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Hi, my name is Dave Ketchen.
I serve as the Harbert
Eminent Scholar and Professor
of Management at Auburn
University in Auburn,
Alabama in the United States.
We're going to talk today
about what determines
success in
international markets.
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First, we want to think
about why exactly do
companies want to enter
international markets?
Why do they want
to expand beyond
their domestic borders
into new countries?
Well, there's
several key reasons.
One, obviously is access
to new customers.
If you think about an
American or British
or German company
that wants to enter China,
if you are successfully
able to pull that off,
all of a sudden you have access
to billions of customers.
A second reason why
we might expand to
new countries is lowering costs,
this is particularly the case
on the manufacturing side.
There are countries
where the cost of
labor is much lower than
in other countries,
so if we can set up, say,
a factory in a low
labor cost country,
that improves our
cost structure and
in some cases,
very dramatically.
We also have this concept of
diversification
of business risk.
There's this old saying,
don't put all your
eggs in one basket,
and that applies here.
If we are operating in
different countries then let's
say there's a problem in
one particular country,
a competitor comes along
and really kicks us around,
or a particular government
becomes hostile to us.
Well, if we're operating in say,
10 or 12 or 20
different countries,
then a problem in
one country is not going to
hurt our company all that much.
We can think about a company
like Coca-Cola that has
a presence in over 200
markets worldwide.
If they have a problem
in one or two markets,
it's not going to be a
killer for the company.
