International Operations Management - Essay Example

International Operations Management Introduction: The management of operations becomes essential since every business prefers to expand and increase their operations thus spreading across the world. When such internationalization of a company occurs, several external factors play different roles influencing the operations thus proving it to be difficult to assume any single measure for the benefit of the organization. The process of internationalization for a company is essential since in order to be established and successful, companies cannot expect to ignore the rest of the world, or remain focused to only the country of its existence. Moreover, when a company tends to get internationalized, it gets the opportunity to learn the concepts of businesses that prevail in other countries, and thus take advantage of such knowledge in their operations affecting the results of the business positively. In the process different business strategies are also learnt and shared by the companies (Plenert, 2002, pp.35-38). The present study focuses on the international operations management and the related theories and considering the Unilever Company and studying the motivation, benefits, process and form of internationalization. Internationalization: Its Motivation, Benefit, Process and Form: The primary motive of a company trying to be global or become internationalized is to earn competitive advantage over other companies playing in the same industry but in other countries, with the help of the advancements in their knowledge and expertise. Motivations can be proactive or reactive that leads a company towards internationalization. Proactive motivations generally result from the company’s intentions to gain competitive advantage over others. A reactive motivation arises when a company plans to internationalize on requirement in a particular economic status of the country or the business. In many cases, expansion of a business to other countries proves to be beneficial in handling the pressures of competition from other companies. The several benefits that underlie the process of internationalization include the company’s being able to spread across the world thus reaching out to greater number of customer and shareholders. Moreover, the company gets to learn the new technologies and processes prevailing or used in the other countries and businesses (United Nations, 2009, p.9). Thus it can be understood that some companies follow the process for the enhanced results for their businesses, while others indulge in expansion as a result of the need for the company. Now in order to process the internationalization of a business, proper method needs to be followed such that the company does not experience a failure. This requires management committees to get involved and decide efficiently on the utilization of resources available to the company. The investment requiring finances is an essential factor that needs sufficient decision making. Also, since internationalization would involve expanding the businesses to other countries, several difficulties or problems might arise that the company should be able to encounter and handle effectively (United Nations, 2009, p.10). As far as the process and form of internationalization is concerned, the process would depend on the motivation of the company, its internal and external handling of operations, its similarity with the foreign market, the locations where the company already has its operations, as well as the mode that the company follows in performing its functions (United Nations, 2009, p.11). Considering these motivations, benefits, processes and forms of internationalization of a company can be understood. In the following section, the study would focus on the Unilever Company and its internationalization and try to associate the company’s state with the theories of internationalization. Unilever Company and its Internationalization: The Unilever Company is an extremely popular company and has its presence felt internationally. The company has always focused on expanding its business that reflected significant motivations on the part of the company’s management teams. The success of the company has had relevant associations with its accessing different foreign markets. It has also been observed that the motivations of the company have changed over time depending on the advancements in its products, the life cycles that the products involve and the thereby profit margins planned by the company. The company in its present state is considered to be a successful international firm serving its customers with satisfying products (Edwards, 2007, pp.77-78). In this context it would be preferable to have an overview on the internationalization of the Unilever Company that has been taking place over the years thus reflecting on the company’s presence across the world. Studies reflect that until the 1930s, the company had gone through stages of depression and economic deterioration. However, with time, and on and from the 1940s, the company started internationalizing and expanding in the food markets. During the 1950s and the 1960s, the company engaged itself in several new products and advancements and involved in more and more acquisitions and market entries. By the 1990s and thereafter, the company had and has its focus on internationalizing in the Central and Eastern regions of the European countries. With such internationalization strategies, the company keeps its focus on satisfying its customers and gain competitive advantages (Our History, 2011). Internationalization of the Unilever Company and Its Associations with the Theories of Internationalization: From the above studies, it is clear that the motivations and the benefits of the process of internationalization require the company to have its focus on the processes and the form in order to create its position in the global industry. There are different theories in relation to the concept of internationalization that include the economic, learning and the network theories. The process of internationalization involves the exporting of products as a primary step (Kuada & Sorensen, 2000, p.8). John H. Dunning had presented the eclectic (OLI) paradigm of international production that proves to be one of the significant economic theories for internationalization. According to this theory, the international growth or production and thus the expansion of a company depends on the competitive advantage that the company has over its competitors. Also, the company’s interests in the process finding it to be essential for its success are significant. A third factor that this important according to this theory is the company’s ability and interest to spread its value-added products or services to the countries and the customers where the company intends to expand (Dunning, 2001, p.176). Thus relating this theory to the Unilever Company, it can be understood that the success of the company has been possible owing to the competitive advantage that the company gains over its competitors. Moreover Unilever Company, as studies reveal, has always had its focus on spreading its products across the world, and expanding its business slowly and gradually. Thus in order to fulfill its further objectives of expanding in the European countries, the company needs to continue its focus on the concepts of this eclectic theory as suggested by Dunning, and which has provided the company with benefits over the years. The Uppsala model reflects one of the significant learning theories for internationalization of companies. This theory focuses on the learning of an organization about the factors necessary in the process of internationalization. The model thus stresses on the fact that knowledge regarding the foreign market as well as the requirements of investments are highly essential, the lack of which might prove the process of internationalization for the company to be a failure. Having prior knowledge on these issues as well learning from experiences thus assist a company to encounter lesser market and other relevant risks (Forsgren & Hagstrom, n.d., p.4). In this context it can be understood that the success of Unilever Company has been to a great extent related to the extensive knowledge that the company gathered while it planned for its expansions. If the company has plans to further expand across the European Countries, then Unilever would require learning about those countries business strategies and other business related information significantly to assist the entry of the company and create its position in the market. The importance of learning and knowledge regarding the foreign markets can be understood since every country has their own level of business strategies and perspectives without learning which a company would find it very difficult to adjust in the new business environment. The other model related to the networking theory associates with the life cycle of product that to a great extent is responsible in determining the internationalization requirements and measures for a company. As Vernon had presented the international product life cycle theory, it reflects that depending on the stage of the product- new, maturing or standardized- the internationalization of the business would depend (Kuada & Sorensen, 2000, p.15). Thus it can be understood that when products are in the new stage, internationalization might not prove to be a suitable step for the company’s success. In order to create a position in the market as well as satisfy the customers, the products are required to be in a standardized state. Thus considering the case of Unilever Company, if the company has plans to produce new products, then before internationalization, it should take time to mature and standardize the product in its home country and on getting the successful positive feedback from the customers, might try to go global. Conclusion: The study focused on the process of internationalization with respect to the Unilever Company and found that the economic, learning and network theories are significant in the understanding of the process. The company has been found to be highly successful in its way of globalizing and has plans for further expansions. Thus depending on the motivations of the company, the internationalization process may be applicable to the company while following the theories since the theories are meant for the understanding of the implications of the right and wrong measures that a company might consider in the process. Thus it can be concluded from the study that focusing on the theories and knowledge, and depending on the motivations, the Unilever Company might further execute its plans for internationalization. Reference 1) Dunning, J.H. (2001), The Eclectic (OLI) Paradigm of International Production: Past, Present and Future, International Journal of the Economics of Business, Vol.8, No.2, pp.173-190, available at: http://biz.konkuk.ac.kr/community/upload/Dunning1.pdf (accessed on January 9, 2012) 2) Edwards, T. (2007), International Human Resource Management, India: Pearson Education India 3) Forsgren, M. & P. Hagstrom (n.d.), Ignorant Internationalization? The Uppsala Model and Internationalization Patterns for Internet-Related Firms, snee, available at: http://www.snee.org/filer/papers/361.pdf (accessed on January 9, 2012) 4) Kuada, J.E. & O.J. Sorensen (2000), Internationalization of companies from developing countries, London: Routledge 5) Our History (2011), unilever, available at: http://www.unilever.com/aboutus/ourhistory/ (accessed on January 9, 2012) 6) Plenert, G.J. (2002), International operations management, Frederiksberg: Copenhagen Business School Press DK 7) United Nations (2009), Patterns of Internationalization for Developing Country Enterprises (Alliances and Joint Ventures), Pennsylvania: United Nations Publications Read More