International-Business-Dr-R-Chandran-E-book

147
International Business- Dr. R. Chandran
3. A subsidiary would not be able to integrate its operations easily with the
other multinational operations and hence puts major constraints on a
firm’s ability in the initial stages of operations.
4. In a typical joint venture, the two partners pool different but
complementary know-how. They interact regularly through their core
operations and understand each other’s working. Both partners learn the
other’s know-how and often if one firm learns faster than the other it may
sooner or later seek to dissolve the alliance.
5. Government regulations stress upon local equity participation.
Historically, several countries with a very large market potential such as
China and Brazil have been successful in imposing joint ventures.
STAGES OF GLOBAL ORGANISATIONS
Globalization process does not take place instantly. It is a deliberate and
cautious move for several companies. Nike and Addidas took more than a
decade to move to other countries from their origin. Apple, HP and Dell are
fast globalizing their operations due to technology advantages. if they are
not quick then technology obsolescence will crop up and finally they have to
lose their current status to their competitors. However, in the normal
process, a complete globalization has to pass through several stages as
described in the following table:
Stages Purpose Action End Result
Stage # 1
Stage # 2
Stage # 3
Stage # 4
Make the presence
feel – the move
for product or
service
Study the whole
nation and explore
the avenues for
production
Set up production
facility with a
local or alone
Expanding to
neighboring areas
Physically export and
establish one strong
contact overseas
Find out a right partner.
Jointly promote the
product/s. establish brand
in one market.
Identify location or
develop a complete
network. Reduce the cost
and service the market.
Take the products from
the unit and spread in
One market established.
Trial and errors are
overcome, confidence is
built
Awareness is created in
one territory. The demand
level is known for the
production.
Becoming close to the
customer at a reduced cost
and part of the local
The whole region is
aware. Loyalty is built.
Only for Private Circulation