Advantages Of Internationalisation In Volkswagen

Great Essays
Introduction

There are two internationalization strategies which play an active role behind the development of small and medium sized enterprises (SMEs): exporting and foreign direct investment (FDI). They either act jointly or individually to affect the growth of such firms. FDI is more effective than exporting strategy for the growth of SMEs. A strategy which incorporates high rate of exporting with high FDI will have obviously higher rates of firm growth. Those firms who take up the internationalisation strategy at the initial stage have better chance of prospect and growth than those who internationalise late (Loane & Bell, 2006).
Traditionally SMEs have a small financial foundation, domestic target and limited geographic opportunities.
…show more content…
International car industry is a good example of such type of internationalisation. Volkswagen intends to explore international markets with its product. Many small suppliers had to internationalise in order to match with Volkswagen as there exists an interdependent network of relationships. In order to avoid competitive disadvantage the small and medium sized suppliers had to forcefully follow the path of Volkswagen’s international steps (Coviello & Jones, 2004).
Another reason to choose internationalisation activities is to survive in the market populated with foreign competitors. These foreign competitors follow a very aggressive policy to capture the major share of the market, so it is better for the domestic firms to expand their focus on international markets. There is a positive change in the general economic climate of the world. This positive change is providing incentives to the firm to think of expansion beyond boundaries. Many firms and companies are finding it easy to take up internationalisation activities. Earlier there used to exist strong market entry barriers that demoralised them from taking global steps (Macpherson & Holt, 2007). These days international expansion reaps more benefit for companies compared to earlier days. Eastern European and Asian countries are newly emerging markets for such businesses as the market development is in its infancy stage in these countries. These new markets involve risks and demands thorough planning before venturing. Compared to saturated Western markets, these emerging markets promise better opportunities and huge profit margins by sharing a respectable market

Related Documents

  • Improved Essays

    There appears to be high-quality proof that global trade influences business growth in an encouraging manner through making smooth capital buildup, business organization promotion, scientific advancement as well as institutional development. Particularly, increased introduction of resources and intermediary goods which are hard to obtain in the household market might have an effect on the growth of amount produced in manufacturing. Further dynamic contribution to the worldwide market through promotion of abroad sales causes most intense antagonism and upgrading about efficiency. Learning-By-Practice might be extra helpful in the abroad sales industry on account of the awareness and expertise overflow outcomes. Additionally, the advantages of worldwide business are…

    • 973 Words
    • 4 Pages
    Improved Essays
  • Superior Essays

    Market Penetration Strategy When a company decides to enter a new market, it's essential to use market penetration strategy. The aim of market penetration is to effectively use your product, enter the market as quick as possible and seize a large market share. Furthermore, market penetration is frequently used a measure to determine, whether your product or a service is capable of capturing a fixed percentage of the market. Although market penetration strategy doesn't make any radical changes to the firm's corporate marketing strategy, it has an unbelievable potential to grow profitability and revenue. Also, if a business plans to increase market penetration, it's important to implement certain tactics & strategies that will increase your…

    • 1241 Words
    • 5 Pages
    Superior Essays
  • Superior Essays

    It also promotes trade between members by the elimination of the partitions, and increase the distribution of capitals, by boosting a competitions between the members that provide more stimulant for the invention of modern changing technologies. The importance of regional economic integration are: -the regional market that insure a greater market than that was represented by the interior of a single country, economies schedule, internal and external , all that become accessible with the size of the market. -the greater number of markets that are invented would lead to a high degree of specialization of products. So the gains from international trade will increase. -the integration will enhance the number of trade, what will made a change in the cost and price of foreign trade.…

    • 1505 Words
    • 7 Pages
    Superior Essays
  • Improved Essays

    Now globalization has advanced the relationship between the countries and removed the barriers. Thus, local enterprise can enjoy the benefits of foreign investment. When an overseas company invests in a local company, they provide new technology, capital flow and many other opportunities for these companies. Thus, home-grown firms can use these technologies and opportunities to surge the profit. Also, global trade increases consumers of the companies which in turn raises the income of firms.…

    • 990 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Globalization promotes economic growth which mean the world leaders want to create more jobs, and lower prices for consumers. Furthermore, the world leader insist the effect of this process would cause companies to increase competitive which they feel will work in the consumers favor. Another pro to globalization would be it provides an upgrade for developing countries’ capital and technology. By doing this, it assists the developing countries in becoming more established while…

    • 1091 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Argentina Marketing

    • 811 Words
    • 4 Pages

    The advantage of this is it pulls in customers, as there is a large exposure to potential. This can lead to maximisation of communication and effectiveness. However, the message may get lost in the constant bombardment of mass marketing. However, is believed that the pull strategy will be best suited to the Cervena products, due to the size of the potential market and being a consumable good. The pull strategy will also be more cost effective and have a larger reach than the push strategy.…

    • 811 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Domtar Swot Analysis

    • 1683 Words
    • 7 Pages

    Opportunities that exist for Domtar are good potential for venture capital being that Domtar is a long established and successful organization. They also can enter into new markets as their product offerings expand (Weiner Consulting, 2017). Potential threats that exist are tax changes – specifically tax increases and increases in labor costs. Competition will be on the rise as the global market continues to expand which will result in lower profitability due to supply being more readily available (Weiner Consulting,…

    • 1683 Words
    • 7 Pages
    Great Essays
  • Improved Essays

    After going through internet, I had this to quote. www.loc.gov/rr/business/BERA/issue1/trends.htm... As the economy grows slowly at home, your business may have to look at selling internationally to remain profitable. Before examining foreign markets, you have to be aware of the major trends in international business so you can take advantage of those that might favor your company. International markets are evolving rapidly, and you can take advantage of the changing environment to create a niche for your company. Growing Emerging Markets Developing countries will see the highest economic growth as they come closer to the standards of living of the developed world.…

    • 895 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Maclean Supply Chain

    • 1448 Words
    • 6 Pages

    Overall, globalisation has had both good and bad impacts on the global market place. Although it has opened up companies to new global markets with various opportunities, there are now greater risks involved in a company extending its supply chain globally. This is why companies need to consider any system which can help reduce risk as much as possible and help them gain more control of information from suppliers and companies they outsource…

    • 1448 Words
    • 6 Pages
    Improved Essays
  • Great Essays

    Since monetary policy allows more spending and more money the economy will grow to a certain extent. When our economy grows, It will make America more empowering. We want America to be empowering. So lets hope the United States government emphasizes a monetary policy and uses that approach because it will help…

    • 1677 Words
    • 7 Pages
    Great Essays