The Eclectic Paradigm: What Are The Reasons For Internationalization?

1. High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy: A. global B. multidomestic C. transnational D. overall cost leadership 2. Foreign direct investment includes the following form of entry strategy: A. licensing B. franchising C. joint ventures D. exporting 3. According to Michael Porter, firms that have experienced intense domestic competition are A. unlikely to have the time or resources to compete abroad. B. most likely to design strategies aimed primarily at the domestic market. C. more likely to design strategies and structures that allow them to successfully compete abroad. D. more likely to demand protection from their governments.

Once a firm determines its corporate level strategy, it must decide on its business level strategy. An international firm must decide on only what business level strategy it wants in one market but also whether it wants to have the same business level strategy for each country in which it competes or whether to give its managers in other countries the responsibility for creating their own business strategies.

Figure1 presents the diverse types of the market entry ways, and the different levels of the risk and control in the market entry (Doole and Lowe, 2012, 219-221).

By taking a closer look into the different types of international business, it is helpful to first define the two major categories. All types of international business are sub-categories of equity and non-equity entry modes. These are different in their commitment level of spending resources, which is extremely difficult to transfer to other business units. Therefore, to choose the correct entry modes to other countries is one of the most critical strategy decision of a multinational enterprise (Decker and Zhao, 2004, p.1). In addition, the risk as well as the control is a major difference. The equity entry modes require more investments and are therefore riskier. However, the companies using an equity entry mode have more control over the

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

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.

International market entry is important because it enables an organization to increase its output and attract new customers. By expanding the customer base and the scale of production, the business will be able to achieve economies of scale. That is, the organization can be able to reduce the average cost per unit of production when the level of output is substantially increased (Stephan and Roin 28). After international expansion, cost advantages and higher profit be obtained through bulk purchasing, enjoying high turnover rate and paying lower interest rates on loans.

However, while the OLI paradigm centers around a single expansion decision, the Uppsala model views internationalisation as a gradual process with an incremental increase of knowledge of the target region and subsequent commitments in that region. Hence, internationalisation occurs faster in the OLI paradigm. Another difference between the two models is their respective focuses. The OLI paradigm focuses more inward, on the attributes of the expanding company, comprising ownership, location, and internalisation advantages and argues that companies need to combine these to minimise risk and succeed with FDI. On the other hand, the Uppsala model concentrates on the actual process of internationalisation, stating that companies should begin with low risk commitments - such as exports - to acquire knowledge of the target country and then increase their commitment based on the gathered knowledge. With higher commitment, more knowledge can be gained to be used for further commitment (Peng & Meyer

Global companies like P&G, J&J, IBM, GE, Pfizer, Cisco, Tata & Sons, Mahindra & Mahindra, Haier, Lenovo, HSBC among others, have all adopted M&A strategy. Some authors say that organizations rely on three mechanisms to achieve growth: organic growth, alliances, and mergers and acquisitions (Rosinski, 2011). Other authors have proposed five ways of international expansion, in increasing order of cultural risk: (1) the greenfield start, (2) the international strategic alliance, (3) the joint venture with a foreign partner, (4) the foreign acquisition, and (5) the cross-national merger (Hofstede et al., 2010).

Going global will increase their export sales because with globalisation B’s can now expand their revenues by selling around the world and reduce their costs of producing in countries where key inputs, including labour, are cheap.

Before making an international move, though, it is of benefit to figure out commonplace reasoning companies infiltrate the international business field. Sodden Domestic Corporation leaves limited opportunities for organisations to snap up applicants. This drives them to look abroad for advanced consumers and markets. For example, establishing countries can offer an abundant opportunity for new revenue causes. Discovering resources or constitute partnership

There are internal and external factors that drive companies to approach the global market in a different way as compared to earlier description of traditional stage model. The external factors include globalization, digitalization, outsourcing, virtual economy and development in communication standards while the internal factors include operations, language, culture, local adaptation (Oviatt & McDougall, 1994).

“The Performance of business activities that direct the flow of goods and services to customers and users in more than one country”

Eclectic paradigm is a theory that provides a three-thiered framework for a company to follow when determining if it is beneficial to pursue direct foreign investment , the eclectic paradigm is assumed that institutions will avoid transactions in the open market when internal transactions carry lower costs in order for a direct investment in a foreign country to be successful.

When an organisation takes that step to expand from a domestic to an international platform, one of the most important factors to consider is marketing. International development for a company can be challenging, and the two overarching factors to take into account are; technology and globalisation. Technology dictates what the market wants. Globalisation dictates the economic realities of international development. The opportunities of marketing internationally include Market Expansion, Brand Reputation, Global Networking, and access to Future Opportunities . The challenges that marketing internationally creates for a firm are; Global Market Needs, Brand Name Power, Cultural Factors, International Partners, and the Logistical aspect of distance and time . Overall, in modern society with all the aspects of globalisation and technology it is significantly easier to be develop a company to an international level, which can create huge profits.