What Makes A Firm?

2491 WordsMay 9, 201510 Pages
When looking at how and why firms internationalise we need to both look at what makes a firm want to internationalize and how they do this. We will look at what defines an international firm and we will look at obstacles, but also things that might help certain firms expand internationally. We are also going to look at different trade theories, traditional approaches and how the theories have developed over time. The general definition of internationalisation is the process of starting involvement in international operations, all though there is no agreed definition of internationalisation. (Susman, 2007) In this essay we will be looking at internationalisation as how a firm sells a certain product or service overseas or across borders.…show more content…
The firms should also be very concerned about corporate social responsibility when adapting their business. The winners and losers of internationalisation was thought to be found between sectors and skills, but we see now that both winners and losers can be found also in sectors. (Holton, 2011) The motivation for wanting to internationalise is often that more profit can be made. We also see that internationalisation happens in some businesses because they want to learn from the same industries in different countries and cultures. Internationalisation can be both external and internal. When looking at the internal reasons, these can be proactive and reactive. Proactive reasons in internationalisation leads to a both a marketing and a profit advantage, while reactive reasons leads to a risk diversification and the increase of seasonal products. This can in the end lead to overproduction and that the firm excess their capacity. (The export marketing imperative, 2005) The external reasons can also be proactive and reactive. We see that the proactive reasons are that there is a lot of opportunities for certain products in foreign markets, and that change in agents might lead to it being beneficial for a certain firm to start sales abroad. Reactive reasons is the saturated domestic market and the competitive pressure in the business in general. If the market for your

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