Internationalization of a Business: Analysis of Tools & Theories

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Internationalization of a Business: Analysis of Tools and Theories

December 7, 2009

Internationalization is a process that takes place when a company expands its selling, production, research and development and other business activities into foreign markets. Research shows there are many different theories, methods and steps proposed for an organization to internationalize. Internationalizing a company entails many components no matter the method chosen to use. Several theories are generalizations of steps or processes to put in place and pertain more to the manufacturing and exporting industries. We will be focusing on applying theories that are relevant to the service and business to business industries. The research will also show when choosing to enter foreign markets a company will have to be proficient in their research of the numerous business sectors like marketing environment, financial capacity, managerial tasks, etc. In order to illustrate this The Hartford Financial Services group, a company in the insurance and financial industry, will be used as an example. The following research will analyze and describe various theories and tools for a company to use when looking to internationalize their business.

Before delving into the theories of internationalization, first we must ask and answer some very basic questions every corporation should research before putting a plan in place. First the company should ask why internationalize? When asking this question we need to find the motive(s) for starting the internationalization process. Two types of motives can be the determinants here: proactive & reactive. Proactive motives to internationalize are profit and expansion ambitions, foreign market opportunities, tax breaks/benefits, distinctive product or service and just the push for management to grow (Hollensen, 2004). Reactive motives include a saturated domestic market, competitive demands and convenience to nearby international...