Decision to Move into an International Market

There are many businesses that have expanded their business internationally in order to benefit in some sort of way rather it revenue or a better market for their product. In this thesis, I will research a multination company and its international strategy over the last 10 years. I will elaborate on it international orientation and rather it etho-, poly-, or geocentric. I than explain why the company decided on expanding to the chosen locations. Then I will clarify if they had core capability to succeed in those markets, along with its

The Law of diminishing returns states that if one factor of production is increased while the others remain constant, the overall returns will relatively decrease after a certain point. The total fixed cost is the same regardless of the output; the total variable costs will change with the level of output resulting in the total cost as the sum of the fixed cost and variable cost at each level of output. Over the 0 to 4 range of output, the TVC and TC curves slope upward. They reflect a decreasing rate due to the increasing minor returns. The slopes curves will increase due to these diminishing marginal returns.

The Marginal Cost graph is a function of change in total cost divided by change in quantity produced. Marginal cost is the added cost of producing one additional unit of production, or the savings in not producing one additional unit. The graph decreases until the fourth unit of production, and then increases rapidly, as marginal cost is tied to total cost and is thus subject to the law of diminishing returns.

In microeconomics, economies of scale can be defined as a scale which is there when lager output is obtained with the lower per unit cost this is because the fixed cost is spread over the more units produced or generated.

North Company can produce 500,000 units at a total cost of $220,000 or 600,000 units at a total cost of $250,000. Economies of scale

1. Price of the good : Generally if the price of a product gets higher the quantity demanded becomes smaller so people buy less of that good and more of its substitutes . And as the price of product decreases the quantity demanded increases.

Many companies today want to expand their business to the international business, which can bring cost down and profits up. Taking a business internationally means knowing the rules and regulations of the countries you are entering. There can be many issues with going global which include cultural barriers, diversity issues, multicultural issues, political issues, and economical issues. It is very important to know how important expansion is to the company and what implications will come from going global.

There are so many ways to evaluate the role of TNCs, and how they shape and contribute to the economy. Before all this one must understand what globalization is and why it is very important to TNCs. Globalization is simply the integration of culture, trade, natural resources and factors of production between nations. But, economic globalization refers to increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, services, technology and capital (Shangquan, 2000). The main key players are transnational corporations (TNC) sometimes known as multinational corporations (MNC).TNC’s are firms that have attained the power needed to co-ordinate and operate across the boundaries of many nations. Usually the main purpose of TNCs is to maximize profit and increase their selling market. This is why many TNCs are interested in globalization because without an effective and free trade global economy, many (if not all) will not be able to function and be successful. Some economist feel differently about how TNC’s

Economies of scale are the cost advantages a firm obtains due to the size and scale of its operations. The large size of the farms that supply the top dairy firms, as well as the size of their factories, have allowed them to reduce the per unit cost of the products they sell and therefore achieve economies of scale. New firms with smaller production capabilities do not have these cost advantages, making it harder to

The rapid pace of Globalization has led to a change in the global economy during the past several decades; it is believe that factors such as trade liberalisation, access to cheaper labour and resources, similarity of consumer demand around the world, and advances in technology and communication has widened the market of consumption, investment as well as production on a global scale. These globalization driven factors created new challenges and global competition for businesses around the world thus as a response many companies decided to expand their operation across national borders in order to be competitive. A company that operates their business in at least one country other than its country is called Multinational

As discussed in Chapter 21 of our text book, any company that is looking to expand globally must make five key decisions. A firm must decide if: a) they really want to expand to the international market; b) they

a global, centralized corporation that acquires cost advantage through centralized production wherever cheaper resources are available

Cost behavior refers to the way different types of production costs change when there is a change in level of production.

A multinational corporation (MNC) is a corporation that operating in two or more countries, known as host countries but managed from one country, known as home country. Multinational Corporation is also known as international corporation (Wikipedia, 2011). Besides that, MNC can be defined as a corporation that derives revenues from operations in countries other than home country (BusinessDictionary, 2011).

Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.