Literature Review
The international market is attaining huge significance and popularity as a business market and a base for globally performing companies as well as for those organisations who wants to become global. At a similar point of time, there are various companies in the world that supports the international economy with their technological and economic significance. By analyzing the strategic management of the globally active companies, it is revealed that there are huge investments in the international market are shaped by the modern trends in the internationalization of the organisations and the upsurge international competition. The organisations are acknowledged and recognized in a number of ways and primarily from the perspective of internationalization which is presently given huge attention by various theorists, business people, academicians and scholars (Alexander and Doherty, 2009). The organisations play a significant role in the globalized economy as maximum of them are going global or at least have an idea of going global and have international business operations. The organisations have increased their business operations in the global markets and are taking use of diversification to attain a number of competitive benefits and success and growth in the global markets. The one of the most recent trends and development in the business world is the use of internet in the businesses. There are companies which have initiated their businesses by the use of internet called as ecommerce which is extremely beneficial and advantageous in achieving growth and sustainability in the globalized economy (Barkema and Drogendijk, 2007). The impact of internet on the business strategies is considered as the “innovation of the century”. It is due to the fact that the internet has sparked the information and the communication revolution. It has laid a huge emphasis on the businesses to essentially change the value creation model as it is regarded as both an opportunity as well as a threat. Internationalization is one of the most interested and favored aspect of all the companies or business organisations. There is no particular or specific definition which can explain the exact or true meaning of internationalization. But from an overall perspective and from the economic point of view, internationalization is an approach where the business increased its involvement in the global markets. In this thesis, there will be discussed the role of international business and particularly the growing markets as an innovative and significant business operation for the organisations across the world will be discussed. In present time, there are several technological advancements and reducing trade barriers and these factors are driving the economy of the globe for achieve increased level of integration. The increasing globalization has enabled the large companies and the small enterprises to become global in a more faster and effective manner. When the companies internationalize, there is a need to have a structured and efficient process. The process of internationalization cannot be approached in absence of any action plan or strategy for the attainment of the business goals and objectives. In absence of any adequate strategy, the business intends to go global results into failure. The strategy formulation comprises of decision making in respect with deciding at what time the company must internationalize, the manner of internationalization and where to internationalize. There are numerous methods which are used for entering into the global markets but out of all there is a need to select the most appropriate way as the success or failure of the businesses are highly depended upon the method or mode of entry. The paper will provide information containing the analysis of the reason that why the organisations are much interested in global markets.
Internationalisation
Internationalisation
From the historical point of view, the internationalisation of the firms and the businesses started with the competence of mankind to travel across the globe in order to have successful business operations. Internationalization is one of the most interested and favored aspect of all the companies or business organisations. There is no particular or specific definition which can explain the exact or true meaning of internationalization. But from an overall perspective and from the economic point of view, internationalization is an approach where the business increased its involvement in the global markets. In such a modern and dynamic business world, the businesses initiate their operation in the domestic markets only but also develop future planning in respect with going global and expand the business roots. The phenomenon of internationalization has changed in a significant manner because of the intense market competition and dynamic markets situation (Bhardwaj, Eickman and Runyan, 2011). The key reason behind going global differs from organisation to organisation. However, most of the companies internationalize their business operations because of the reason that the domestic market have saturated or become inadequate due to the economies of scale. There are several definitions given by a number of academics and scholars of internationalisation but the core meaning of internationalisation can be understand as the competence and the ability of the companies to take advantage of the opportunities available in the global market of the foreign regions. Internationalisation can also be defined as a process where the companies enhance their level of participation in the global operations (Casson, 2013). Few scholars have also defined internationalisation as the process of increasing indirect and direct awareness of the various impacts and benefits of the global transactions on the future growth and sustainability of the business operations. Later to this, internationalisation was described as the approach of adapting the operations of the companies comprising resources, structure and strategies to the global environments.
Process of Internationalisation
In the process of internationalization, there is increased level of uncertainties and risks which the company undergoes and thus there is a need of a good international business strategy for managing and overcoming the various risks of internationalization. The management team is required to pre-planned the activities and prepare the company by acquiring knowledge of the international market, the business environment and the culture. By acquiring knowledge of all these factors the company can gain huge success in the process of internationalization. Other key factors which are also responsible for any successful internationalization of the business includes the business network which support the business organisation in the process of internationalization. The organisations which are planning for internationalisation are required to adopt and work on the basis of a process that comprises of some particular stages or phases. There is a need of upfront planning in performing business in the global markets. There is a high need to acquaint oneself with the domestic culture of the foreign nations where the organisation is planning to expand its business that comprises of everything from search engine mechanisms to the business practices (Cavusgil, et al., 2014). The approach by which the companies go global is known as the process of internationalisation and this process comprises of five specific stages. The five stages include international marketing strategy scope and framework, international marketing environment, international marketing strategy, international market entry strategy and strategic alignment and performance. Following is the adequate and in-depth description of all the stages of the internationalization process.
Process of Internationalisation
Stage1: International Marketing Strategy Scope and Framework
In the first phase or step of the process of internationalisation, there is development of a strategy scope and framework which means that the company analysed the regions or the overseas nations and evaluate whether there is a scope for international business or not and if a scope is identified to perform business, there is development of a marketing framework which comprises of the complete structure in the manner in which the company will initiate or start performing its business in the overseas nation (Contractor, 2007).
Stage2: International Marketing Environment
In the second phase or step of the process of internationalisation, there is analysis of the international marketing environment where the company analyse the resources and the capabilities of the organisation so that it can have improved and effective business operations in the overseas region. The second analysis in the evaluation of the marketing environment is the analysis of the global competitors where the company analyse the various competitors which are already there in the host country who can have a direct impact on the business functioning of the organisation. The third key factor in the marketing environment is the culture which is required to be managed as there are several cross cultural issues in the global business functions and international businesses. Buy achieving effective cross cultural balance, the business achieve high level of sustainability. The next factor in the international marketing environment is to create and develop competitive benefits which are one of the major factors in achieving success in the international business (Dachs, Stehrer and Zahradnik, 2014). It is also necessary to analyse the various uncertainties and the political risks associated in the global business as in the process of internationalisation, the companies face a number of risk which are required to be analysed, evaluated and managed with appropriate risk management. In the marketing environment, it is also required to profile the global product markets and develop a strategy and a new vision for the international markets. The strategy help the company to perform the business in an effective manner and the vision helps the organisation in having adequate focus on the accomplishment of the goals and objectives of the business (Fernhaber and Li, 2013).
Stage3: International Marketing Strategy
In the third phase or step of the process of internationalisation, there is development of strategies for having business in the international regions. There are a number of strategies which are required to develop and take use of for attaining competitive benefits, assessing risks, attracting consumers and achieving business sustainability. There will be development of strategies in the process of internationalisation in respect with the consumer products firm, services firm and the industrial product firm. In respect with these three, the companies develop and work as per the strategies according to the need of the business. To attract the consumer products, the company develop the strategies accordingly (Fernhaber, Gilbert and McDougall, 2008).
International Marketing Strategy Scope and Framework
Stage4: International Market Entry Strategies
In the fourth phase or step of the process of internationalisation, there is analysis and selection of the best suitable market entry strategy. In the international businesses, there are a number of strategies which are used for market entry such as exporting, joint venture, licensing etc. But from all these strategies there are a need to select the most appropriate one which offers highest competitive benefit to the company. There are primarily three key factors in working abroad and having international business i.e. strategic alliances, exporting and the foreign direct investment. in the exporting strategy, the company internationalise its business by exporting or selling the products in the overseas markets but without establishing any physical body in the foreign nation. There is export of goods and merchandises and sell through the distribution channels. In the strategic alliances, the company go global by having partnership and alliances with the domestic companies of foreign countries such as joint ventures or merger (Freixanet, 2012). With the help of the strategic alliances, the companies try to build brand image of the company through an already existing organisation so that there can be attained huge customer base. In the foreign direct investment, where the company directly have an investment in the overseas country to initiate the business operations. Therefore from all these market entry strategies, the companies select the most appropriate one in accordance with the business operations to internationalise (Gaur, Kumar and Singh, 2014).
Stage5: Strategic Alignment and Performance
In the fifth phase or the last step of the process of internationalisation is the analysis of the overall performance and developing the strategic alignment. Firstly the company search and develop adequate channels of international distribution so that while going global there can be effective sales of the products through string distribution network. the distribution channels is the key to success in any global business operation as the stronger and expanded the distribution networks are, the maximum are the chances to enhance the customer base for the company (Zhang, Duysters and Filippov, 2012). The next aspect in the strategic alignment is setting the prices or developing pricing strategy for the international markets. n the global markets, there is an intense need to first analyse the present market situation and the prices offered by the competitors (Hill, 2008). If the company will offer high prices than the already existing companies then there are high chances of failure in fetching the attention of the customers. Therefore, pricing analysis is required to have improved and sustainable business operations in the overseas region. The step of strategic alignment also comprises of the international negotiation as whenever a company internationalise its business or go global there is a need to negotiate with eth foreign region where the company wants to expand its business. Thus, negotiation is a key factor in the sustainability and initiation of the business operations. So, there will be performed global negotiations based on various factors. The last factor in the strategic alignment and performance step of internationalisation process comprises of assessment of the overall global market performance (Humphery-Jenner and Suchard, 2013). When any business expand its roots in the international market, it is essential to monitor the operations, business functions and performance of the company so that there can be effective analysis of the deviations or any kind of modification required to be done in the planning so that desired results can be obtained from the international business.
Driving factors in the process of Internationalization
International Marketing Environment
There are various factors which drive the business for indulge in the internationalization of the business. Following are key drivers that are involved in the process of internationalization:
Profit: A number of companies go global or internationalize because of one of the driving force i.e. the increasing profits of the organisation and the declined costs (Oviatt and McDougall, 2005). Such objective can be attained by accessing to a more extended and larger market and taking use of the opportunities available in that market so that there can also be acquired the advantage of economies of scale. The economies support the businesses in enhancing profits and reducing costs (Nowi?ski and Rialp, 2013).
Opportunity: There are present opportunities in number of foreign countries across the world which helps the businesses to grow and develop (Sui and Baum, 2014). In the global business expansion or internationalization, the company search for those nations who have high economic growth as the nation with higher economic development results in high purchase power of the individuals and thus the company has the opportunity to brings and offer new products and services in the market (Onetti, et al., 2012). A good example of business opportunities can be seen as for example the higher level of population in the Chinese market and therefore companies has the opportunity to garb a large number of customer base (Gaur, Kumar and Singh, 2014).
Band Wagon Effect: It is that particular situation where the organisation decides to have an international business or go global because of the reason that the other market players or the competitors are going global and performing business in the overseas nations (Pangarkar, 2008). Such business internationalization is good when the organisation takes use of an opportunity and maximizes the returns. Moreover, it is necessary that companies going global due to the band wagon impact must have a proper care of other factors too to achieve successful business internationalization (Banalieva and Dhanaraj, 2013).
Global Markets: A number of companies go global or internationalize because of one of the driving force i.e. they are aware of the high potential ability of the global market of making huge revenues. Thus, the company outbreaks its competitors by taking use of the revenue earned from the global markets in respect with protecting the domestic market which is extremely competitive (Sitkin and Bowen, 2013).
Shifting of the cost:The costs of manufacturing are driven by flexibility, control processes, required skills, responsiveness of the customers and product quality. There is less consideration imposed on the labour costs in the selection of the place for internationalization. Thus, the organisations internationalize due to lower costs in the global markets as comparison with the domestic markets (Poulis, Poulis and Plakoyiannaki, 2013).
International Marketing Strategy
Globalization of technology: Across the globe, there has been plenty of innovative and advanced technology used by the nations and the companies (Ruigrok and Wagner, 2003). There are a number of nations that possess scientific infrastructure and cheap human resource for the development of technology’s research and development. Thus, it is easy to go global as the costs in respect with technology are very low (Preston and Windsor, 2013).
Complex political and international environment: A number of companies go global or internationalize because of one of the driving force i.e. presently the exchange rates are much flexible and there are no huge tariffs imposed therefore an increased number of foreign investments are there in the overseas regions. The robust political stability is another major driving force for the companies to internationalize the business (Rugman, Verbeke and Nguyen, 2011).
Saturated home market: The next driving force behind the internationalization of the businesses is the saturation in the domestic market as there are number of local manufacturers and companies that are making the market saturated and due to huge number of companies there also take place intense market competition (Sinkovics, Sinkovics and “Bryan” Jean, 2013). Thus, the organisations internationalize for competing in the global markets which is comparatively less competitive in nature and there are chances of making profits for protecting the operations of the domestic market (Singla and George, 2013).
The process of internationalisation is not approachable in the absence of an action plan or a strategy for the attainment of the organisational goals. In the absence of any strategy of plan, any company which is planning to go global or performing business in the international regions is bound to fail. The strategies of internationalisation comprises of making a decision on where and when to internationalize and also the selection of the market where to enter. There are number of methods and strategies which can be used for entering into the international markets. The internationalisation process comprises of taking a number of uncertainties and threats and thus, there is a need of an effective strategy (Jansson, 2007). For the success of the internationalisation of the companies and for reducing the various risks which are involved with an improved and good choice of international strategy. There are number of international strategies which are suede for entering and venturing in the global and emerging markets. These strategies comprises of export strategy, collective strategy, transnational strategy, the global strategy, the multi domestic strategy and the international strategy. There are number of advantages of all these strategies.
International Market Entry Strategy
The first strategy is export strategy as it is one of the most common internationalization strategies used by the multinational corporations for selling their products in different countries. There are number of advantages associated with this internationalization strategy such as the companies are not required to develop their manufacturing units in the overseas nations as well as the organisation would also benefitted with the curve effect which will support in cost reduction for the company. As per this strategy, the company manufactures the products from a centralized or headquartered place and then distribute it to other places in the form of export realize economies of scale (Kafouros, et al., 2008). On the contrary, there are a number of drawbacks also which are associated with the exporting strategy of internationalization. To start with, it is identified that the exporting strategy is quite expensive for the companies as instead of manufacturing at the home country and exporting it other host countries it is cheaper to manufacture in the destination country only. Secondly, the exporting strategy also sounds uneconomical if there is high transportation cost among the two nations. With the high exportation costs, there are high tariffs too which made exporting difficult for the companies. Thus, all these drawbacks made export a less preferred choice of the companies dealing in internationalization of their businesses (Kahiya, 2013).
The second strategy is international strategy which is the most common and recognized strategy which is used by the organisations for globalising the business operations. With the use of this strategy, the companies develop value for the services and the products by the means of transfer of valuable and helpful products, technology, qualifications and competence to the foreign nations and have establishment of the production centres in the destination country. There are number of companies and mainly the Japanese organisations that take use of this strategy for selling their differentiated and unique products in China as well as various other overseas countries as the new market (Kaynak, 2014). There are number of organisations which centralize their technology as well as the production operations and there is exporting of the differentiated products only. There are also a few of times, when the companies take use of its competent staff and the technology to have manufacturing of the products in the overseas country (Zhang, et al., 2016). Though, there is more control remained with the parent organisation in comparison with the newly established subsidiaries. The use of international strategy for internationalisation sounds good and effective if the overseas nation where the organisation is planning to internationalise is comparatively less competit8uve in nature. But if there is increased pressure from the domestic companies, then there can be faced challenges and issues by the company and it may also suffer from the situation of driving out of the market (Knight and Cavusgil, 2004).
Strategic Alignment and Performance
The third strategy of internationalisation is franchising. It is a strategy similar to licensing other than a single factor that it is for a longer time period in comparison with licensing as it is for a shorter time period. Franchising can be explained as a right which is attained by the organisation from another organisation which allow them to perform specific business operations such as selling of the services as well as the goods under a particular name. Franchising is considered as a special form of licensing where there is a contract for following the strict regulations and rules on the manner by which there is carrying out the business operations through franchisee. There is a royalty payment received by the firm which sell the franchisee which is considered as the revenue. The operational risks and the cost associated in the destination nation are some of the causes for selling the franchise by the organisation who owns it (Knight and Liesch, 2016). Such strategy of internationalisation helps an organisation to develop a strong presence of the form in the nation as well as in the globalised world in a short span of time at a low level or risk and cost. Though, the key disadvantage of taking use of franchise as a strategy is that there remained low level of quality control as the organisation is large and it differs from the various other regions of the globe.
The next strategy for internationalisation is turnkey projects. It is a time when an organisation is planning to establish an equipment or project. These firms obtain tenders for carrying out the projects in overseas nations and attain access to the overseas market. Such a strategy of internationalization is very usual in the construction sector, pharmaceutical sector, petrochemical refining and metal industries. Such strategy is useful for the companies where the government has limited the foreign direct investment (Knight, 2015). One of the organizations is in possession of the various resources which are needed and the other organisation requires the technological know-how for the purpose of production. The organisation is recognized as the contractor which takes care of the project for the overseas company. The organisation provides the client with the competent and skilled personnel, the plant and the contract. Once there has been accomplishment of the project, the contract does not maintain a long term association in the foreign nation. The organisation which ventures in the overseas market will attain its competitive benefit as its knowhow and technology while it will also sell to the competitors (Kyvik, et al., 2013).
Walmart Internationalization Strategies
The next strategy is licensing, it is an internationalisation strategy which comprises of an agreement among the licensor and the organisation which is being licensed. The licensor offers another organisation the right over the specific intangible asset and property for a particular time period in return to a loyalty fee as revenue from the license. The most common organisations that take use of such strategy are the pharmaceutical companies where the rights, innovations, inventions and patents are common. These types of firms do not work upon the incurring costs and expenses for entering in the overseas nation (Lecerf, 2012). One of the key benefits of this strategy or mode of entry is that the firms which have lack of capital or investment can take sue of this strategy and can perform the business operations in abroad. The strategy of licensing can also be used by an organisation that wants to venture in any overseas nation where there are strict rules and restrictions. Though, the licensing strategy of internationalisation offers an organisation scarce control over the marketing, production and also the strategy which is being used in the sale as well as development of the product (Lu and Beamish, 2004). The licensing also results in limiting of the competence of the form to have coordination among the activities in various nations and also taking use of the revenue which is earned from one nation to support the various competitive threats in another nation.
The next key strategy of internationalisation is the joint venture. It is one the most used strategies which is employed by the companies going for internationalization of the business operations. A joint venture can be explained as an entity which is developed by the joining of two or more organisations which bare independent in nature and are also working jointly (Nairn, 2009). The organisations agree on working together and share the losses and the profits which are being obtained by the new entity as a result of the managing and running an organisation on a joint basis. Such type of strategy is recognized as very useful and viable as the organisations who are involved are in such a position to not compete but complete each other skills and competence. A joint venture is performed basically for a long term advantage rather than for a short term benefit and because of this aspect, the organizations which are involved in joint venture easily gain global brand recognition (Onetti, et al., 2012). This is one of the best ways to operate on a global or international level with minimum risk. Joint ventures are basically established in an agreement on the manner in which there will be carrying out of the roles and sharing of the revenue gained from the venture in future. Joint venture are also benefitted for the companies as a foreign organisation can gain advantages by taking use of the knowledge of the host company in respect with the market of the foreign nation, economic and political conditions, environment of business, culture, language and the competitive conditions prevailing in the host nation. As well as, the risks and the costs which are incurred in the business are also shared on mutual basis. By the means of joint venture, a company can also sustain and overcome a number of risks by letting another organisation to have a control of the technology (Oviatt and McDougall, 2005), Though, the joint ventures do not permit the organisations to have complete control over the business subsidiaries including international as well as domestic and it may also result in conflicts and issues in respect with the control of the business operations (Preston and Windsor, 2013).
Amazon Internationalization Strategies
There are various other strategies of internationalisation which can also be used for entering into a foreign nation and make the organisation globally operating business unit. It comprised of global strategy, multi-domestic strategy, wholly owned subsidiaries strategy and various other strategies of internationalisation. An organisation must always perform the comparative analysis of the various internationalisation strategies before using or selecting a particular strategy for business expansion (Pangarkar, 2008).
The organisations decide to expand their business in the international regions and enter in the global markets for a number of reasons and these diverse set of objectives at a particular time of entry develops various strategies, market participation and the performance goals. However, the organisations usually follow a particular market development and entry strategy. The most common in all is the continuously increasing commitment approach of the market development in which there is performed the market entry through any domestic partner. Once the business grows and develops, there is often a switch towards a directly managed subsidiary. Such kind of approach of internationalisation results in a desire for building of business in the foreign market as soon as possible and to minimize the risk of failure and economic downturn (Rugman, Verbeke and Nguyen, 2011). Going global or internationalization is one of the most major decisions for the organisations but because of a series of reason. Following are some of the wide and major reasons behind going global or for business internationalisation.
Generating High Revenue
Domestic organisations constantly look for opportunities to add customer and revenue flow. When increment strategies are used up on the national level, the next path is to seek out international growth. Distributing the merchandise in additional nations increases the number of customers (Wright, Westhead and Ucbasaran, 2007). If the companies offer compelling solution as well as loyalty across the global market places, the profits and the success strengthens and escalates as well. A new market offers a new customer base to the company which not only increases the sales of the products and services but also the revenue generation is increased. Therefore, to generate high profits and revenues is one of the major factors behind the internationalisation of the business (Ruigrok and Wagner, 2003).
Diversified Income Stream
Small business entrepreneurs understand the significance of expanding revenue sources as possessing that one particular major client can seem like the foundation to the success and growth of the business until the time the business lose it. Marketing and expanding the business internationally and diversifying the revenue sources by introducing the services and the goods to the new customers in foreign countries is one of the best way to decrease the dependency upon one client or one particular market. Therefore, if the domestic economy gets inactive and experience a downturn, the impact posed can be easily balance through the revenue from other foreign countries with healthier economies (Singla and George, 2013). The global business expansion permits an organisation to attain diversity in the business functions in number of ways. Firstly, there is spread of risk of the slow demand in various nations. If there is loss or no gain in of the markets where the customers lose their interest in the products or the services, the company can have their focus on another regions or nation. Also, the organisations increase innovation and develop more diversify solution to have sustainable business operations in the foreign countries.
Internationalization Strategies of Other E-commerce/Internet Companies
Competing for New Capital
The goal of achieving a number of places is firmly associated with the acquisition of new capital. If the organisations are satisfied with the revenue generation from the domestic business, the continuously increasing race for global expansion often is in respect with the competition of the resources. If an organisation satisfied with domestic revenues would not enter in the global market. The competitors will do. And because of this, there is not only the loss of a new revenue source but also the loss of cash which could be utilised for promoting the organisation in the domestic as well as in the foreign regions. In number of cases, the big domestic companies overrun by the small players because of the reason that they succeeds global and attain a huge growth and expanded market share in the foreign country (Sinkovics, Sinkovics and “Bryan” Jean, 2013).
Recruiting New Talent
By initiating the business operations in the global markets also offers an opportunity to access to a larger and highly diversified pool of competent and talented employees. The people who are sound in speaking in diverse languages and have a better understanding of the diverse cultures increase the associations with an extended customer base. There can also be structuring of global work teams in a manner in which there is development of synergy in the building of an international brand (Sui and Baum, 2014). In addition, there also develops connection with the suppliers in the global markets and take benefit of resources availability and access to the raw materials in the domestic markets.
Intense Market Competition
In the domestic market there has been increasing competition and because of this the small businesses do not get much success and visibility. To save from the intense market competition and to attain increased level of sustainability the companies go global and expand their businesses. The threat of competition force the companies to internationalise and have a look towards the unexploited business opportunities as there is less competition in the foreign market which offers a better opportunity to the business to grow and develop (Wach, 2014).
Become a Trusted Brand
One of the major reasons behind going global or internationalise the businesses is to enhance the prestige as an international brand. The global business expansion not only enhance the brand recognition but also develop a higher customer base as there are a number of potential customers who look for an international brand and possess huge level of trust in those global brands. And this results in prestige enhancement and brand recognition. The greater the visibility of a brand is, the higher are the chances to become one of the most favoured and reliable brand for the customers (Weerawardena, et al., 2007). The consumers have a tendency to associate themselves with the brand which have higher global recognition and brand value. Thus it is one of the key reasons behind internationalisation and going global.
Results
Revenue Potential
To expand your business, think globally. By providing global coverage to business, business can have access to enormous customer base and can augment the customers. Domestic markets can reach its saturation level at a faster pace (Pangarkar, 2008). Thus to combat with the saturation and to increase business, global expansion is the key. A hit product service or service gives steady flow of revenues with the capture of global markets and enhanced customer base (Sui and Baum, 2014).
The Ability to Aid and Serve More Customers
Businesses have the ability and potential to influence and improve the lives of customer in various ways. With global expansion and increased customer base, the company can aid a large base of customers. Business expanded globally can provide solutions to the challenges and difficulties faced by a larger group of people across the world (Onetti, et al., 2012).
More Access to Talent pool
Global expansions of business can en-cash the enormous benefit of talent acquisitions. Expansion of business can provide access to talented employees with distinctive expertise and logical thinking and mind-sets (Sitkin and Bowen, 2013). Also the added advantage is that businesses can have access to larger talent group if they expand globally, as compared to employees hired in the domestic markets, which in turn gives a competitive edge to the business against the competitors in the same business line that have yet not expanded globally (Banalieva and Dhanaraj, 2013).
Adapting to Global Culture
It is important to have well-versed knowledge of the culture and taste of the people of the new place, where the business is planned to be expanded. Understanding the customer base of global locations helps in understanding the business from new perspective and thus helps in enhancing and improving the products and services to improve customer relations globally (Poulis, Poulis and Plakoyiannaki, 2013). Also the new perspectives can help in bringing more innovations to the product and services in domestic markets and thus attracts more customers, build trust among business partners, and build brand loyalty among customers in domestic markets. For global expansion of business it is important to hire a cultural consultant that creates a market pitch for the entrance into new markets by keeping in mind the culture and linguistic nuances of the global markets.
Access to favourable business climate
Economic conditions of the overseas markets can be more favourable as compared to domestic markets or home country. Restrictive government policies and recession in domestic market can provide saturation to business in domestic market (Preston and Windsor, 2013). Thus to the help the struggling enterprises, strategy of global expansion can be a boon and it is lucrative offers for the business to increase their revenues. Economic conditions and government policies of the new place can prove to be business friendly for the struggling business in the domestic markets. Also employees are more enthusiastic to work in new parts of the world with better standard of living (Ruigrok and Wagner, 2003).
Alibaba: History and Background
Rejuvenation of the business
Thriving businesses can expand globally for more revenues and increasing customer base. However for struggling enterprises in the domestic market, global expansion to overseas markets provides an enormous opportunity to revive their business. Products and services that have reach saturation in domestic markets can again provide enormous revenues by tapping new markets and new customers (Sinkovics, Sinkovics and “Bryan” Jean, 2013). Also businesses expanded globally have easier access to resources that have short supply in domestic markets, but can be easily available in overseas markets. Global expansion of business provides insulation to business from struggling performance in home country. The business risk can be spread among the diversified customer base of global market. Also if the economic conditions of the home country is negatively influencing the business, it can be overcome by the favourable condition in the global market (Rugman, Verbeke and Nguyen, 2011).
Acquaintance to Foreign Investment Prospects
Expansion to overseas markets is favourable for the business in terms of foreign investments. Business gets more opportunities for increasing their services and products with the increases foreign investment in the business (Singla and George, 2013).
Amazon
Amazon is one of the most recognized and valued e-commerce company or an online retailing business organisation which is headquartered in Seattle, Washington. It is an internet-based retailer which initially had its primary emphasis on the sales of books and later there was product diversification. In order to reach an extended range of masses and to develop the business, Amazon started offering products in various international regions such as in Netherlands, Australia, Brazil, Japan, China, India, Mexico, Italy, France Canada, Germany and United Kingdom. The products are delivered to the customers on a direct basis. The following part will provide a detail analysis of the international strategies used by Amazon in its global business and the associated results of those international business strategies (Blagova, et al., n.d.).
International strategies used by Amazon
Out of the international business strategies, Amazon takes use of the acquisition and merger as its most preferred international business strategies. The company initiated its global business operations through a number of acquisitions as well as merger. There is a huge list of names of companies which have been acquired by Amazon. Acquisition and merger are the business transactions where the possession and ownership of the companies, the operating units and the other business organisations are combined or transferred to other company. With the help of the acquisition business strategy, the companies go global and expand its business in various international regions (Varia and Mathew, 2014). Amazon is one of the biggest and renowned examples of taking use of acquisition as it had done a number of acquisition and mergers for expanding the global reach of its business (Wild, Wild and Han, 2014).
Alibaba Internationalization Strategies
Results
With the help of the internet and sound international business strategies, there has been a significant improvement in the capacity of the companies to internationalise and gain competitive benefits. In Case of Amazon, the company had gained huge and enormous success in its global ventures and international business. The acquisition strategy and the international business helped Amazon in growing and developing its market. Amazon continuously added new regions and new countries for offering its services. Every new nation is regarded as a new market which offers growth opportunities to the company. The sound results of the international business can also be analysed from the continuously growing revenues of the company. There has been a sudden increase in all the countries it operates and the rising profits are the biggest factor of growth and success (Bergvall-Kåreborn and Howcroft, 2013). There are a number of competitive benefits gained by Amazon as with the help of acquisition of a number of companies, Amazon get a hold on the existing customer base as well as a market share which supported the growth of the company.
(Source: Gazzini, 2017)
From the period of last ten years there can be seen continuous success and growth of the company as the revenues of Amazon are rising with an increasing rate. The new products and services and the global expansions had remained beneficial for Amazon for its intensive growth in the global regions. Thus, from the overall discussion and analysis, it can be stated that the international business of Amazon is flourishing and had a number of growth opportunities. Therefore, it is evaluated that in the process of internationalisation, Amazon had gained huge business success and brand recognition.
Apple Inc.
Apple is a lavish and a highly posh electronic brand which was grounded in the year 1976 by the Steve Jobs, Ronald Wayne and Steve Wozniak. Headquarter of the company is placed in California and holds almost 500 retail stores across the world. The profits of the company are rising unceasingly and it is making its well-known existence in almost all the foreign regions with a fast speed. Apple is recognized as the market leader in terms of price statement, technology and innovation. Apple offers a number of products and services that includes of apple music, Apple Pay, iPhones, App Store, iPads, iPod, etc. The company has its noticeable presence in almost 23 countries where there is prolonged distribution and supply of the Apple’s products. Primarily, the company is currently attending the upper-middle class and the upper class market and has its main emphasis on the uniqueness and innovative technology of the products. Currently Apple is relishing a vigorous market position across the globe in the electronic industry (Clelland, 2014).
Problems Faced with the Internationalization
There are a number of global activities which had supported Apple Inc. in expanding and surviving the business in the global markets. The company indulge in huge level of importing and exporting activities for the buy and sale of the products across the international market. For entering into the international markets and to have successful global expansion, Apple significantly uses three major international business strategies that comprises of exporting, licensing and importing (Morschett, Schramm-Klein and Zentes, 2015). The first strategy use is the licensing which is an agreement under which the licensor offers something which possesses a value to the licensee in return for a particular payment or performance. Such an agreement is considered as licensing. The company take use of licensing as a market entry mode because of the reason that it possesses a number of positive features which are nit available in other international business strategies such as with the help of licensing Apple lower down its risk as in comparison with other strategies, the risk is minimum as well as it also help the company in dealing with less complications and issue while entering any foreign nation. Apple Inc. had expanded its business in several foreign nations with licensing and it is one of the key factor behind the successful business and high returns of the corporation (Jenkins, 2013).
With the help of the robust international business strategies, there has been a significant development in the capacity of Apple to internationalise and gain competitive benefits. In Case of Apple Inc., the company had gained huge and enormous success in its global ventures and international business. The licensing, exporting and importing international business strategy and the international business helped Apple in growing and developing its market. Apple covers new regions and new countries on a continuous basis by offering its innovative products. Every new nation is regarded as a new market which offers growth opportunities to the company. The sound results of the international business can also be analysed from the continuously growing revenues of the company (Lessard, Lucea and Vives, 2013). There has been a sudden increase in the market share and the profits acquired from all the countries it operates. There are a number of competitive benefits gained by Apple as with the help of licensing and exporting mainly such as it offers high customer value that help in enhancing the brand reliability and visibility in the international markets. With the help of the business strategy, Apple gained strong market share as there has been a wide acceptance of the products of Apple across the globe as they offer differentiated services to the customers. With the global expansion, Apple had also enhanced its competitive benefits as it is the differentiation strategy combined with licensing that offers high stability to the company by which all the challenges are met and Apple stood as the market leader in the electronic industry. The one of the biggest advantage which shows extreme positive results of the global expansion is that the imitation level is very low because of the high valued products offered by Apple. Thus, it becomes difficult for the competitors to supply similar products in the market and because of this; Apple holds a string position in all the overseas markets (Lessard, Lucea and Vives, 2013).
Benefits of Alibaba’s Internationalization
Wal-Mart is a multinational company which operates in number of countries with its well established stores. The headquarters of Walmart are established in the United States as is considered as one of the biggest retail giant. There are around more than eight thousand stores of Walmart in more than fifteen nations and the company had gained huge success in its global ventures. But there are some lessons also learned from the global expansion of Walmart in Germany where the company experienced a huge failure. Walmart had expanded in various overseas markets such as Mexico, Japan, China, Canada, Britain, Brazil, Argentina, etc. (Brea?Solís, Casadesus?Masanell and Grifell?Tatjé, 2015).
Once any nation is selected for entrance by Walmart, the company determine an appropriate mode of entry from an array of choices. There are choices available with Walmart in respect with acquiring an already existing player, starting Greenfield operations, developing alliance with an existing company or a partnership with some other company. Out of the international business strategies, Walmart takes use of the acquisition as its most preferred international business strategies for entry mode (Halepete, Seshadri Iyer and Chul Park, 2008). The company initiated its global business operations through a number of acquisitions. There is a huge list of names of companies which have been acquired by Walmart. Acquisition is the business transaction where the possession and ownership of the companies, the operating units and the other business organisations are transferred to other company (Verbeke, 2013). With the help of the acquisition business strategy, the companies go global and expand its business in various international regions. Walmart is one of the biggest examples of the companies which take use of acquisition strategy as it had done a number of acquisitions for expanding the global reach of its business.
To enter into the markets of Canada, Walmart take use of acquisition and it was a very logical move of the company due to a number of factors such as the market of Canada is considered as a mature market which is unattractive for the greenfield operations therefore the new business only lead to intense competition. There are also exists cultural and income similarities in the markets of Canada and United States. There was a little need for any new learning for Walmart while internationalising in Canada. Therefore business expansion through strategic alliance was also not necessary. Lastly, a non-performing company named Woolco was purchased or acquired by Walmart. Furthermore, the business model of Walmart was exactly the one which Woolco required to be transformed as a healthy organisation. To enter into the markets of Mexico, Walmart take use of a diverse strategy. As there exists a number of cultural and income elated differences among Mexico and the United States, there was a need to have modifications in the business operations as the requirements of the domestic market may create issues for the company (Gandolfi and Strach, 2009). Therefore Walmart take use of Joint venture as an international business strategy and had a venture with Cifra which was one of the largest retailers of Mexico. Thus, it offered high operational expertise to Walmart in the markets of Mexico. To enter into the markets of Latin America, Walmart analysed and targeted the two most significant regions i.e. Argentina and Brazil. Walmart took use of joint venture as the international business strategy to enter into the markets of Brazil by having a joint venture with Lojas Americana, a domestic retailer. The entrance in Brazil offered a great understanding of the American market and therefore for entering in Argentina, the company used a wholly owned subsidiary (Halepete, Seshadri Iyer and Chul Park, 2008).
Future Plans of Alibaba’s Expansion through Internationalization
In the United States, Walmart had developed a number of competencies. Therefore, the company was efficient enough to enter into the global markets. All the business expansions of Walmart are a lesson as the company had internationalise its business by first analysing the market and then selection of the most appropriate international strategy that will offer the highest competitive benefit to the company.
Results
With the help of the sound international business strategies, there has been a significant improvement in the capability of the organisations to internationalise and gain competitive benefits. In Case of Walmart, the company had gained huge and enormous success in its global ventures and international business. The acquisition strategy, joint ventures and other international strategies helped Walmart in growing and developing its market. Walmart continuously added new regions and new countries for offering its services. Every new nation is regarded as a new market which offers growth opportunities to the company. The sound results of the international business can also be analysed from the continuously growing revenues of the company. There has been a sudden increase in all the countries it operates and the rising profits are the biggest factor of growth and success. There are a number of competitive benefits gained by Walmart as with the help of acquisition of various companies, Walmart get a hold on the existing customer base as well as a market share which supported the growth of the company. The organisation attained success in the markets of United States by offering the products at very low prices. Walmart also cherished economies of scale and as a result more than half of the market shares position in the discounted retail business. Walmart also experienced a huge failure in its global expansion in Germany and had to close the business operations in the country (Gandolfi and Strach, 2009). The key afctors behind the failure of the business was dissimilarity in the business regions, inappropriate selection of business strategy as well as inadequate balance among both the countries. Therefore from the overall results and evaluation, it can be stated that Walmart gained success in its global expansions but also had faced a number of issues and difficulty and thus it is essential to have an in-depth understanding of the cultural factors as well as the selection of the international business strategy.
Overview and history of Alibaba
Alibaba Group Holding Limited was established in the year 1999 by the mutual efforts of Peng Lei and Jack Ma in China. Alibaba is one of the most renowned and recognized organisations in the internet industry which had attained huge growth with its advanced technologies and integrated business operations. The development of Alibaba can be described in five phases for the last eighteen years of its success (Westland, 2016). The very first phase was from the year 1999 to 2001. In this particular phase, Alibaba offered free of cost info for the suppliers so that it can have an easy entrance to the market. At this particular period, the trade market of China was in a situation where there was only flow of information on the Internet. Jack M recognized the demands of the small and medium enterprises of China to enter into the e-markets of B2B by offering them with free of cost information as well as online services as per the different organisations and the features of the industries. In the year 2000, Porter Erisman was hired as a foreign expert for supporting the organisation in globalisation. At that point of time, to attract the foreign experts for running an organisation was highly essential as the Chinese people usually had a little experience of management. The second phase started from 2002, when there was investment done by Alibaba in Trustpass, a reliable credit certification in order to increase the number of customers who make a purchase without any consideration of deceit or fraud as the credit has always being one of the biggest issues in the e-trade development of China. At the time of this phase, there was a sudden increase in the internet penetration and also the overall export volume also exceeded. There were buyers from various parts of the globe and they were lined up to make profits for the company. The next or the third phase took place from 2004 during the time when Alibaba initiated the development of the foreign marker to develop the e-trade market and expand its roots. The China supplies supported the global organisations in developing their individual websites as well as personal accounts for enabling faster access to the customers of the business information. it supported the business organisations to create higher profits as well as increased number of business opportunities (Yazdanifard and Li, 2014). There was also launched Taobao by Amazon which is considered as one of the largest market for online shopping. There were also launched Alipay as well as Alimama for their business purposes as well as for the online advertising respectively. The next stage took place from 2005 when there were several acquisitions done by Alibaba for developing and expanding the business such as Yahoo China was acquired by the company and all the transactions now had a full control of Alibaba. This resulted in creation of a new e-trade search engine which helped the e-trade business to grow and expand across the globe with larger communication space. The last and the fifth phase initiated from 2008 till present. The company established its offices in Switzerland and in Taiwan. Alibaba developed strategies to enter in the market of business to customer in a feasible manner. There has been a sudden increase in the number of users, profits and revenues of the company. Alibaba had developed its brand image and significantly gained huge brand visibility across the globe with its continuous success, rapid internationalisation and fastest growing technology (Kshetri, 2016).
Recommendations
There are basically three sort of international business strategies which all the companies take use of while entering into the global markets. The three strategies comprises of the global strategy, multi-domestic strategy and the transnational strategy (Poulis, Poulis, and Plakoyiannaki, 2013). The first strategy i.e. the global strategy is used when any company sacrifices its responsiveness to the domestic needs within its each particular market in the manner to achieve high level of efficiency. The key emphasis of the global strategy of the international busies strategies is to attain economies of scale by providing similar sort of services and products in all the markets. Alibaba took use of the global business strategy to expand in ten global markets made its e-trade business (Kim and Chen, 2016). There is an extensive use of the global business strategy by Amazon. The key reason behind selecting this particular strategy of international business is to have a recognized brand image across the globe. In some of the business expansion, Amazon also too use of transnational business strategy (Jung, Ugboma and Liow, 2015). The companies take use of the transnational strategy for seeking a middle ground among the global as well as the multi-domestic business strategy. Amazon takes use of the strategy to achieve a balance in the domestic and the international business. The company use transnational business strategy to adjust the local preferences among a number of different nations. Amazon takes use of the brand name but had some of the modifications in accordance with the local demands.
While going global the companies face obstacles and issues which impacts the success and sustainability of the business in the overseas regions. In case of Alibaba, the company had also faced a number of issues and problems in the process of internationalisation. There are many issues which depend upon the location of the business and the competence to source for the resources. Following are the problems faced by Alibaba:
In the objective of going global, there is a need to have an efficient team which can undergo the various challenges. One of the major concerns is the organisational structure and the teams’ locations. In running the business operations of Alibaba, there are several representative offices and one central office but team organisation venoms difficult. Thus, the issue arise in respect with the autonomy and coordination across the various locations in respect with the time zones. This was one of the major problems faced by the Alibaba during its internationalisation in number of countries. To manage this, it was required to hire local market professionals who can effectively understand the overseas culture and the needs of the target market but can work centrally in an efficient manner (Banalieva and Dhanaraj, 2013). Alibaba is divided among a number of various groups and each is overseen by the respective executive people. The central head manages all the other groups which are the regional subdivisions. In spite of the recognised global visibility, Alibaba and its business operations are controlled centrally and also consistent across the globe. While Alibaba is a large global brand, the business structure, expertise level and the nationality varies and it depends upon the particular industry, size and product of the business (Tan, et al., 2015).
Foreign Laws and Regulations
The next issue other than the structure of the business, there is a vast need of understanding of the regulations and laws of the overseas regions so that competitive benefits can be attained. From trading laws to the tax implications, navigation of the legal requirements of the overseas country is a primary function for the growth of the global business operations (Havinga, Hoving and Swagemakers, 2016). There are a number of legal costs and potential tariffs which are associated with the new market entrance. Alibaba faced trouble and issue in consideration with the following of the laws and the regulations while in the international markets. Because of breach of the laws and regulations there were faced issues and Alibaba had difficulty in continuing its business operations in the foreign nations (Anwar, 2017). The labour requirements and the employment laws in various countries are different and Alibaba had to follow these diverse laws to perform effectively in different foreign countries. With huge level of complexity involved in the employment laws and the foreign trade, Alibaba also faced issues in respect with the laws and regulation while going global. Alibaba faced issues while following the unwritten guideline and regulations (Wing Sum, et al., 2014).
Global Pricing Strategy and Cost Calculation
There are challenges associated with the setting up of process of the services and the products while internationalising the business and another challenge is in relation with the pricing strategy to be used. Alibaba tried to remain competitive but also in an aim to achieve high profits in the global business operations. By having an in-depth research of the prices of the competitors can be a benchmark (Glowik, 2017). In case of Alibaba, there were faced issues in respect with the cost calculation of various factors comprises of cost of distribution, marketing, labour, shipping and production. Thus, the inappropriate cost calculation has a direct impact upon the business operations of the company in the overseas regions and thus the profits are impacted. Alibaba faced issue in positioning its brand as the higher prices reflect the status of luxury whereas in the low prices a new market has to penetrate (Casson, 2013). Therefore, Alibaba faced the issue of cost calculation and global pricing strategies in the process of internationalisation.
Currency Rates
Another major issue faced by Alibaba in the process of internationalisation is the fluctuation in the currency rates. it is one of the core part of the strategy to have an effective monitoring and analysis of the exchange rates in any international business. But in such a dynamic and volatile business environment, it was very much difficult for Alibaba to forecast the profits and the revenues and mainly when the currency rates fluctuate suddenly (Kshetri, 2017). There has been a serious impact upon the balance among the business profits and expenses because of the currency rate fluctuations. In case of Alibaba, there has been faced issues of currency fluctuations as the payment to the suppliers and the production cost are high whereas on the other hand the market where the sales are done in a weaker currency. Therefore, there are less margins of profit or usually company made a loss. To protect oneself from the currency fluctuations Alibaba try to manage the fluctuations by transacting in a similar currency (Sitkin and Bowen, 2013).
There are a number of benefits of internationalization realized by Alibaba in its global expansion in various emerging markets. Following are the list of advantages which have been realized by Alibaba:
Enhanced profit margins: This is one of the key benefits Alibaba realized in all its business expansion in the global regions. The company had gained huge profit and revenues by serving value services and products to the customers. By increasing the distributing in additional nations enhanced the number of customers for Alibaba. The company provide compelling solution as well as loyalty across the global market places, the profits and the success strengthens and escalates as well. A new market offers a new customer base to Alibaba which not only increases the revenue generation. Therefore, the first key advantage of internationalisation for Alibaba is to generate high profits and revenues (Czinkota, Moffett and Rokainen, 2015).
Reduced cost and expenses: It is another benefit gained by Alibaba through internationalization of business. By engaging in a number of activities the overall cost is decreased which help in enhancing the profits. in the global regions when there is increased number of customers as well high volume of sales, then the overall cost and the expenses decreases. Alibaba also had benefitted itself from mass supply and distribution and attained high profits (Etemad, 2017).
Enlarged market: With the help of internationalization, Alibaba exposed itself to a more diversified and large market. Such an enlarged market helped the company in supplying the products and services n large scale. Alibaba served the customers with supreme quality products and services which not only enhanced the market share but also enable the company in enjoying the economies of scale supply and production (Nowi?ski and Rialp, 2013).
Reliable and recognized brand: One of the key benefits realized by Alibaba through going global or internationalise the businesses is that it enhances its prestige as an international brand. The global business expansion not only enhance the brand recognition of Alibaba but also developed a higher customer base as there are a number of potential customers who look for such a brand and customers possessed huge level of trust in Alibaba as an international brand. And this results in prestige enhancement and brand recognition of the company (Fan and Liu, 2015). The greater the visibility gained by Alibaba, there were increased chances for the company to become one of the most favoured and reliable brands for the customers. The consumers associated themselves with the brand as Alibaba attained higher global recognition and brand value. Thus it is one of the key benefits of internationalisation for Alibaba (Wang and Lu, 2016).
Pool of highly talented individuals
Global expansions of Alibaba had en-cash the enormous advantage of talent acquisitions. Expansion of business had provided access to the most talented employees with unique expertise and logical thinking and mind-sets. Also the added advantage is that Alibaba can have access to larger talent group as the company expand globally, as compared to employees hired in the domestic markets, which in turn gives a higher competitive edge to the business against the competitors in the same business line (Alvina, et al., 2013). By initiating the business operations in the global markets Alibaba had experienced an opportunity to access a highly diversified pool of competent and talented employees. The people who are sound in speaking in diverse languages and have a better understanding of the diverse cultures increase the associations with an extended customer base. It helped Alibaba in structuring of global work teams in a manner in which there is development of synergy in the building of global brand (Ee and Yazdanifard, 2015).
Supportive Business Climate
In various nations, Alibaba attained enormous growth opportunities and success because of the reason that the economic conditions of those foreign markets are more favourable as compared to the conditions of the domestic markets. There are continuously increasing restricted policies and recession in the domestic market which resulted in saturation of the business in domestic market. Thus, with the help of internationalisation, Alibaba do not have to struggle much and had a successful global expansion. Alibaba benefitted as there were available several opportunities to enhance the revenue as the business climate was highly supportive. The government policies and the economic conditions of the foreign countries proved to be business friendly for Alibaba. Also the workers were more passionate towards working in new parts of the world with better and improved standard of living.
Business expansion in other countries
There are future plans of Alibaba and the key managerial authorities of the company that there will be business expansion in mainly three nations i.e. New Zealand, Australia and India. The company want to have successful business operations in these countries so it had also established its regional headquarters in New Zealand and Australia. This is one of the key future plans of Alibaba which will help the organisation in having a sound market share in all these nations. There are plans to have expansion footprints in the areas of logistics, digital entertainment, payments and cloud computing (Hoffmann, n.d.).
Hit $1 trillion by 2020
The goal or the vision of Alibaba is to reach the gross merchandise by the total value of $1 trillion by the year 2020. For this, the company has planned to visit a number of nations and had a meeting with all the head of states as well as the business leaders so that all the small businesses can have improved trading with high level of security and openness on the platform made available by Alibaba (Johnson, 2014).
Development of partnerships, technology and infrastructure of commerce
To increase the global trade and to have a better involvement of hundreds of small merchandisers it is the future plan of Alibaba to develop huge partnerships so that a larger market share could be gained. It is also planned to enhance the level of technology in all the products and services to the customers. The use of higher technological advancements and development of the infrastructure of commerce is the key future step which would help the company in having extended market share (McDermott and Payvision, 2015).
Technological Breakthrough
Over the next thirty years, there has been a plan to have technological breakthrough. Alibaba is planning to rule the online selling platforms with its innovative and disruptive technology. The company is panning to transform the entertainment, manufacturing, financial and retail services with its unique technological updates and modifications (Wu, Li and Kee Wei, 2016).
Attractive business opportunities for small businesses
There are many large firms which have established in China and are taking sue of platform provided by Alibaba but still there are several small companies who do not have an access. Alibaba is planning to have attractive business opportunities for the small businesses so that they can flourish in China and develop their business and grow on the platforms made available by Alibaba (Valero, 2016).
Leveraging Cloud Computing Power
In present there is very small segment of the business of Alibaba. But from the future perspectives, Alibaba consider cloud computing as one of the strongest pillars of the business success of Alibaba. Computing data and power would be success drivers which will help in reaching the target audiences in a fast and easy manner. It is the future strategy of Alibaba to leverage cloud computing power and attain growth in the global business operations (CHEN, SHEN and ZHENG, 2016).
Based upon the complete data and the huge literature in respect with the internationalisation in the global emerging markets, following are few of the recommendations:
- There are a number of companies which have been internationalized and still have not gained much success and growth in their global expansion in the international markets. it is recommended that those organisations must have a re-evaluation of the strategy of internationalisation and must analyse that whether it is the most appropriate strategy for the business or not.
- Before any organisation internationalise, it is required to collect enough info of the markets in respect with the initiation of the process, collection of resources and planning. However, in such a dynamic market and enhanced level of technology, it is essential that the entire factors must be analysed.
- It is also significant that an organisation must employ effective management which have thorough past experience of internationalisation so that the process of internationalisation can be carried out with utmost efficiency (Alexander and Doherty, 2009).
- Depends upon the current market situations, the resources which bare sued z eth organisation at the initial level had a strong contribution towards the effective market performance. The organisation can have higher amount of investments of the resources and can attain it effect upon the market and thus enhancing the speed of internationalisation as well as customer base.
- Before any organisation internationalize, it is necessary that he organisation must ensure that the organisation had attained in-depth knowledge of the domestic markets. Therefore such impact would help in internationalising with faster pace.
Conclusion
The report helped in analysing and evaluating the factors which influence internationalisation in the global markets. The study emphasized on international business in eth emerging markets in respect with the process of internationalisation and strategies of internationalisation. There are a number of reason because of which the companies go global or expand in the foreign nations. Some of the reasons that led to global expansion of Alibaba comprises of earning higher set of profits from the global markets, market diversification and search for competent talent, search for cheap raw materials and to attain brand recognition in the global markets. Therefore, the other organisations also internationalise because of few of these reasons and other few more reasons. The process of internationalisation of the companies can take varied forms which comprises of exporting, licensing, franchising, turnkey projects, joint ventures, acquisition, etc. The strategies used by the organisations differ according to the needs if the respective company. There are few major factors which are highly significant for successful internationalisation and these factors enhance the speed of going global and expanding business in overseas regions. The factors comprises of the competence and the capability of the company to have effective management which have past experience in the global business and a string position of the organisation in the domestic market, government policy of the overseas nation, industrial and business environment and availability of the resources. Maximum of these factors have a direct impact on the internationalisation of the organisation. In fact, few of the factors also resulted in occurrence of obstacles for some companies. There are few other barriers also faced by the companies while going global or internationalisation such as loyalty of the customers, dynamic nature of market and lack of adequate knowledge of the foreign market. There are several benefits realized by the companies who internationalise such as economies of scopes, economies of scale, reduced costs, availability of cheaper raw materials and increased revenue. The profits and the revenue which are generated by the global business operations or through internationalisation can be comparatively higher than the revenues earned in the domestic markets. This following paper is not only beneficial in supporting the organisations that are internationalising or which are like to internationalise but it is also significant from the research and academic point of view. The readers of the study will gain an in-depth understanding of internationalisation in the emerging business markets.
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