Think Global

Running Head: MARKETING

Why do companies go international and think global at local

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Introduction

Internationalization refers to the process through which an organization expands its operations so as to capture a niche in the global market. Through this process, the organization's products are modified to fit into different cultures that form the international market. Since the onset of modern technological advancements, many companies are going global so as to exploit this market for varying objectives. This paper seeks to identify the reasons prompting companies to internationalize their operations.

One of the chief reasons that make companies go international is to reach a wider population of consumers. The world population has risen in the recent past to hit the 6 billion mark. Therefore, many business managers are internationalizing their operations so as to make their products and/or services available to this customer population. However, the global population is made of different cultures with people who have different tastes, preferences and varying decision making processes. To understand these markets better, it is essential for the business manager to carry out a thorough research that will enable the company gather vital information (Phillips, Doole & Lowe, 1994).

Secondly, companies move to the international market due to the profit potential that lurks within this market. Operations costs vary with locations. Operating at an international market allows a company to maximize its operations in areas characterized by low operation costs. As these costs are maintained at low levels, profitability of the company increases. Nonetheless, the issues of competitiveness should not be overlooked as the company decides to enter the international market. The market is very competitive and unpredictable. It is therefore important for the company to survey the market properly, analyze the competitive profiles and develop strategies that will give it a competitive edge over other players (Phillips, Doole & Lowe, 1994).

Thirdly, companies move to the international market so as to acquire stability through diversification. As noted above, the world is made up of dynamic people. In order to be assured of stability, the business owners invest in different countries so that losses in one country can be compensated by profits in another. Political, economics, social and technological environments differ and therefore compels the business owner to diversify the risks of instability in different markets (Phillips, Doole & Lowe, 1994).

In addition, internationalization of business operation is instigated by offers from the international distributors who commit to carry out the distribution role of the company in the foreign market. This comes in a form of reducing costs and therefore the parent company will find it easy operating in the larger market (Phillips, Doole & Lowe, 1994).

Another reason would be easy access to international market where if a company's products can easily find access to international market, then the company will be compelled to internationalize its operations. Also, the desire to utilize excess capacity can make a company look for customers from the international market (Phillips, Doole & Lowe, 1994).

Conclusion

As many companies internationalize their operations, scholars have come up with different theories from which company managers can choose the strategy to follow. One of the theories is referred to as moral universalism, which holds that there are universal fundamental principles upon which social rules should be based. Secondly, ethnocentrism theory holds that whenever a company is operating in a multi-cultural environment, it should apply morality standards that are acceptable in the home country. Lastly, ethical relativism theory guides international business managers on their decisions. In this case, their decisions should be based on the morally acceptable code