Internationalisation Process and Free Trade Areas: Unit 3 and 4

Pressures for internationalisation

Unit 3: Internationalisation Process

Global competition has spurred very rapid and significant growth in the international trade of goods and services during the past few decades.
Given the costs of entry into new markets, which can be extremely high, firms have been forced to share these costs and the risks involved through partnerships and collaboration which, in turn, have created new challenges for international managers in terms of choice of direction, location, type of product/service etc.
Unit 3 also examines the main drivers behind the growth in the internationalisation process and explores the different methods by which firms can exploit overseas markets such as export-based, non-equity-based (intellectual property rights), and equity-based (foreign direct investment).

In this unit we will explore:
    •    Pressures for internationalisation 
    •    Methods used by firms to enter foreign markets and their advantages and disadvantages 
    •    Investing abroad and principles behind successful international alliances 
    •    Theoretical approaches to internationalisation

After completing Unit 3, you should be able to evaluate, discuss, and critically analyse the following questions:
    •    What are export-based, non-equity, and equity-based methods of internationalisation?
    •    Why investing abroad may or may not be a good idea?
    •    What are the principles behind successful international alliances?
    •    What are some different theoretical approaches to internationalisation?

Unit 3 Reading

Given the increasing pressures for internationalisation identified in unit 1, unit 3 examines the different ways that firms can exploit overseas markets such as export-based, non-equity-based and equity-based. Various models are explored to explain the internationalisation process, and the principles behind successful international alliances are considered.
Key terms in this unit: Eclectic Paradigm, Uppsala model, Born Global, push and pull drivers, JVs, alliances.

Unit 4: Globalisation vs Regionalisation

This unit reviews the mechanisms of international trade in general and explores in particular the role of free trade areas and trade blocs such as the European Union (EU), North American Free Trade (NAFTA), Association of South-East Asian Nations (ASEAN), and MERCOSUR (Common Markets of the South, by its Spanish Acronym).

In this unit we will explore and study:
    •    The definition and role of free trade areas and trade blocs 
    •    The factors contributing to the growth of free trade areas 
    •    An appraisal of the costs and benefits of free trade areas/regional trade blocs

        After completing Unit 4, you should be able to evaluate, discuss, and critically analyse the following questions:
    •    What are free trade areas and trade blocs?
    •    What are the factors contributing to the growth of free trade areas?
    •    What are the advantages and disadvantages of free trade areas and trade blocs?

Unit 4 Reading

This unit examines the role of free trade areas and trade blocs such as the European Union (EU) and North American Free Trade (NAFTA). The growth and the advantages and disadvantages of free trade areas are also explored.

International institutions like WTO, IMF, and the World Bank are then considered and their effectiveness relative to RTAs is discussed.
Key terms in this unit: RTAs, MTAs, EU, IMF, WTO, World Bank