Factors Effecting Internationalization Decision Of Indian Firms Commerce Essay


Firms advantage from global expansion by making use of their internal environment and resources advantages such as tangible or intangible resources. It has been claimed that during internationalization, a firm would use its full resource to prevail over market flaws and exploit location specific market opportunities.

Corporations also obtain several strategic benefits by internationalizing their operations. The benefits include learning; flexibility; risk reduction; and keeping away of fierce competition in home markets.

Foreign firms would face higher costs in host country operations due to lack of familiarity with local culture and dealing with host country governmental policies, distinctive needs of their customers and understanding suppliers.

Multinational corporations also face increased management expenses due to coordination and monitoring operations across large distances, as well as additional costs due to setup and modifications of products and services spread across diverse markets.

Eventually, global operations need firms to encounter altering political status in the host countries and variations in currency exchange values. Consequently, the paybacks of internationalization have to be judged against the costs of such operations.

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This subject has been taken noticeable attention, and several researches exist which test for the relation between globalization and internal environment of the firm and have been appraised. In spite of the existence of a number of researches on the topic, existing researches don t congregate on an ultimate outstanding pattern. Therefore, some scholars develop a model that tries to unite the varied findings linear or nonlinear, positive and negative, reported earlier by including the concept of stages in internationalization. Here, the relationship between internationalization and corporate internal environment is distinguished by three discrete phases. In the first phase, performance is bad but changes to good in the growth phase and decreases in the mature phase. These studies argue that in the initial phase, firms encounter liability of being a foreigner, shortage of economies of scale, and enduring preliminary learning costs leading to lower performance.

Later, as firms adjust to foreign markets, they are able to use their resources efficiently, while gaining economies of scale and economies of scope as well as achieving access to lower cost resources and so taking advantage of increased performance.

Finally, while companies expand their operations internationally in many markets, they encounter intensive managerial pressures because of the increasingly complicated and detached activities, leading to a drop in performance.

Some researchers find support for the previous form, while others find quite opposite results to the orientation discussed by supporters of this model.

Resources are divided into two groupings: resources that help for differentiation or help cost efficiency.

Firms following a differentiation strategy invest in research and marketing to develop products and services that are perceived as unique by customers.

They create innovative products/services relative to competitors, thus allowing them to generate a demand which is inelastic, leading to high profit margins.

Firms following an efficiency based strategy develop resources that allow for cost minimization through economies of scale and configuring the value chain. These firms create value by providing customers with products/services at lower prices relative to their rivals, resulting in above average returns.

Both strategies are considered viable options for competitive advantage. Therefore, firms that follow either strategy should do well in international markets, as their relative competitive strength in either of these two resources should enhance internationalization performance.

A firm's research and marketing capabilities tend to attenuate the performance between internationalization and performance.

3.2 Competitive Advantage Literature.

Competitive advantage is a theory that looks for express some of the disapprovals of comparative advantage. Competitive advantage theory proposed that asserts and businesses should follow policies that generate goods with high quality to sell at leveraged prices in the market. Porter highlights productivity increase as the converge of public strategies. Competitive advantage lies on the idea that cheap labor is everywhere and natural resources are not essential for a good economy. The other conjecture, comparative advantage, can escort countries to focus on exporting preliminary goods and raw materials that ensnare countries in economies with low wage owing to conditions of trade. Competitive advantage tries to correct this thing by focusing on leveraging economies of scale for goods services that gain best prices.

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Competitive advantage happens when an organization gain or create a combination of characteristics that allow it to do better than its competitors. These characteristics can contain admission to natural resources, or admittance to highly skilled human resources. New technologies like robots and information technology to be included in the product, or to help in making it.

Information technology has become notorious part of the contemporary business world which it can be a factor to competitive advantage by defeat competitors regarding the presence of internet. The central issue of information allowance, leading to the increase of middlemen, has been an important obstruction in capturing competitive advantage. Through exploiting the internet as a middleman, the vendor of data to the final customer, businesses can capture a competitive advantage through generating an efficient website, that in the past needed intensive effort to find the most appropriate middleman and taming the relation.

The competitive advantage is the capability acquired via characteristics and resources to make a higher level of competencies than others in the same industry market. The revise of such advantage has concerned research interest because of the new issues regarding excellent performance levels of companies in the current competitive market conditions. A firm has a competitive advantage when it s applying a strategy that creates value not concurrently being applied by any present player. Successfully applied strategies would leverage a firm to outstanding performance by simplifying the firm with competitive advantage to excel. To capture competitive advantage a strategy at business level influences several resources over which it has explicit control and such resources have the capability to create competitive advantage. Excellent performance findings and dominance in production resources expresses competitive advantage.

Competitive advantage is the capability to stay in front of current or prospective competition, so good performance attained via competitive advantage would ensure leadership in the market. Also it supports the knowledge that resources acquired by a firm s business strategy would have an impact on creating competitive advantage. It is a tool that exploits the resources and generates competitive advantage, so, vital business strategy might not be sufficient unless it has control over extraordinary resources that has the capability to generate such an outstanding advantage. As a summary, competitive advantage is a major pillar of outstanding performance and it would ensure endurance and renowned position in the market. Outstanding performance being an ultimate goal of a company, competitive advantage is the basis expressing the importance to develop same.

Previous research has cut short of explicit dimensions of competitive advantage; abilities, researches on globalization regarding professional service companies are few, and researches linking internationalization to competitive advantage have been irregular.

The resource-based view of the corporation expresses them as combination of abnormal abilities that lead to competitive advantage. The study of companies variation as a cause of competitive advantage has been discussed many decades ago, however it is seen as distinct organizational theory of the firm beginning with an initially proposed that resources and products are the two sides of the coin. The company would gain above average leases if it is capable of acquiring factor endowments at a lower price of the definite discounted value of factor to the company s activities. Those crucial resources are built up rather than acquired and the steadiness of a firm s asset situation depend on the easiness that assets can be replaced or duplicated. The asset is considered as strategic, it has to be non tradable, imitable or substitutable. In order to give continued competitive advantage, resources have to be precious, uncommon, improperly imitable substitutable. Competitive advantage has been built based on main pillars; excellent resources, limitless competition, and flawed resource movement.

3.3 Branding Literature.

Marketing and branding are significant when it comes to major matters of ability to sell products and services in global markets.

Indian firms have used their global raids to gain needed global marketing experience and to get into major technologies, that can be leveraged in the next stage of their internationalization progression, the greater part of Indian firms still have shortage in the needed skills in abroad marketing. Research proposed that these skills are essential in the internationalization subject. In the study of success factors in companies that have a noteworthy international dimension such companies classically have a well established global marketing orientation. This flashes creativity strategies that drive excellent global performance via knowledge of consumers, product development and adaptation and scrupulous alteration of major marketing strategic factors to target global customers with quality and distinguished goods.

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Brand management is considered important for firms from uprising economies that aim to generate consciousness of their services to defeat the liability of being a foreigner linked to emerging countries. Some proposed procedures to create brands in an emerging economy would include:

Firms should elucidate their core basic values and build the corporate brand. The brand s subliminal success would depend on every member in the firm accepting the value proposition of the brand.

Firms have to remodel a more inclusive brand building plan which would generate positive client experiences. Firms have to classify the basic quintessence of the brand to be perceived wherever sold. Firms must use the value proposition of the brand as the major element of the firm s strategy and business policy.

Firms have to measure the brand building efficiency by an inclusive set of measurements that include perceived value of the customer, satisfaction, share of wallet, retention, and customer advocacy.

One planetary example of global brand generation of Indian firms is the Tata Group. The Group focus of the global media of its international mergers and acquisitions acts, like the buyout of Corus Steel, Jaguar and the Land Rover brands, and its appealing corporate core values emphasizing comprehensive growth.

Rumbling cultural economy study into forming and qualifying goods focus on the deep relation between brands as an object and branding as practice. In specific, branding is an act that gives meaning to products and so increasing the profitability.

brands, branding and the identities connected to them are be major items for generating an distinctiveness for a product or service, and in so support to shape and even out the service.

Brands enable a company to differentiate its products from competitors. Also, brands image and reputation linked with them have been recognized as instruments for identity instruction in the company.

Workers repeatedly develop their behavior based on the brand image as well as identities anticipated by the top management of the company in public relations. So the manner managers maneuver the brand affects workers engagement with customers.

The significant role of brand reputation has momentous insinuations because of the difficulties associated with structuring the product they present something that is predominantly noticeable in the industry.

One upshot of this dependence on reputation is the creation of professional services firms with conspicuously analogous identities and brands. A fascination with professionalism, customer service and the progression of a skilled employees means companies focus on the same pillars when characterizing their brand.

nevertheless, while this context on brands and reputation is enlightening in divulging how these cultural features are important in soothing the products which Professional Service Firms offer consequently for the time being at least alleviating the markets in which they do business it says much less about how strategies are employed to generate new markets as Professional Service Firms go international on the broader disregard of the branding.