Internationalization: Engaging in Global Markets for Business Success - Research Paper

Introduction

In the economic vie, internationalization is the process where different business involves in global markets. Similarly, it can also get defined as the process of designing products to suit customer's need in many countries. These businesses increase their footprints to capture the more significant markets in other countries. Business starts up a small enterprise in a domestic manner but later draw a long-term plan in on how to engage in the international market. International phenomena as well as altered the landscape for many business activities. The same has broadened the dynamic situation in the business field; hence, the competition of different firms. Every business has its reason as to why it must involve in the international market. However, the primary goal as to why business reach the global market is the inadequacy of domestic demand as far as the economies of scale is concerned.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Moreover, most domestic firms strive for internationalization due to various opportunities which always come in foreign countries. Executives which seem to be successful will always try every opportunities after the other so long as they don't fail. Many executives in different companies have identified internalization as among the strategies used to reduce the cost operation. There are some business with overhead cost, they tend to experience excess cut down in countries with low cost of living as well as deflated currencies. Most companies within different States in America find it comfortable doing transactions in countries which include them in better free trade engagement. Internationalization has helped businesses in a variety of ways. For instance, they reduce the labour cost of most business activities.

Firms who have decided to involve in international markets always look for countries with low cost of living. The same usually help these firms in getting cheap employees. Other companies will always include the global market at the time of the financial crisis (Vahlne & Bhatti, 2019, p. 215). During this time, they have different business issues such as is maximizing business strategies or hiring employees. Executives of companies with these problems in the domestic market will modify their budget and involve with the foreign exchange. Institutions have helped businesses in the field of internationalization. It helps the market economy in shaping the social as well as the political relationship with different firms. The critical role of an institution is to ensure the market mechanism, which is valid.

Companies that involve in foreign markets do not suffer financial loss or risk because of these institution engaging with global markets. Some reasons attached to companies participating in the overseas market include opening up trade borders as well as eliminating trade barriers. Moreover, those firms in the domestic market spread the risks by engaging with international markets. The advancement in the field of technology, as well as communication, has made internationalization much possible. There are different ways of achieving internationalization. Some firms will start by exporting their products to foreign markets. As they do the same, they strengthen the relationship between their companies and the foreign ones.

Some companies will adopt an aggressive approach to internationalization like acquiring new firms. They come up with different alliances to form a joint venture, hence achieving their subsidiaries. These strategies of entry to internationalization differ in how risks are associated with them. Different firms used various modes in entering foreign markets. These modes can be grouped into two categories. The first mode is called non-equity. This model has composed of contractual as well as an agreement to the foreign market. The second mode is the equity mode of entry. It comprises of owned subsidies as well as joint ventures. Import, as well as export mode, always ensures low risk with low market control.

The other mode to global market entry which comprises of high market control and high risk is the one which expects investment return. Direct investment is linked with planned return investment. Most companies use export and import mode in gaining access to internationalization. To expound on the meaning of export, it is the process of selling goods and services to foreign markets. Most firms always uses urgent or direct service to access export mode. When domestic firms connect with international firms in the manner of export, they share ideas exchange business strategies hence enlarging their business plan. The same improves business weakness these domestic firms may have. Later on, they gain success in internationalization.

Another accessible mode to involving in the global market is licensing. International firms give domestic firms the right to trade with them. These rights include copyright, patent right. These rights enable firms to process as well as gain access to products. Licensee always involves in the production of the licensor. Nevertheless, the licensee also markets these products and even pay the fees of the licensor. Another role licensee can do in the global market is the payment of fees to sales-related royalties in return. Many foreign authorities mostly welcome this strategy of entry into internationalization. The reason is, it makes countries access the advancement of technologies. Licensing will always make domestic firms trade freely in the foreign market without fear of contradiction.

The other mode of gaining access to internationalization is franchising. It is somehow related to licensing only that it involve much in the development and even direct control to most activities taking place within the market. It can be defined as the process whereby business owners or franchisees pay small fee to their royal companies. These people owned a semi business firm. They pay these fees because they have trademark access to interact with the foreign firms. When a business firm has a trademark, it is allowed to sell goods and services in the international market. Through the same, they can use the right format and system for business. This mode of entry give domestic firms more rights as well as resources. Nevertheless, franchising mode of internalization has got various advantages that a firm has to analyze before adhering to it.

The next strategy that a firm can use to gain access to the foreign market is joint ventures.it is different from licensing mode. In this scenario, the overseas joint ventures have an equal position like the business managers in international firms. What happens here is, there is a strong partnership between the hosting company as well as the foreign company. This relationship always leads to the development of the third firm. The international firm has the opportunity to control different operation and have access to knowledge of the local market. This idea is not possible for those firms which have opted for the licensing model. Similarly, companies which deal with the innovation of technology prefers strategic alliances mode. The same happens because they have an interest in exchanging technology with foreign firms.

The final mode captured in this review of gaining access to internationalization is the direct investment. This arrangement always involve one hundred percent ownership. It can be achieved via posting direct questions to the hosting firm. In the same note, it can also be accessed through owning facilities. The same is referred as Greenfield investment. This mode gives a different company's broader picture of analyzing internalization. It also provides entry strategies as well as solutions to the factors which hinders entry strategies. The above-discussed modes are the processes and conditions which domestic firms have to pass through to gain access to internalization.

Change in International Trade Patterns Influences International Business

The structural changes in the international trade pattern have raised a significant concern on how it will impact countries differently. The same get aligned with the different design of specialization. Economic theorists set views on how structure is concerned with trade performance. However, generalization is based on financial performance. Business people do argue that three conditions need to be satisfied for the alteration of pattern in international trade. The idea sounds to be a relevant policy in the global market. The most immediate is the stability of these changes. For instance, there is a long-run trend which most countries should adopt. Second, to that, there should be emerging advantages that arise to these countries taking the direction. The last one is successful adaptation should not follow automatically.

Various literature has focused on the link between trade specialization and growth in business. For instance, countries that specialize in technological industries tend to grow faster than those who do not-following this approach, changing the pattern of specialization in sectors dealing with technology results into adverse effect as far as economic performance is concerned. Because of the character of technological process, designs that exist in specialization get reinforced with time. There is relevant link between change in the international trade pattern and global economic performance. Different studies have focused on the relationship between structural changes in the word and specialization of different countries. The difference in international trade pattern will automatically change the global market, even if the commodity share of each country remains constant.

This change depends upon the structural factors, for instance, how fast the commodity that a country specializes in growing. These structural effects are calculated depending on the countries' individual share in the global market. Change in international trade pattern to some extent will advantageous to countries that specialize in the specific commodity. Similarly, the same will affect some countries. When there is change in international trade pattern, demand usually grows faster in some market resulting into market composition effect. This scenario only favours countries that specialize in first growing markets. In addition to that, there will also be a change in the total market share for the individual states. It gets described as market share effect, which relies on the competition. Nevertheless, there is also a commodity adaptability effect that arises due to global trade pattern change. It is attached with market adaptability effect.

This effect measures the capability of a country changing its export into a fast-growing market commodity. It as well rates how the state is flexible concerning the change of international trade pattern. Countries that get considered fortunate benefit from the world commodity changes as well as those that are much flexible to the global pattern change. Following the discussed effects on the pattern change, the question then arises in each country, what should get done? Most importantly, countries should advance into technology as well as specialization in the commodity. Besides that, states should also attain maximum flexibility to adapt to global changes that are never predictable.

How Globalization Influence the Pattern of International Business

Globalization can be defined as the growing interdependence of countries economy, culture as well as population. It is caused by cross border trade in both goods and services, technology as well as investment. It has influenced the international business in a number of ways. Let us begin with interconnectedness. Globalization has connected various markets across the world, leading to an increase in communication as well as awareness in different busi...