INTERNATIONALIZATION OF BUSINESS

 The internationalization of business involves the following stages:   Domestic Company: Most international companies have their origin as domestic companies. The orientation of a domestic company essentially is ethnocentric. A purely domestic company “operates domestically because it never considers the alternative of going international.

The growing stage-one company, when it reaches growth limits in its primary market, diversifies into new markets, products and technologies instead of focusing on penetrating international markets. A domestic company may extend its products to foreign markets by exporting licensing and franchising. The company, however, is primarily domestic and the orientation essentially is ethnocentric.

1. International Company: International company is normally the second stage in the development of a company towards the transnational corporation. The orientation of the company is basically ethnocentric and the marketing strategy is extension, i.e., the marketing mix ‘developed’ for the home market is extended into the foreign markets.

2. Multinational Company: When the orientation shifts from ethnocentric to polycentric, the international company becomes multinational. In other words, “when a company decides to respond to market differences, it evolves into a stage-three company is multinational that pursues a multi-domestic strategy. The focus of the stage-three company is multinational or, in strategic terms, multi-domestic (that is, the company formulates a unique strategy for each country in which it conducts business).

3. Global/Transnational Company:  The global company represents stage four and transnational company stage five in the evolution of companies. The global company will have either a global marketing strategy or a global sourcing strategy but not both. It will either focus on global markets and source from the home or a single country to supply these markets, or it will focus on domestic market and source from the world to supply its domestic channel.The Transnational Corporation is much more than a company with sales, investments and operations in many countries. This company, which is increasingly dominating markets and industries around the world, is an integrated world enterprise that links global resources with global markets at a profit.