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5 Stages of Internationalization (Companies)

 5 Stages of  Internationalization (Companies)

The previous factors contributed for the significant change in the scenario of ‍ and resulted in the variations in the operations of International companies.These variations in the scenarios generally categorised into five stages-

Image is about Domestic Company

Stage 1. Domestic Company-

Domestic company limits its operations,mission and vision to the national political boundaries. This companies focuses its view in the domestic market opportunities, domestic suppliers, domestic financial companies, domestic customers, etc.
the domestic company never thinks of growing globally. If it grows, beyond its present capacity, the company selects the diversification strategy of entering into new domestic markets, new products, technology, etc. The demotic company does not select the strategy of expansion penetrating into the international markets.

Image is about International Company

Stage 2. International Company-

Some of the companies which grow beyond their production or domestic marketing capacities,think of internationalizing their operations.These companies believe that the practices adopted in domestic business, the people and products of domestic business, the people and products of domestic company are superior to those of other countries. The Focuses of these companies is domestic but extends the wings to the foreign countries.

The International company holds the marketing mix constantly and extends the operations to new countries. Thus, the international company extends the domestic country marketing mix and business model and practices to foreign countries.

Image is about Multi-national Company

Stage 3. Multinational Company-

Sooner or later, the international companies learn that the extension strategy (that is extending the domestic product, price and promotion to foreign markets) will not work.
This stage of multinational company is also referred to as multi-domestic. Multi-domestic company formulates different strategies for different markets; thus, the orientation shifts from ethnocentric to polycentric orientation the offices/branches/subsidiaries of a multinational company work like domestic company in each country where they operate with distant policies and strategies suitable to the country concerned. Thus, they operate like a domestic company of the country concerned in each of their markets.

Image is about Global Company

Stage 4. Global Company-

A global company is the one, which has either global marketing strategy or a global strategy. Global company either produces in home country and focuses on marketing these products globally, or produces the products globally and focuses on marketing these products domestically.

Image is about Transnational Company

Stage 5. Transnational Company-

Transnational company products, markets, invests and operates across the world. It is an integrated global enterprise that links global markets at profit. There is no pure transnational corporation. However, most of the transnational companies satisfy many of the characteristics of a global corporation. For example, Coca-Cola, Pepsi-Cola, etc.

Conclusion-

The stages of Internationalization

Stage 1: 

 Domestic Operations The firm’s market is exclusively domestic.

Stage 2: 

Export Operations The firm expands its market to include other countries, but retains

 production facilities within domestic borders.

Stage 3: 

Subsidiaries or Joint Ventures The firm physically  moves some of its operations out of

the home country.

Stage 4
Multinational Operations 
The firm becomes a fullfledged 
multinational corporations
(MNC) with assembly and production 
facilities in several countries and
 regions of the world.
Some decentralization of decision 
making is common, 
but many personnel decisions are still
 made at corp. headquarters.
Stage 5: 
Transnational Operations Firms that reach
 this stage are often called transnational because 
they owe little 
allegiance to their country of origin.
 Operations are highly decentralized,with 
each business unit free to make
 personnel decisions with very 
loose control from corporation headquarters.

Part 4- Next topic is Differences between Domestic and International business.

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