3.4 Internationalization

Organizations have different ways and stages of going global, as listed bellow

Global sourcing. In this type of going international, companies purchase materials or labor from around the world, wherever the materials or labor are least expensive.

Exporting or Importing. Companies may go international by exporting (making products domestically and selling them abroad) or importing (acquiring products made abroad and selling the products domestically).

Licensing or Franchising. To going international, managers may also use:

Licensing: is giving another organization the right to make or sell its products using its technology or product specifications) or

Franchising: is giving another organization the right to use its name and operating methods

Strategic Alliance. In a strategic alliance, partners share resources and knowledge in developing new products or building production facilities.

Joint Venture. A joint venture (a specific type of strategic alliance) may be undertaken to allow partners to form a separate, independent organization for some business purpose.

Foreign Subsidiary. Managers may decide to make a direct investment in a foreign country in which a company sets up a separate and independent production facility or office.