## Internationalisation of Business
### Why Internationalise? (Why Do Businesses Go Global?)
1. Need to grow — The primary reason; domestic markets eventually become saturated.
2. Shrinking time and distance — Faster communication, speedier transportation, growing financial flows, and rapid technological changes have shrunk time and distance globally.
3. Domestic markets no longer adequate — Companies realise their home market cannot sustain long-term growth.
4. Cheaper inputs — Need for reliable or cheaper sources of raw materials and cheap labour.
5. Reduce transportation costs — Companies set up overseas plants to be closer to markets and reduce logistics costs.
6. Collapse of trade barriers — The apparent and real collapse of international trade barriers is an important driver.
7. Strategic alliances — Globalisation has made companies form strategic alliances to ward off economic and technological threats and leverage comparative and competitive advantages.
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### Benefits of Internationalisation
- Enter new markets in search of greater earnings and less expensive resources.
- Achieve greater economies of scale.
- Extend the lifespan of products (a product in decline at home may still be in growth phase abroad).
- Development of effective strategies and global strategic objectives.
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### Characteristics of a Global Business
A global business has three characteristics:
1. It is a conglomerate of multiple units located in different parts of the globe, all linked by common ownership.
2. Multiple units draw on a common pool of resources — money, credit, information, patents, trade names, and control systems.
3. The units respond to a common strategy. Managers and shareholders are also based in different nations.
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### Steps in International Strategic Planning
a. Evaluate global opportunities and threats and rate them against internal capabilities.
b. Describe the scope of the firm's global commercial operations.
c. Create the firm's global business objectives.
d. Develop distinct corporate strategies for the global business and whole organisation.
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### Levels of International Environmental Analysis
| Level | Focus |
|---|---|
| Multinational | Identifying, anticipating, and monitoring significant global environment components on a large scale; understanding macro economic and other global developments |
| Regional | In-depth evaluation of critical factors in a specific geographical area; discovering market opportunities for goods, services, or innovations in a chosen location |
| Country | Customised analysis for each country; covers economic, legal, political, cultural dimensions, exchange rate fluctuations, political risks, and taxation issues |