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Analyze the main reasons why companies decide to internationalize their activities - Assignment Example

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From the research conducted by Kleinert (2004), internationalization relates to creating networks through penetrating into new markets by increasing commitment to resources in varying networks, integration by coordinating the various networks, and by extension through investing…
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Analyze the main reasons why companies decide to internationalize their activities
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Analyze the main reasons why companies decide to internationalize their activities

Download file to see previous pages... With the rush to globalize corporations on the increase, it is of great importance that the reasons behind this internationalization be analyzed. In the work of Rugman (2003), it is evident that corporations internationalize their businesses so as to remain competitive and relevant in the market. This form of networking is evident in the case of Chabros International Group that internationalized its markets so as to stay relevant in the tough economic times of the time (Farah, 2010).
Additionally firms internationalize so as to fit in the current global economy (Czinkota & Ronkainen, 2007). Relationships between varying firms are considered as networks that require co-existence and relationship between the varying complexes. For instance, the manufacturing industries have to create close links with production, distribution as well as service provision. In this case, internationalization is inevitable if a firm has to remain in the market.
Mathis, Rogmans & Albqami (2011) say that there are many risks in the market including the political risk. With the financial and political risks on the rise, notable the global crisis of 2007, and unrests in Middle East and North Africa respectively, Mathis, Rogmans & Albqami (2011) indicate that there was need to change the macroeconomic policies in UAE and Saudi Arabia to reduce the impacts of global crisis on the economy. In this instance, there is need for internalization of the management base of the investors in multinational companies so as to reduce the liability of foreign investors, and the need to incorporate local partners in their corporations.
Cavusgil, Ghauri & Sinkovics (2009) argue that corporations face stiff competition in the domestic market. Internalization for their markets gives them a chance to devise policies that will keep them running in such touch economic conditions. Through setting market policies, corporations are able to react to unforeseen threats from their foreign competitors, and as a ...Download file to see next pagesRead More
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