International Marketing: Internationalization theories

Essay by anthonytoUniversity, Bachelor's November 2008

download word file, 9 pages 3.0

Internationalization is the strategy that has been developed during the second half of the twentieth century. Nowadays, every company, whatever its size, has to deal with internationalization requirements.

The goal of this essay is thus to analyze and describe the many paths towards internationalization that the firms use, with three theories, the Uppsala model, the transaction cost analysis model and the Network model.

Prior to drawing analysis, it is crucial to understand what urges companies to internationalize and also to be fully aware of what is at stake.

There are three concepts that must be understood, the exports stage (when companies only sell abroad), the internationalization (when firms sell and manufacture abroad, yet in a limited area), and the globalization (when the company is implanted worldwide, especially via subsidiaries).

The business world in which evolve private entities is currently favourable to internationalization, because all the key factors required are gathered:-the technical factor: development of international transportation, evolution of the means of communication,-the economic factor: higher qualification of the workforce event, the partial standardization of the consumer behaviours,-the political factor: decrease of the customs tariffs, creation of free trade areas and economic communities, and incitation of public authorities.

In what concerns the internal reasons, internationalizing permits to allocate risks more efficiently between different countries, to prevent oneself from potential economic crisis and currencies fluctuation, to restrict the risk of dependence from a single country, to find countries where competition is less active and hence give a new life to a product.

Internationalizing also gives competitive advantages like access to cheap workforce and available resources as well as local financial and taxes incentives.

Concerning the external reasons (evolution of markets), internationalization can be required to cope with the evolution of the local market in which the company is based. Indeed, when...