How Companies go international

 

How Companies go International

 

A company which conducts business through branches/subsidiaries in a number of foreign countries is known as a multinational company (MNC). More commonly, an organization proceeds through several stages of internationalization to become an MNC as described below:

STAGE 1.              Firm begins to export and import from a foreign source via an agent.

 

STAGE 2.              When the turnover of  business is big enough, a foreign branch or

                                subsidiary is established and the agent is incorporated.

 

STAGE 3.              As the firm grows it sets up more subsidiaries. The home office becomes

                                the co-coordinator of activities of subsidiaries.

 

STAGE 4.              As the activities of subsidiaries become more complex, a certain amount

                                of regional autonomy is given.

 

-The following are some of the ways in which companies go international:

1 Exporting         -the selling of domestically produced goods in foreign markets.

2 Licensing          -the selling of rights to market brand-name products or to use patented

                                processes or copyrighted materials.

3 Franchise         -a type of licensing arrangement in which a company sells a package

                                containing a trademark, equipment, materials and managerial guidelines.

4 Joint venture  -business undertaking in which foreign and domestic companies share the

                                costs of building production or research facilities in foreign countries.