Module Code: MKIB 225 Module Title: International Business Essay Title: Why do business internationalise? Student ID: 200992874 Module leader: Dr.Clases Belfrage Date of Due: 9am ON Thursday 6th of March, 2014 Word Count: 988 Why do business internationalise? The business internationalise means a company’s production and business activity are not only confined to one country, but also integrate the different countries’ raw material and labour and technologies to produce products and sold to multi country. The primary purpose of business internationalise is seek a wider range of competitive advantages and integrate resource in order to profits maximization. The Internationalization motives include three …show more content…
In addition, the internationalisation is the strategy to occupy the foreign market step by step. Also, the porter’s competitive advantages theory is to analysis the strategies of global business. They could divide to three strategies: over cost leading, diversity, and market focus strategy (Passemard& Calantone, 2000). The cost leading strategy focus on establish efficient scale production facility and minimize the research and advertising cost. The diversity strategy focus on introduce some unique product in whole industry. But, this strategy will with a high cost price. The focus strategy is attack of a particular customer group or specialist regional market, its purpose to design the service for a particular target. Consequently, the companies need to consider the internal and external factor condition, such as: factor condition, demand condition, related and supporting industries condition, and firm strategy and rivalry. They are called diamond system. This dynamic system gives the company a standard to measure theirs advantage and disadvantage before they enter foreign market. Moreover, the specific advantage in Internationalisation of Production is give companies a new choose for exhausted market (Strange,S. 1992). In an international environment, the companies will face more uncertain and unequal condition than home market, therefore the companies need keep the attention of more factors:
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The internationalisation process of the firm has been a subject, which has been motive of study for a number of
When starting an internationalization process, companies must take into account that they will have to adapt their products and marketing process in order to get the attention of customers in the new market.
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.
In the business industry, if businesses want to export their goods and services to other countries, they must become familiar with and adopt international and global strategies. Consequently, there are three types of international and global business strategies. The first type is international, which entails conducting a significant amount of activities outside the home country, yet its focus remains on the home market (Fung, 2014). The second type is multinational, which consists of operating in multiple countries, yet the headquarters is in its home country, not to mention that the competitive advantage will vary by country (Fung, 2014). The third and final type is global, which is when the organization treats the whole world as one market and one source of supply, not to mention, that its competitive advantage is contingent of common brands, standardized products, and global scale production (Fung,
Firms internationalize for couple of reasons. Philips expands their overseas market because home market is limited and Matsushita expanded as efficient operation did not guarantee growth anymore. Basic strategies adopted by these two companies evolved during their process of internationalization. As competitions become brutal, firms need to change strategies to cope with T high pressure for cost reduction and strong pressure of local responsiveness. Transnational strategy is now a feasible approach. Companies reduce cost to be competitive and the same time modify products to satisfy local customer preferences. However, firms’ structures are very different. Philips has a decentralized structure as Matsushita’s operations are highly centralized. Strategic human resources are also vital so both companies send expatriate experts to offshore subsidiaries. Philips and Matsushita also form strategic alliance relationship with each other. Companies’ strategy is highly correlated to their basic strategy and the fit between strategies is vital to company’s
While targeting the international market segments, the company has availed the benefit of low wage rates and cheaper raw material costs, available in some regions of the world. This has helped the company in reducing its operational costs and maximizing profits, hence enabling the company to more effectively compete in the market. Moreover, this strategy has given the company, a competitive edge over its competing firms. One of the reasons, for which the company is currently targeting to the international market segments, is the saturation of the domestic markets that is forcing the companies to explore new avenues and to develop new markets around the world. One major advantage the company has, over other competing firms, is that in most of the cases they have an edge over other firms in terms of technology. This technological advantage has helped the company to develop products that are more effective.
The traditional internationalization models regard that firms’ capabilities (internal factors) lead firms to make internationalizing activities. On the contrary, OC paradigm refers to internationalization as a process that internal and external factors interact so that firms obtain a competitive advantage in the global level (Mathews & Zander, 2007). According to this innovative model, firms achieve superior performance by adapting and integrating in view of a varying environment (Pisano et al, 2007). Considering that BGs try to survive, operating under uncertain conditions that change all the time, OC constitutes the most suitable way for studying them.
In economics, internationalization is the process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization.There are several internationalization theories which try to explain why there are international activities.
Research on the International business is the study of transactions across national borders. The KPIs of internationalization theories are all about the influence of the environment, the organizational impact on internationalization, the choice of international strategy and the results of internationalization.
When external marketing becomes increasingly more important and successful for the business, they will begin seeking new sources of growth and profit. New countries serve as new markets, thus international marketing begins. International Marketing is approached by concentrating product and promotional strategy to a given foreign market. Furthermore, an international marketing firm has polycentric orientation with emphasis on product and promotional adaptation in foreign markets whenever necessary. They make strategic decisions that are tailored to suit the cultures of the foreign countries. The company may establish an independent foreign subsidiary in each and every foreign market it services such efforts are also called multi-domestic
The structure and management systems of firms in different countries can potentially affect competitiveness. By using Porter 's diamond, business leaders may analyze which competitive factors may reside in their company 's home country, and which of these factors may be exploited to gain global competitive advantages. Business leaders can also use the Porter 's diamond model during a phase of internationalization, in which leaders may use the model to analyze whether or not the home market factors support the process of internationalization, and whether or not the
It is vital to understand the internationalization process of small to medium-sized enterprise (SMEs) for them to compete internationally. There are various international approaches that companies can adopt in the process of internationalization. For example, Uppsala Internalization Model (U-Model), The Network Theory, Dunning’s Electric Paradigm and Transaction Cost Theory.
The practical studies focus on identifying that internationalization was regular or incremental process .The internationalization process is study focusing on attitudes and behaviors of firms in market that are in the process of internationalization. The practical studies focus on identifying that internationalization was regular or incremental process. Some observations are also made on de-internationalization that point towards the flexibility seen in the duration of the internationalization process.
Internationalization provides countries with more options to encourage the arrival of foreign enterprises and provides more trading opportunities with other nations, according to their unique situation. In general, those who advocate internationalization are not against businesses per se; rather, they want to ensure the continuance of indigenous cultures. Factories that adhere and