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Internationalisation process of firms: theories; motives and influencing factors

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  1. The theories of internationalisation
    1. Internalisation process theory
    2. Internalisation motives
  2. The different entry modes
    1. Definitions, advantages and disadvantages
    2. Selecting a entry mode choice

In today's world, "globalization" is a very commonly used term but there are many ambiguities with respect to its definition, when the phenomena was born and why is it so important for companies? Although this term is imprecise, literature enables us to define it using two very distinct schools of thought. The first phenomenon is called "internationalization" which portrays the growing interdependence among national markets for goods, services and factors which in turn has resulted in the liberalization of trade among nations. The second concept is associated with two aspects namely Foreign Direct Investment (FDI) and the Multinational Enterprises (MNE). In their annual World Investment Report, UNCTAD, the term "globalization" was used by the sense of integrated production activities and strategies adopted by the multinational enterprises. MNE are considered as agents of production for activities such as integration strategies, intra-firm trade, outsourcing and offshore production. This chapter concentrates mostly on trade and investment liberalization. The working definition used here is a marked increase in the movement across national boundaries of goods/services, investment, people and information.

[...] Indeed, theories of internationalisation process, methods of managing business abroad and factors influencing selection entry modes have been developed. The second part will analyse a case study of the company Tesco which is a supermarket. From this literature review objectives research can be given to make this case study. First, the author will analyse the internationalisation process of Tesco. The purpose is to know: - Which method did they choose to internationalise? - Why this method is the best for this company? [...]

[...] Johanson and Vahlne (1977) examined the internationalisation process by investigating the development of knowledge and the building of a commitment within the firm to foreign markets.? (Tayeb 2000, p 141). In fact, they made a basic assumption which is quite simple. For them, market knowledge and market commitment affect both commitment decisions and the way current decisions are performed, which in turn, affect market knowledge and commitment (see fig.2). In this process, the role of knowledge is very important. Indeed, internationalisation requires both general knowledge and market specific knowledge which is obtained mainly through experiences from specific markets. [...]

[...] Internalisation motives The theory of the growth Luostarinen (1979) uses the basic framework of Penrose (1959) and his perspectives on growth as one main reason for internationalisation of the firm. One way for the firm is to seek growth through internationalisation. This is the case with countries like Finland, being a small and open economy where the markets can be found abroad. Then, growth could be obtained through internationalising the firm and capturing new market possibilities, or in the terms of Penrose, through finding new ?productive opportunities. [...]

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