Internationalization Definitions And Processes Free Essay Example

The definition of internationalization is written differently in various academic papers. However, this research has chosen some that are relevant to its target that is to discover the best way for a multinational firm to invest in Nigerian pharmaceutical industry. Michael and Iuka (2005) defined internationalization as “the process of transfer of a company’s goods and services to consumers or users in more than one nation”. Daniels et al (2001) distinguished between domestic and international firms in that “there are differences in environment, company organization and strategies in the market”.

Many researchers view internationalization as a process. Cavusgil (2000) projects internationalization as a learning process. According to him internationalization prompts the management to either learn through personal experience while the process is taking place or through formal learning process where the management hires professionals to train them on various aspects. Piercy (1999), on the other hand defines the term as to describe the outward movement or international operations in individual firms or even large conglomerates.

John (2005) defined the term as “the process of increasing involvement in international operations”. Michael and Ilkka (2005) defined the term as “a continuous process of choice between policies which differ marginally from the status quo”. Lindquist (1991) has studied the process of internationalization in three dimensions, i. e. , speed of foreign entry, pattern of foreign market selection and choice of foreign entry form. According to this, the speed of entry concerns: The time lag between subsequent entries;

The pattern of foreign market selection refers to the sequence of markets entered and penetrated by the firm; The choice of entry refers to the organisation form used by the firm.

Douglas and Craig (1995) identified three phases in the process of internationalization of firms or the globalization of markets: Initial market entry into a foreign market Expansion of the market either locally or nationally Rationalization of the business on a global basis The process of internationalization is viewed as founded on two major concepts, the psychic distance and the increased experiential knowledge of a foreign market.

These concepts can be used to explain how companies commit resources to international market over a period of time (Leblanc, 1994, cited in Anderson et al, 1998). Internationalization can also be viewed as a networked process which focuses on the firm’s position in a foreign market underpinned by the relationships of various degrees of importance. Thus this perspective puts the market and the relationships of the firm into focus rather than concentrating only on international development (Ohmae, 1995).

In summary, the internationalization process is a process of business expansion based on experience and learning about foreign markets, cultures, and institutions. However, apart from learning about the foreign market internationalization is also learning about the internal resources and capabilities of the firm. Hence, internationalization can also be viewed as a set of connected learning process (Dudley, Martens, 1993 cited in Anderson V. et al, 1998). A more recent research conducted by Anderson V.et al (1998) identified the key problematic areas and the learning implications in the internationalization process.

When the data collected during the research was analyzed subsequently, a model was made which divided internationalization into various stages and linked them to the problems faced by the company and the consequent learning gained after the issues were sorted out. Based on the data, internationalization was divided into five stages or levels which have been described in detail as shown in table 2. 1 below.

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