German interna onal university (GIU)

Faculty of business administra on

Topic:

The impact of home countries’ support on Interna onaliza on

Submi ed by : Nimet Ahmed Mekewi

ID: 100-2001

Submi ed to : Prof. Florian Becker-Ri erspach

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Abstract

How home countries influence the process to go international is an important case for most

companies and the establishment of their entry strategies. Many home countries seek to succeed

at this process and achieve the company's goal . For this reason, many studies have been

conducted to shed light on the factors that actually support the process of the organization. Other

studies have focused on the home country itself and its support to the internationalization

process.

In this paper, several aspects concerning internationalization support have been taken into

consideration. First the internationalization strategies and its types and how they ease the entry

process. In addition to that, the home country supports what can happen through trade and

foreign direct investment. After that a focused example of Egypt’s export is being defined and

how they proceeded with the process of it. The Government of Egypt's Ministry of Trade and

Supply establishes effective strategies to enhance the export promotion program and these

programs are organized into four export promotion units and also view the implications for

Egypt.

Finally, it is important to note that in order to have a successful entry strategy to penetrate

another company there are important aspects that should be taken into consideration, and also

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having the right vision of choosing the most compatible strategy, that benefits the home country

and gets the organizational goal to be achieved.

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Outline

Table of contents

1. Introduction………………………………………………………………………………7

2. Literature Review………………………………………………………………………11

2.1. Home Country ……………………………………………………………………. 11

2.1.1. What is a Home country?.......................................................................................11

2.1.2. Role of Home country in terms of Internationalization…………………………12

2.1.3. The direct effect of the home county on internationalization……………………13

2.1.4. Indirect effect of the home country on internationalization……………………..13

2.2. Internationalization ………………………………………………………………….14

2.2.1. Definition of Internationalization………………………………………………….14

2.2.2. Types of Internationalization Strategies……………………………………………14

2.2.2.1. Multi-domestic Strategy……………………………………………………14

2.2.2.2. Global Strategy………………………………………………………………15

2.2.2.3 Transnational Strategy………………………………………………………15

2.2.2.4. International Strategy………………………………………………………16

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2.3 Impact of home country support on internationalization…………………………16

2.3.1. Home country’s impact on internationalization via trade……………………17

2.3.1.1. Comparative Advantages………………………………………………...17

2.3.1.2. Comparative Disadvantages…………………………………………………18

2.3.1.3.Country-of-origin Advantage………………………………………………18

2.3.1.4. Country-of-origin liability…………………………………………………18

2.3.2.Home country’s impact on internationalization via foreign direct investment…19

2.3.2.1.Institutional Learning………………………………………………………19

2.3.2.2.Competitve Learning…………………………………………………….19

2.3.2.3.Institutional escape……………………………………………………………20

2.3.2.4.Competitive Escape…………………………………………………………21

2.4.Case Study ……………………………………………………………………………23

2.4.1.What does Egypt as a home country support its export promotion program?.......23

2.4.1.1. Brief of the case………………………………………………………………23

2.4.2. Recommendations to address…………………………………………………….23

2.4.3.Objectives…………………………………………………………………………24

2.4.4.Effective Promotion Programs…………………………………………………….24

2.4.5. Egypt’s Implications for export Programs………………………………………..25

2.4.6.Four Export Promotion units and their strategy…………………………………..26

3. Conclusion……………………………………………………………………………….29

4. References………………………………………………………………………………..30

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The impact of home countries on Internationalization

Research Question: The effect of home countries on the process of internationalization.

1. Introduction

The research question of the influence of home countries on internationalization will be

examined in this article. A lot of home countries put in the effort to go abroad in order to

generate a significant amount of profit , have a better reputation in the market and meet the wants

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of their clients. In order to enter any other nation, the aforementioned corporations devise plans

and analyze advantages and costs. In order to take action against any country, the most

significant variables they evaluate are political and economic reasons (Nancy Snyder,2002)

Firstly in this paper, the definition of what a home country is is going to be stated.

According to the business definition, a home country refers to the country where the

headquarters of a company is located, in other words, the country of origin (McGahan & Victer,

2010).

Not to forget to be mentioned is the role of the home country itself. Each nation,

according to institutional theory, is the sum of its institutions - the legal, political, administrative,

and economic structures of a country. Factors of production include "natural resources, labor

quality, and infrastructure" - all of which differ from one nation to the next. When it comes to

accessing their markets, industrialized nations provide more patent rights, more comprehensive

knowledge-based assets, and higher entry barriers. Different institutions in diverse countries have

different approaches to planning and implementation, as well as different behaviors and

performances (Yoo & Reimann, 2017). As a result, the possibilities and challenges in developing

nations differ structurally from those in developed countries. By that, a home country puts

several questions into consideration in order to know if the entry is beneficial or not.

The role of the home country in terms of internationalization can be split into two

categories: an impact in which the home country becomes a resource for the firm, which supports

or hinders its worldwide strategy. The direct effect and indirect effect are based on the valuation

that individuals in the host country give to the foreign home country. Some consumers prefer

products made in other countries over domestic ones, while governments give preferential

treatment to firms from particular home countries ( Alvaro Cuervo-Cazurra,2011). Consumer

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perceptions of the home country typically influence product marketing in the host country. The

home country indirectly influences the organization's global strategy by persuading the firm to

build specific resources at home to deal with specific environmental challenges there

(Cuervo-Cazurra andGenc, 2011).

On the other hand, the definition of internationalization and the types it has to be

mentioned. Defining internationalization first, as mentioned in previous studies, is the process of

expanding business operations beyond one's home country. Welch and Luostarinen defined

"internationalization" as the movement of resources across international borders.

Internationalization is more generally thought of as the consequence of gradual adaptations to the

changing conditions of the firm and its surroundings. Going deeper into the process of

internationalization I will be stating the four types of it which are Multi-domestic Strategy,Global

Strategy, Transnational Strategy, and International Strategy (Fayerweather, 1978).

Starting off with the Multi-domestic strategy includes compromising efficiency in order

to cater to many national desires.

Following that global strategy, When a corporation pursues a global strategy, it forgoes

local market response in order to focus on cheaper costs and better efficiency. A global strategy

emphasizes the importance of achieving low prices and economies of scale by delivering almost

identical products or services in each region ( Kennedy,2015).

Another strategy to be mentioned is the transnational strategy.A transnational strategy

attempts to achieve a balance between a multi-national and a global approach. McDonald's and

Kentucky Fried Chicken, for example, rely on the same brand names and basic menu items all

over the world. These companies also respond to regional tastes ( Kennedy,2015).

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 Lastly, the last approach is international strategy. Companies that pursue an international

strategy aren't worried about costs or cultural adaption. Taking Harley-Davidson as an example,

it does not reduce prices or modify motorcycles to meet local motorcycle standards. Regardless

of the product's features, buyers are willing to pay more for Harley's distinctive American style,

sound, and power ( Kennedy,2015).

An important aspect that should be shed light on is the home country’s support of

internationalization, which is the main research question.

The impact of the home country on business internationalization has changed as authors

focused on different phenomena and based on each other's work. There is an older tradition that

investigated countries' comparative advantage in facilitating exports due to their closeness to

other countries. In this paper how Firms in advanced countries have traditionally introduced

innovative items to meet the requirements and wishes of high-income consumers, is going to be

mentioned. Some businesses design goods that do not require or reduce the use of inputs that a

country has a comparative advantage in. Based on the foregoing, these items are then employed

as the foundation for greater corporate competitiveness ( Ramamurti,2012).

Another aspect to be mentioned is that Some customers would discriminate against

products from specific home nations or enterprises based in such countries. Firms should take

proactive actions to combat negative attitudes by providing a better price-quality ratio (

Porter,1990).

Later I will shed light on The impact of home countries on corporate multinationalization

that serves as the foundation for understanding the actions that support some of these acts. The

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case of Firms in more urbanized areas who internationalize more widely because they have

access to more sophisticated resources and face more competitive challenges is going to be

pointed out (Hennart, 2009). The argument is extended to countries with significantly lower

levels of taxation and transparency, such as offshore financial centers. As it gets more difficult to

operate in one's own nation, some businesses may consider relocating operations abroad(Lessard

& Lucea, 2009).

Next, The importance of the location of a firm which may be determined by its owners'

personal tax advantages rather than institutional factors is going to be highlighted. Afterward, the

effect of Home-country measures (HCMs) that may play a pivotal role in facilitating market

entry and mitigating post-entry risks will be emphasized (Barnard 2014).

2. Literature review

2.1 Home country

2.1.1 What is a Home Country?

Starting off with the home country, a company's "home country" is the country with

which it is associated culturally, normatively, operationally, and/or by its establishment. As

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generally known, the home nation is normally the territory of the company's core operating units

and the country that accounts for the majority of the company's sales(McGahan & Victer, 2010).

Almost always, for enterprises that only operate in one country, the home country also serves as

the company's headquarters. In addition to that, the bulk of multinational firms has their

headquarters mostly in their home country (Brouthers, 1998).

2.1.2 Role of Home country in terms of internationalization

Each nation, according to institutional theory, is the sum of its institutions, which

serve as the foundation of societal structure. The legal, political, administrative, and

economic structures of a country are the main foundations of what constitutes a "formal

institution" in that country. Different countries have varying levels of institutional

development, which can result in an absolute advantage (Yoo & Reimann, 2017).

Based on the foregoing, the role of the home country in terms of internationalization is all

about the importance of decision-making concerning international trade and investment

decisions.

What's most important to be mentioned about the role of the home country in terms of

internationalization can be split into two categories: an impact in which the home country

becomes a resource for the firm, which supports or hinders its worldwide strategy depending on

the home country's views in host countries; and an indirect effect in which the home country

pushes the firm to produce specific resources in order to operate there, and these resources

subsequently influence the corporation's worldwide strategy ( Alvaro Cuervo-Cazurra,2011).

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2.1.3.The direct effect: home country as a resource used in the process of

internationalization:

How the country of origin affects a firm's advantage abroad depends on the valuation that

individuals in the host country give to the foreign home country. Some consumers prefer

products made in other countries over domestic ones, while governments give preferential

treatment to firms from particular home countries (Alvaro Cuervo-Cazurra,2011). Consumers

and governments interact with the firm in a variety of ways in the home country. Consumer

perceptions of the home country typically influence product marketing in the host country. Firms

seek countries where governments do not restrict investments to specific firms. Furthermore,

other people in the country react to the country, which has an impact on the firm's operations (

Alvaro Cuervo-Cazurra,2011).

2.1.4.Indirect effect: home country encourages the firm to enhance resources that are

utilized in the global strategy.

The home country indirectly influences the organization's global strategy by persuading

the firm to build specific resources at home to deal with specific environmental challenges there.

These resources are then utilized by the company in its international expansion, allowing it to

pursue specialized global goals ( Del Sol and Kogan,2007). Some aspects of the firm's home

country environment compel it to build extremely sophisticated resources in order to operate

there. The distance between home and host has a beneficial impact on the foreign firm's capacity

to gain an edge. Companies that encounter pro-market measures in their home country, for

example, develop the capacity to deal with them and achieve higher profitability in other nations

(Cuervo-Cazurra andGenc, 2011).

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2.2.Internationalization

2.2.1. Definition of Internationalization

Welch and Luostarinen defined "internationalization" as the process of expanding

business operations beyond one's home country. While "international business activity" refers to

the movement of resources across international borders, the "internationalization process" is

more generally thought of as the consequence of gradual adaptations to the changing conditions

of the firm and its surroundings. Most importantly, had previously shown the link between

internationalization and corporate attitude change, highlighting the effects of cross-border

economic expansion on a company (Fayerweather, 1978).

2.2.2. Types of Internationalization strategies

Defining firstly what A multinational corporation is it is known as a company that

operates in numerous countries (MNC). The world's largest MNCs are key players. A firm's

international strategy can be divided into four categories: multi-domestic strategies, global

strategies, transnational strategies, and international strategies. Each method takes a distinct

approach to attempt to respond to differences in costs and efficiencies on the one hand, and

differences in customer preferences and market conditions between countries on the other. Which

of the four worldwide strategy categories will be pursued is determined by how the two cost

pressures and local cultural factors are managed (Kennedy, 2015).

2.2.2.1 Multi-domestic strategy

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 Multi-domestic strategy involves sacrificing efficiency in favor of adapting to different

national tastes. An example of a company that uses the aforementioned strategy would be Heinz

since the company customizes its products to suit regional tastes. Heinz provides an alternative

version of its famous ketchup to Indians because some of them will not consume garlic or

onions, for instance (Kennedy, 2015).

2.2.2.2 Global strategy

When a company adopts a global strategy, it sacrifices local market responsiveness in

favor of a focus on lower costs and increased efficiency. The global strategy is basically an

antithesis of a multi-domestic strategy (Kennedy, 2015). A global strategy emphasizes the need

to gain low costs and economies of scale by offering essentially the same products or services in

each market, despite the possibility of some minor product and service modifications in different

markets (Kennedy, 2015).

For instance, Microsoft makes the same software programs available in different

languages around the world. Similar to other manufacturers of consumer goods, Procter &

Gamble looks for every opportunity to build global brands in order to increase efficiency. Global

strategies can also be very successful for businesses whose products or services are largely

undiscovered. Variation in local preferences is less significant for these businesses in comparison

to pricing (Kennedy, 2015).

2.2.2.3 Transnational Strategy

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 Talking about the transnational strategy, A company that employs a transnational strategy

looks for a balance between a multidomestic and a global strategy. These companies are willing

to strike a balance between the need to adapt to local preferences in various countries and the

desire for lower costs and greater efficiency. Large fast-food chains, like McDonald's and

Kentucky Fried Chicken (KFC), for instance, rely on the same brand names and basic menu

items all over the world. These businesses also give in to regional preferences. For instance,

you can buy wine at McDonald's in France. Given that French diets heavily feature wine,

McDonald's strategy makes sense. Also, McDonald's offers a McArabia Chicken sandwich in

Saudi Arabia, and there are no pork products like ham, bacon, or sausage on its breakfast menu.

(Kennedy, 2015)

2.2.2.4 International strategy

Companies adopting an international strategy aren't particularly concerned with expenses

or cultural adaptability. They make few to no adjustments while they try to sell their items

internationally. When selling motorcycles abroad, Harley-Davidson, for example, does not

decrease pricing or change the motorcycle to fit local motorcycle standards. Buyers are prepared

to pay more for Harley's distinctive American appearance, sound, and power, regardless of the

product's attributes, even if the product is known in international markets for its "American"

attributes (CUERVO-CAZURRA, LUO, RAMAMURTI, & ANG, 2018).

2.3 . Impact of home country support on internationalization

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2.3.1.Home country’s impact on internationalization via trade

The analysis of the impact of the home country on business internationalization has

changed as authors focused on different phenomena and based on each other's work. Thus, one

perception is that only recently, with the analysis of multinationals from emerging markets and

the realization that what differentiates these firms from others is the influence of the home

country authors that appear to have paid more profound attention to the impact of the home

market on internationalization ( Ramamurti,2012).

Recent theoretical advances have concentrated on the impact of the home country on

internationalization through foreign direct investment, i.e., multinationalization. There is an even

older tradition that has investigated countries' comparative advantage in facilitating exports due

to their closeness to other countries ( Cuervo-Cazzura,2012).

The four drivers of the impact of a home country on internationalization via trade are

going to be mentioned in the following part which are comparative advantages, comparative

disadvantages, country-of-origin advantage, and liability ( Cuervo-Cazzura,2012).

2.3.1.1.Comparative advantages

The significance of the home country in corporate internationalization may be traced

back to Adam Smith's concepts of absolute and comparative advantage. Rather of relying

primarily on natural resources, countries might "generate" endowments (technology, knowledge,

or innovative capacity) ( Beck,2002). Firms in advanced countries have traditionally introduced

innovative items to meet the requirements and wishes of high-income consumers. These items

later became the foundation for their international expansion. As technology was employed and

standardized, production moved from the original country to other advanced countries (

Porter,1990).

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2.3.1.2.Comparative disadvantages

By mixing inputs and components from the home country with those from countries with

a comparative advantage in such areas, a corporation may be able to boost the competitiveness of

its final goods. This relationship between comparative advantage and disadvantage leads to a

similar relationship between firm imports and exports ( Cuervo-Cazzura,2012). Some businesses

design goods that do not require or reduce the use of inputs that a country has a comparative

advantage in. These items are then employed as the foundation for greater corporate

competitiveness and internationalization ( Williamson et al.,2013).

2.3.1.3.Country-of-Origin advantage

In some cases, the place of origin of traded items provides an advantage that aids a firm's

internationalization. In advanced economies, opinions of products from specific countries can be

favorable for products from other advanced economies since they are linked with higher

technology or higher quality (Zhou, Yang, & Hui, 2010).Companies might utilize good opinions

about the place of origin to justify a higher price for their products. They use their brands to

strengthen the links between the brands and their country of origin, rather than developing or

purchasing local brands that may not have such a link ( Tallman & Yip, 2009).

2.3.1.4.Country-of-Origin liability

Companies may discover that consumers discriminate against their products due to the

existence of country-of-origin liability. Some customers would discriminate against products

from specific home nations or enterprises based in such countries. Firms should take proactive

actions to combat negative attitudes by providing a better price-quality ratio (Magnusson, Haas,

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& Zhao, 2008).Firms can invest in shifting perceptions by using components from advantaged

countries or by separating the country of design from the country of manufacture (Salciuviene,

Ghauri, Streder, & Mattos, 2010).

2.3.2.Home country impact on internationalization via foreign direct investment

The impact of the home country on foreign direct investment differs from the effect on

international trade because in foreign investment the ability of the company to rely on

comparative advantage is limited. Many of the competitive advantages a company gains in its

home country do not transfer well to other countries. The role of institutions in shaping

companies was first explored in the context of business groups and transition-era economies. In

the 2000s, the conditions of the home country became of important because of the focus on

emerging market firms and weak market-supporting institutions (Hennart, 2009).

The analysis of the impact of the home country on corporate multinationalization serves

as the foundation for understanding the actions that support some of these acts. The four drivers

can be arranged in a two-by-two matrix, with the internationalization force (learning or escape)

on one axis and the resource dimension on the other (institutional or competitive) (Luo & Tung,

2007).

2.3.2.1.Institutional learning

Considering this part it was stated that Companies from poorer institutions are more

likely to invest in other weaker institutions and gain an edge there over companies from better

institutions since they have learned how to function under weak institutions (Holburn & Zelner,

2010).

Studies can concentrate on a certain feature of interest and examine how the firm

generates institutional learning through its exposure at home. Individual managers can do this

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because their experience with institutions drives the investments. A company that is exposed to

institutional instability at home is better prepared to deal with such uncertainty abroad. The same

institutional learning achieved from exposure to weak institutions can assist corporations in

expanding into a broader range of countries. According to Cuervo-Cazurra, Ciravegna,

Melgarejo, and Lopez (2018), enterprises from more corrupt and unstable nations have a stronger

multinationality-performance link.

2.3.2.2.Competitive learning

Competitive learning, or the exposure that firms in specific nations have to higher levels

of competition, is a second driver of the impact of the home country on overseas

multinationalization. Firms may be forced to increase their capabilities and become highly

sophisticated worldwide rivals as a result of intense rivalry in their own country. By working as

suppliers to multinationals from advanced economies, emerging market enterprises can gain

from competitive learning. Firms in more urbanized areas internationalize more widely because

they have access to more sophisticated resources and face more competitive challenges, allowing

them to improve and internationalize (Lessard & Lucea, 2009).

Competitive challenges in one's own country are insufficient for a company to become global.

Different levels of competitive learning help enterprises achieve worldwide competitiveness and

sell their products. The firm must discover and refine its sources of advantage to the point where

they may be transferred to other countries ( Estrin, Nielsen, and Nielsen (2017).

2.3.2.3.Institutional escape

Companies relocate abroad to avoid the shortcomings of domestic institutional

institutions. The argument is extended to countries with significantly lower levels of taxation and

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transparency, such as offshore financial centers. Firms do not need to invest in the host country

to become multinationals in these instances. As it gets more difficult to operate in one's own

nation, some businesses may consider relocating operations abroad. Sometimes this entails

physically relocating important activities to another country. The progressive deterioration of

institutional conditions at home may induce this institutional flight (Barnard (2014) .

The development of violence in a country can lead to fascinating assessments of which

enterprises relocate their operations and which choose to stay there. Even if the violence is

fierce, certain businesses with deep roots in the country may be unable to relocate. The location

of the firm may be determined by the owners' personal tax advantages rather than institutional

factors (Dai, Eden, & Beamish, 2017).

2.3.2.4.Competitive escape

The fourth reason is competitive escape, which occurs when enterprises leave their home

country to improve their competitiveness. This mechanism explains some of the

emerging-market multinationals' foreign investments. Acquisitions of enterprises in advanced

economies to boost home country capabilities change over time as the firm's competitiveness

increases (Madhok & Keyhani, 2012).

Competitive escape is the process of investing in countries with more advanced

technology and then repatriating such innovations to compensate for a lack of competitiveness in

the home country. Other methods of upgrading capabilities that do not entail foreign direct

investment include alliances and partnerships with international enterprises (Contractor, Kumar,

Kundu, & Pedersen, 2010).

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 In this article, we examine the relationship between home-country embeddedness and the

behavior of multinational companies (MNC) Home-country measures (HCMs) may play a

pivotal role in facilitating market entry and mitigating post-entry risks. Understanding their role

would help to explain patterns of firm internationalization more fully. In this paper, we examine

the concept of firm internationalization support (HCM) and link it to different forms of economic

coordination (home-country economic coordination or HCM). In doing so, we aim to improve

our understanding of the home-country effect in firms' global expansion.

The importance of emerging-market MNCs' FDI has led to analyses of home countries and how

they condition firm internationalization. Both classical theories and new theories on emerging

market multinationals focus on the constraining or enabling role of home-country conditions.

Concluding this, The significance of emerging-market MNCs' OFDI has prompted studies of

home countries and how they influence business internationalization. Classical and modern

theories on emerging market multinationals take opposing views on the drivers of

internationalization and competitive advantages (Hennart, 2012). Both emphasize the role of

home-country factors in restraining or enabling business internationalization.

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2.4.Case study :

2.4.1.What does Egypt as a home country support its export promotion program ?

2.4.1.1.Brief of the case:

The Ministry of Trade and Supply (MOTS) was created in 1996 as part of a

reorganization of export promotion programs. There is hope that MOTS can play a useful role in

both reducing firm export start-up costs and broadening the base of exporters, provided that it

addresses its organization and program shortcomings (Hussein Harrawi,2007).

2.4.2.Recommendations to address organizational issues are:

It has been recommended that a Creation of a single export promotion unit where there

are currently four is relevant and that specific programme objectives for the unit should be

established to have a clear vision of the program. After that, it would be beneficial to develop a

multi-year strategy and annual work plans with measurable outputs for the unit and each program

within it and develop consistent periodic program evaluations against such measurable outputs in

order to evaluate the performance and focus efforts on selected industries within the framework

of the multi-year strategy and Improve institutional marketing ( Galal Elzorba,2010).

MOTS should, in terms of operations, target priority markets (those most likely to create

additional exports) and reallocate abroad personnel and resources to them in proportion to their

estimated export potential.

After that, it should also expand its domestic outreach (one-on-one counseling) efforts to

Egyptian export-capable firms, Change the format and objectives of its direct trade promotion

events (trade missions, trade fairs, foreign buyer missions), Centralized database development,

and take advantage of data available on the Internet Service permit fees ( Nathan,2012).

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 USAID's MOTS export promotion program may well lead to a misuse of scarce public

funds on misdirected activities providing minimal benefit to the business community and

Human resource development is a key component of this effort ..

2.4.3.OBJECTIVES

Over the next decade, the Egyptian government has set a target of 10% increase in

exports. The effects of governmental commercial policies and regulations affecting international

trade are not the case in this study. The most difficult problem for MOTS is establishing

priorities within a context of limited fiscal resources and a rapidly changing environment ( Galal

Elzorba,2010).

2.4.4.EFFECTIVE EXPORT PROMOTION PROGRAMS

A number of recent studies have examined export behavior during periods of significant

national export growth. Following a large number of enterprises through time and characterizing

their behavior during rapid increases in exports in Colombia, Mexico, and Morocco, researchers

discovered the following:

Many enterprises entered foreign markets as a result of the significant increase in exports.

In Colombia and Morocco, new exporters accounted for more than a quarter of the total growth

in manufactured exports, and the export boom would not have materialized without their

participation. Firms that had been actively exporting previously to the burst of export growth did

not significantly increase their shipments during the rise ( Nathan,2012).

Entering into international markets involved major "start-up" costs that include:

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 1. Client identification, international prices, market selection, customs practices, and

standards are all examples of market research.

2. Development or alteration of products and packaging

3. Creating distribution channels

4. Education (export procedure, long-term marketing, foreign culture, language, methods of

payment, finance, documentation, etc.)

As more enterprises become exporters, start-up expenses decreased because newer

exporters learned from their colleagues' experiences and/or export promotion services were more

efficient when supplied on a wider scale ( Nathan,2012).

Once enterprises realized a profit from exporting, they continued to trade as long as

manufacturing costs were met. Firms appear to be altered by the experience of becoming an

exporter, gaining physical and intangible rewards that they are hesitant to give up unless

marginal costs cannot be covered in the long run.

2.4.5.Egypt’s implications for export programs:

Recent studies' implications have provided insight into the design and direction of export

promotion programs:

Rapid export growth frequently involves convincing enterprises that the initial investment

will be compensated by future earnings. Governments can play a significant role in reducing

businesses' export start-up expenses and encouraging them to focus on long-term marketing

plans. Temporary support programs may result in lasting changes in export supply.

Ideally, the government's export promotion schemes should Reduce export start-up costs (and

associated time) for export-capable firms and Motivate and educate enterprises to take a

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long-term perspective in growing markets abroad (thereby recouping start-up expenditures) and

Increase the number of exporters ( Galal Elzorba,2010).

According to a World Bank assessment, Egyptian exporters require more market entry

knowledge and abilities in order to access global markets. It has been mentioned that The

number of Egyptian exporters is estimated to range between 1,500 and 500 and in order to have

A successful Egypt export promotion program a substantial rise in the number of exporters will

be required ( Nathan, 2012).

2.4.6.The four export promotion units and their strategy

MOTS are divided into four export promotion divisions. Each function is going to be

briefly discussed below.

1. Commercial Representation Sector

The Commercial Representation Sector (CRS) is the agent for Egyptian foreign commercial

policy and promotion functions overseas. It operates under the umbrella of the Ministry of

Foreign Affairs representative offices abroad. CRS has about 115 foreign commercial officers

and technical support personnel stationed in 68 Embassies or Consulates in 60 countries.

Its objective is that Egypt's Council for Regional and Country Relations (CRSR) is modifying its

strategy and annual work plans to better match country post-import needs with Egyptian product

export possibilities. CRS aims to increase exports by at least 10% in sub-industry sectors and

rationalize imports, among others (Nathan,2012).

The work strategy that has been established was that Egypt has joined COMESA, the

East and Southern African Common Market. According to CRS, Africa and East Europe have

the greatest potential for Egyptian exports of high-value goods and services. Furthermore, they

26
viewed Egypt's economy as the last frontier, and CRS believes that trade in services and

commodities has prospects that can be capitalized on (Ahmed Ezz,2006).

2. Egyptian International Trade Point (EITP)

Its purpose is to provide information electronically to Egyptian businessmen and foreign

traders. Furthermore, it maintains a central office in Cairo and, in June 1997, opened a trade

point office in Alexandria The information it captures in its computer system includes trade

inquiries and leads received by MOTS and CRS units.

The ETIP objective is that it intends to increase the number of smaller

producers/exporters in order to improve the availability of information on Egyptian enterprises

and encourage regional trade. Another aspect is that it connects all CRS offices to the Internet

and provides pertinent trade information to improve the export process.

How the government establishes ETIP’s strategy, EITP bases its success on the number of

transactions completed by client firms, although no goals have been established yet Most trade

opportunities were received from CRS or the GTN (Global Trade Network) (Ahmed Ezz, 2006).

3. General Organization for International Exhibitions and Fairs (GOIEF)

The GOIEF was created in 1956 as the government entity in charge of organizing trade

exhibits in Egypt and around the world. GOIEF relocated to its current location in Nasr City,

near to the Exhibition Grounds, in 1980. It is funded directly by the MOF and receives extra

funds from MOTS on occasion.

Over the following three years, GOIEF intends to organize approximately 30 foreign

fairs. The fairground halls are old and in disrepair. While government funding for maintenance is

limited, the GOIEF has begun to collaborate with telecommunications and financial

organizations to enhance fairground conditions ( Nathan,2012).

27
MOTS focuses on specific African (Algeria), Middle East/Arab, Eastern European, and CIS

markets, attempting to enhance fairground utilization by pushing Governorates to conduct

national day fairs.

Egyptian Export Promotion Center (EEPC)

EEPC is a General Authority, with funds provided directly by the Ministry of Finance

(MOF). The budget for foreign promotional activities, excluding personnel-related expenses, is

around US$20,000. Participating Egyptian businesses pay LE 600 per year for EEPC services.

The Egyptian Export Promotion Council's (EEPC) priorities are as follows: Facilitating fair

trade participation at abroad trade fairs. Also, the objective is to organize and accept foreign

buyer trade missions (about four each year). In addition to the previous information mentioned, a

priority activity is training for Egyptian enterprises through technical help given by international

donor organizations ( Galal Elzorba,2010).

The strategy that's been conducted in this part is that Over the previous five years, EEPC

has aided around 30 firms in the shoe/leather garment industry but The long-term goal for Egypt

is to work with the Egyptian Export Association (EEA) to assist this activity.

After following these strategies and looking at the current situation of Egypt’s economy

and its export economic situation it has been stated that Egyptian exports reached $34.7 billion

during the period of 2021, up $8.1 billion from a year earlier, according to the Council for

Agricultural and Commodity Exports (CAPMAS). The top 10 commodities it exported included

liquefied natural gas (LNG), fertilizers, crude oil, petroleum products, ready-made garments, and

various foods ( Alahram,2023).

28
 3. Conclusion

This study focuses on internationalization, which is the process of home country

expanding in other countries, operating the business and achieving great profits. In fact, the

current study was formed with the purpose to demonstrate how home countries have an

important role in the internationalization process and how they support internationalization

through specific strategies. In order to find a relationship between both factors which are home

country support and internationalization a lot of research has been made and several aspects such

as strategies have been conducted and applied. Taking Egypt's export support program as an

example was a sort of illustration of how a country views certain aspects to operate in another

company and proceeds its internationalization process correctly.

To conclude this home country is the origin of a company and its role in how to

internationalize is important since it uses compatible strategies that fit in the foreign market.

29
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