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The issue of the internationalization of companies is a phenomenon that has consistently attracted the attention of researchers in the field of management. In the last decade, the focus has shifted from considering the benefits and risks of internationalization to studying the strategies of international companies operating and developing. However, it should be remembered that globalization acts as a kind of institutional environment for global companies, characterized by high uncertainty and risks and a non-monotonous, dynamic nature.
The main incentive for the globalization and internationalization of the company is a significant expansion of market opportunities, both production, and trade.
This is also connected with the benefits gained from implementing an international strategy, namely the growth of the company’s market, economies of scale and learning, and, of course, the advantages of new locations. Many companies from developing countries such as China, India, and Taiwan are active in global value chains in high-tech sectors of the economy (Stallkamp & Schotter, 2019).
However, this fact leads to the fact that there is the broadest range of problems inherent in international companies in these countries. For example, emerging markets often have inadequate government oversight and regulation levels, leading to global companies’ unethical and criminal trading practices. For example, a typical example of this is the exploitation of cheap local labor to make production more affordable for international businesses (Mashan, 2021). This is morally and ethically appalling in the extreme but will have dire consequences for the company in the future.
Given the benefits of international diversification, some firms choose not to expand internationally for several reasons. The most common of these is the reluctance to go beyond the domestic market of their homeland (Paul & Mas, 2019). This suggests either an unwillingness to face the risks of globalization or an initial calculation of opportunities, taking into account only the company’s home market factors. Moreover, an important reason for the rejection of globalization may be the awareness of problems faced with a foreign market, its characteristics, and potential consumers’ culture, religion, and customs. Thus, the global strategy has its colossal advantages and disadvantages that can push the company away from this approach.
References
Paul, J., & Mas, E. (2019). Toward a 7-P framework for international marketing. Journal of Strategic Marketing, 28(8), 681–701. Web.
Stallkamp, M., & Schotter, A. P. J. (2019). Platforms without borders? The international strategies of digital platform firms. Global Strategy Journal, 11(1), 58–80. Web.
Mashan, T. (2021). “Dear Nike, just don’t do it!”: A transnational digital connective action on the issue of forced Uyghur labor at Nike sweatshops in China (No. 272). Central Asia Program. Web.
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