleaner in Europe? Unfortunately, governments have to use local languages on packaging, and in some countries governments encourage the use of iodine-free detergents but in others there are no restrictions at all. The French prefer large packages, while the Dutch prefer small packages, and all these barriers to globalization are preventing P&G from exploiting those potential benefits of globalization as much as possible.

Some companies invest heavily internationally without seeing immediate returns

In the annual reports of a company, such a disaster is often called a "strategic investment", and investment should not be a hard indicator.

"Then Professor Kafua, let's analyze the specific case, then what do you think of the internationalization strategy of the Belgian Power Group. ”

"Belgian Dynamics Group is implemented with a fairly localized character. I think Mr. Steve knows more than I do. Let him say better. ”

"Okay, I'll tell you. Mr. Steve said.

"We have given this internationalization strategy a name, we call it "multi-country local law" why is it multi-country local, because we are in a very sensitive industry, the distribution of natural gas and the distribution of electricity, which is very important for the local people, so it is also very important for the local government, so we have to integrate into the local area to do some of the work that needs to be done, so that we can become a part of people's normal life in the country where we invest.

Now we have agreements with the Dutch power distribution and transmission authorities, we have also built and operated a power plant in Luxembourg, and in Italy we have built a power plant with a chemical company, Solvay, which uses the heat generated by the power plant for its own production and also buys electricity from the power plant......

As I said before, we did not achieve any international benefits, but we began to benefit from learning, and after the benefits, we pursued cost benefits and network benefits, especially after obtaining these two benefits, as the barriers to globalization continue to be removed, the potential benefits are growing, and the Belgian Dynamics Group was determined to take the step of internationalization at that time, so that we could get more opportunities or go to any other country in the world to take risks.

……

"Okay, everybody, we talked about the reasons for internationalization and what kind of entry model to use, what kind of internationalization strategy and organizational structure, and when all the decisions and analyses are made, the internationalization of the enterprise is just the beginning.

So how to run an international business?

Internationalization is one thing to see benefits, but it is another thing to get benefits, international economy such as economies of scale will never come to the door by itself, whether enterprises can get those, depends on the quality of management.

There is also no free internationalization test. You can't just be a little bit international in a company, and if the top management doesn't take internationalization seriously and no one supports it, we don't expect those who are operating internationalization to feel supported and take their responsibilities seriously.

In the process of internationalization, enterprises should pursue long-term interests, rather than focusing on short-term interests, because only long-term efforts can be rewarded. The true benefits of internationalization can only be achieved several years after the steps of internationalization, and it requires sustained investment and careful management to achieve good returns. Belgian Dynamics is a beautiful example of this.

"Yes, we at Belgian Dynamics started with the internationalization process as a learning process, we created some teams, we developed people, we were motivated, and we wanted to do something for the future.

In this process, we have carried out long-term persistence and very firm investment, we have been operating in China before, so internationalization requires the continuous efforts of the senior management of the enterprise and those who are sent abroad, especially those who go abroad, they encounter problems that have never been encountered before, so firm investment is the essence of the most success.

Today, the Belgian Dynamics Group has grown from a small company to an international industrial group, which is why internationalization has revolutionized the entire company

He didn't make precise decisions at the beginning, it just happened, they knew what they were doing, they kept learning from the local area, they kept evolving the organization, the people, the culture and the structure accordingly, and their opportunity-driven internationalization strategy became an increasingly rich strategy, and they built a truly international organization.

"Students, we have learned about several important aspects of the internationalization strategy of enterprises.

And he shared the experience of the successful operation of the Belgian Dynamics Group, which is a good example of how you should even go international when you are not driven by cost advantages and network interests, as long as you know what you are doing, be patient and work on management, a company can grow from small to large, and become a multinational company. I hope to inspire the students here. ”

That's when the course ends.

Professor Zhao stood up and said.

"We would like to thank Professor Ka and Mr. Steve for sharing with us, Amy for their participation, and the students for listening to our discussion on corporate internationalization strategy. ”

After listening to a class, Xi Ming sighed as if he had been brainwashed, tired!

Lin Chen's fat man leaned on the chair in a scattered manner, muttering in his mouth: "Foreigners are really talkative, going around and around, so I don't know what they are talking about, and my head is still buzzing." ”