Chapter 1: INTRODUCTION1.1 Dissertation RationaleRecently, the global environment of business has had a faster rate of growth due to the increasing number of companies that take their operations outside their local markets (Korsakiene, Diskiene and Smaliukiene 2015, p. 144). Such operations might have direct or indirect contribution in the growth of the global exchange of goods and services. The world is more independent in recent time more than ever and changes occur constantly. Due to such changes, most of the organizations with the potential to grow tend to take their operations to foreign countries away from their home country. Their level at which a firm internationalizes its operations may be different for every organization since different organizations apply different methods and strategies depending on the abilities and resource availability. Some of the methods that are commonly used by organizations to internationalize are investment, joint venture, export strategies, turn key projects and franchising among others.
Theories of internationalization of firms have been used by international organizations from the 1960s (Deng 2011). During the 20th century, most of the business people were thinking in terms of internationalizing their activities. Most organizations viewed their strategies from a behavioural perspective and emphasized on their guidelines. Later, they utilized other perspectives such as those provided by the network theory and the entrepreneurship model. The other most important stage that every international organization goes through is the rise and prosperity in global market environment.
Some of the motivating factors for businesses to internationalize their operations are the recent advancement in technology, liberalisation of trade, convergence of cultural believes, access to large numbers of customers as well as the application of good strategies to compete in international markets (Perkins 2011, p. 260). However, the above reasons are not adequate for a firm to settle on its decision of internationalization as many more factors need consideration. This is because of the complexity and the constant uncertainty in the business environment that are difficult to predict. As a result, there is need for the firms to adopt quick adjustments to the business environment as well as ensure prompt growth that will motivate survival in the environment of business.
An organization that operates at international level ought to know that its competitors are not only in the home country because it competes with people from all over the world (Korsakiene, Diskiene and Smaliukiene 2015, p. 150). As a result, such knowledge helps the organization to pursue global goals as profit maximization becomes its main aim. The firm may get engaged into various activities depending on the source that it finds might be more profitable to it. Some of the activities may include expansion of operations, export of goods to other countries, as well as joining hands with other organizations to increase the firms areas of operations (Fisch 2012, p. 302). The factors and forces used by an organization to internationalize determine the success or failure of the organization in foreign markets.
On the other hand, several studies indicated that one of the main reasons for an organization to internationalize is to stay competitive in the global environment. The theoretical explanation of this reason is given by the network theory of internationalization (Korsakiene, Diskiene and Smaliukiene 2015, p. 147). The network theory is bets applied because from the concept of internationalization, it is defined as the development of networks for business organizations and creation of business relationships through integration, penetration and market extension. Integration is the establishment and coordination of different business networks both within and outside the boarders of the home country. Penetration is the development of business positions as well as increment in the commitment of resources in some of the firms existing markets whereas extension is investing in new networks for the firm (Casillas and Acedo 2012 Casillas and Moreno-Menendez, 2014). As a result, most organizations forecast the possibility of getting a benefit out of internationalization because others have done it and succeeded. This is also application of the network theory as they obtain such information from their networking partners. For instance, organizations in the industrial system invest their resources in the production, distribution and the utilization of products and services depending on their specialty. However, there are some industries with high chances of internationalization due to the favours of the world economy configuration (Perkins 2011, p. 260). Due to such prospects, there are four different types of international firms that are named according to the time they enter international markets. These are early starters, late starters, the international firm and the lonely international among others. The firms can thus be called international based on networking ability of an organization as well as its internationalization level. In addition, the competition in the world market has become denser due to market uncertainties and the other aspects of change that directly affect the firm. As such, there is increase in the number of challenges faced by international firms as well as the need for organizations to constantly assess their initial strategies.
1.2 Aim of the study
This study aims at having a critical investigation of the factors and forces that play a role in the internationalization of an organization. The international organization must have played a significant role in the domestic market of its country before moving to the outside market. However, the whole process has various impacts to the strategic integration of an organization. Many organizations start operating in international markets without adequate knowledge on the environmental issues that affect the profitability of other organizations. In addition, there are other organizations that fail in the processes of internationalization due to the failure to apply the best strategies in accordance to its challenges and opportunities as well as the benefits that can be obtained from the process. With the utilization of different examples and theories that have been applied by other organizations, the study will help in demonstrating that there are various factors that should be considered for internationalization or expansion of its operations. The factors may be internal or external to the operating environment of an organization.
1.3 Objective:The primary objective of this dissertation it to investigate the factors and forces that influence strategic integration of firms and the benefits of internationalization to firms. Additionally, the study seeks to fulfil the following specific objectives:
To find out how strategic integration proactively take Business Empire international, because there are no operations of any firm that succeed without challenges.
To explain and analyse the internationalisation process and by identifying those factors and forces critical to their success such as their strategies and policies.
To establish the relationship between internationalization of firms and strategic integration.
1.4 Research Question:
What are the major reasons why firms expand their frontier to other jurisdictions?
What are the major factors and forces that promote firms internationalization process applying the direct opportunism?
What is the relationship between strategic integration and internationalization?
CHAPTER 2: LITERATURE REVIEWChapter OverviewThis chapter has a primary focus on the review of any existing literature with relevant information about internationalization of organizations. It gives an explanation of the process of internationalization, strategies used, theories applied, internationalization motives, the benefits as well as the factors motivating internationalization. Also, various obstacles are faced by organizations in their efforts to internationalize their operations.
The Concept of InternationalizationAccording to Masum and Fernandez (2013, p. 11), internationalization is defined as the process an organization uses to increase its involvement in international markets. Ari and Francisco (2012) also define internationalization concept as the process through which an organization avails its products and services to markets that are outside its country of operation, or where the goods are produced or the main location of the organization. Venzin (2011) asserted that the internationalization process can be through networking, sharing resources with other international organizations, manufacturing and exportation. The concept of internationalization has been on the rise in the modern world as many organizations in both developed and the developing world take the initiative to embrace international opportunities (Patro and Wald 2015, p. 1676). The rate at which organizations import and or export their products and services has been increasing and given the organizations opportunities to invest in other countries (Donaldson and OToole 2012, p. 3; (Amante Garcia and Martinez Martinez 2014). The networking of suppliers, customers, researchers and developers of technology has led to high interdependence among organizations (Jiang and Carpenter 2014). The networking has been made more possible by politics, market changes, competitive advantages and costs among other factors.
There are more chances for the process of internationalization to succeed due to the utilization of advanced technology as well as effectiveness in communication (Donaldson and OToole 2012, p. 3; (Korsakiene, Diskiene an...
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