I heard about the example of producing bottles.

At this time, a student stood up and asked, "Professor Zhao, should all enterprises with idle productivity be internationalized?"

Of course not, the primary question is why companies are trapped in idle production capacity, and even local businesses with small production capacity can succeed in a global industry.

They just need a different strategy and market means, rather than becoming a larger international player and often being able to make money. Not all industries are like the aircraft manufacturing industry, and only a few large international manufacturers can survive.

Speaking of cost advantages, early years, enterprises were often internationalized to obtain better or cheaper production factors. This is still very important in today's oil and gas companies. Just look at those Occupy Petroleum companies. They flocked to the world, the Iraq War, the Kuwait War, and the Middle East War to obtain oil and gas mining contracts.

Cheap labor is another factor of production, and the inability to flow of cheap labor has become another reason for internationalization.

Because Western companies ship their fish and shrimp to Asia to clean and then ship them back to the West for sale is a good example in the past.

Over time, costs are declining. When the company's output increases and becomes more experienced in technology and system operations, the company can reduce costs more effectively. Because the purpose of internationalization is to increase the company's output, it will move the company's costs downward on the learning curve.

By internationalizing a business, it can also easily promote its skills and various resources.

If a company successfully replicates a ready-made system abroad, it means that the investment invested in the system can be offset by setting up multiple points. Think of McDonald's and KFC, both of whom have successfully promoted their business systems.

"Professor, you gave examples of McDonald's and KFC. Do you think that the promotion of enterprise proprietary skills is more typical in the service industry, rather than in the manufacturing industry?"

“In fact, the reality is indeed the case.”

After hearing such words, students who do catering began to become active.

At this time, Professor Zhao said: "The above is about cost advantages. Then let us ask Professor Carvera to talk about the second motivation for corporate internationalization. Enterprise internationalization is to obtain network benefits."

"Okay, classmates, we know that companies must work where customers are available. Unlike cost advantages, network benefits mainly affect the company's benefits."

"Let's think about what some slogans say. Customers are internationalizing. We have to follow them and have no choice. In some industries, internationalization is indeed the essence of the value realization of enterprises. Taking American express delivery companies as an example, the key factor in their success lies in their international network. For a traveler, it is very important to know that an American Express credit card can be used all over the world. Another example is the international hotel chain. Business people like to find a well-known hotel in different destinations. They know what a well-known hotel represents. As a result, the cost of searching for hotels in different countries has been reduced."

"Okay, Professor Carvera, thank you for explaining the interests of the national network to us. Then let's continue to talk about the third benefit of internationalization. I know that learning is the most difficult to quantify."

"Yes, internationalization forces companies to compete with more companies in different countries and business environments. Companies may learn a lot from it and apply it to all business activities. They may become stronger because they have learned to compete in different evil environments and have managed successfully, rather than avoiding diversity.

So people often say that we will go wherever the market goes.

That will make you stronger because you have learned to compete hard, and you have made yourself brave enough to compete with other companies instead of avoiding them. A great man in China once said that a hundred boats compete in the current and those who strive for the oars are the first to describe this situation.

Customer feedback forces you to react quickly and coordinate with it, think about Silicon Valley or London where industry groups have developed, and those industry groups have developed into the center of the world, and it makes sense to establish a company there as a foothold.

In other words, you want to stay with your competitors.

"Professor Carvera briefly shared many cases with us just now, including Japanese companies, KFC, McDonald's, and many internationally renowned hotel chains. From those cases, I see that in order to obtain cost and network advantages, the key is to try to standardize as much as possible. To become a benefit, we must make full use of the diversity faced by internationalization for learning. Those cases are only clicked today, and we mainly analyze the Belgian Dynamics Group today.

Let's go back to this case.

First, let’s analyze the products of Belgium Power Group, such as its production or power generation, as well as transmission and distribution. When transmitting, it refers to the transmission of the produced electrical energy from the power plant to various transformers or substations or we have a special term called high-voltage transmission.

Distribution refers to the transmission of current to the terminal consumer through the local transformer.

"Mr. Steve, as the former CEO of the Belgian Group, can you share with us the Belgian Power Group in accordance with the three views stated by Professor Carvera?"

"Yes, I know the past power operation report of Belgium Power Group. I will first analyze from the production perspective. Belgium Power Group has its advantages in international cost. Belgium's domestic demand has reached its peak. For them, it is not difficult to formulate plans, arrange production capacity, and achieve economies of scale. The fluctuations in power demand are mainly due to fluctuations in the overall economic cycle and changes in weather. In that case, power producers are very happy to have the opportunity to sell excess products, especially because the characteristic of electricity is that it cannot be stored and used later.

In order to transmit and distribute power, you only need to use some local facilities and access to the power supply system, without infrastructure construction, so in transmission and distribution, the cost advantage can also be obtained. Multiple distribution through the network, the cost of one kilowatt is quite low.

There is a historical point in time to tell you here. Before Mrs. Thatcher, you had several large enterprises, with many different power supply points across Europe, and we can buy electricity and gas in the central area, but that is impossible because every country uses their inherent methods to organize the electricity and gas sectors.

As Mrs. Thatcher began the process of liberalization in Britain, and later the whole of Europe began the process of liberalization, the original impossible became possible.

The Belgian Dynamics Group also really began to move towards the international market at this time. My predecessor Bodson pursued opportunism. At that time, he did not formulate a detailed internationalization plan. Instead, he jumped around between various opportunities on the left and right.

This is a typical gesture of a local champion working hard toward international competition, exposing themselves to open markets, to competition in power markets in those already liberalized countries such as Chile and Argentina, in which Belgium grew from a traditional monopoly manufacturer to one of the most competitive power companies in the world.

I think learning was the main benefit obtained by the Belgian Dynamics Group in internationalization at that time.

Because they did not initially set up evaluation standards for their international projects. They had to improve their profitability and produce more electricity than they did when they were operating in China, but in fact they did not immediately show much effect at that time, but they gained professional knowledge in managing a diversified market structure, and in this regard they transformed themselves into a stronger and more competitive group.

"So, Professor Carfuya, do you think that from the successful cases of Belgium Power Group, our companies can be internationalized?"

"No, I think it is very dangerous to seek international development with a wishful thinking. We should think about why our domestic market is narrow, is it because of the company, is it limited by the market itself, or is it an excuse for the inability to enhance competitiveness in the country. If you cannot improve your position in a familiar place, then why do you think you can do this in a new international market?"

"So, can I think so, Professor Carvera, you mean that there are prerequisites to internationalize, and your company must have a strong competitive advantage."

"Yes."
Chapter completed!