Submission: 1st December 2010
A review of factors that should be considered when deciding to internationalize
The globalization is a historic process by whom the individuals, the human activities and the political structures see their mutualdependence and their material exchanges as much as immaterial increasing on significant distances on the scale of the planet. It consists of the increasing interdependence of savings and contributes to the expansion of the exchanges and the human interactions. The increasing globalization involves then a necessity for the companies to become international.
That is why it seems justifiable to wonderwhat are the factors that should be considered when deciding to internationalize.
We shall study here has review of several factors such as the resources and the strategies of the company, the environment of the targeted country, and finally the detailed analysis of the competitors.
I. Resources & Reasons
The importance of the resources dedicated by the company defines thepossible options and the rhythm of international development. Pervez N. Ghauri says that “a company may become totally involved and invest large sums of money and effort to capture and maintain a permanent, specific share of the market”. Indeed, however, the financial side is not enough to decide to abroad go in spite of the importance of the economic situation and the currency fluctuation. Acompany can also face an aggressive competition or a saturation of the national market. From a marketing point of view, it is necessary to consider the phases of the life cycle of the product too.
According to Frank Bradley, "The emergence of newly emerging markets in the Far East, Africa and Latin America have increased the demand for and supply of industrial and consumer goods and thereby furtherincreased the globalization of markets" what allows the companies to enjoy low levels of salaries, an availability in natural resources as well as a control of the supplies, a more important productivity of the work thanks to a skilled labor, benefiting moreover, financial and fiscal incentives.
Frank Bradley distinguishes some phases in the marketing procedure of internationalization: " in thefirst stage, the firm decides whether to internationalize by determining the scope of marketing international strategy and establishing yew has framework in which to understand the role of internationalization process in the firm ". The stage 2 is dedicated to the studies and the analyses on the market and the competitors. The stage 3 concerns the international marketing strategy and finally thestages 4 and 5 treat various modes of international presence. We note three different modes such as the direct export (showrooms abroad, either by means of a sales agent or of a distributor), the indirect export with intermediaries' intervention which constitute a screen preventing any knowledge and penetration of the targeted market, and the export joint or associated with the technique of theporterage (piggy back) or the joint venture.
II. The environment of the targeted market
“Business strategy must take into account both the external and internal environment of the organization. Two traditional tools, PESTEL analysis and SWOT analysis are given below” says Janet Morrison in her book The international business environment. We are more particularly going to be interested in theexternal environment that is the environment of the targeted country and its various factors. The political factor corresponds to the decisions which the Government takes, as the privatization of certain sectors for example, or another change of political system. The economic factor involves economic crises, variation of the purchasing power of the households, the inflation, etc. The company has...