STAGES OF INTERNATIONALIZATION 1. Domestic company: Most international companies have their origin as domestic companies.

The orientation of a domestic company essentially is ethnocentric. A purely domestic company operates domestically because it never considers the alternative of going international. The growing stage-one company, when it reaches growth limits in its primary market, diversifies into new markets, products technologies instead of focusing on penetrating international markets. A domestic company limits its operations, missions, vision to the national political boundaries. This company force its view on the domestic market opportunities, domestic suppliers, domestic financial companies and customers, etc.. These companies analyze national environment of the country, formulate the strategy to exploit the opportunities offered by the environment. The domestic companys motto is If it is not happening in the home country, it has not happen. However, if factors like domestic market constraints, foreign market prospects, increasing competition etc. make the company reorient its strategies to tap foreign market potential, it would be moving to the next stage in the evolution. A domestic company may extend its products to foreign markets by exporting, licensing and franchising. The company, however, is primarily domestic and the orientation essentially is ethnocentric. In many instances, at the beginning exporting is indirect. The Company may develop a more serious attitude towards foreign business and move to the next stage of development, i.e., international company. 2. International company: Some of the domestic companies which grow beyond their production and/or domestic marketing capacities thinking of inter-nationalizing their operations. Those companies who decide to exploit the opportunities outside the domestic company are the stage 2 companies. International company is normally the second stage in the development of a company towards the transitional corporation. These companies believe that the practices adapted in the domestic business, the people and product of domestic business are superior to other countries. The focus of these companies is domestic but extends its wings to the foreign countries. The orientation of the company is basically ethnocentric and the marketing strategy is extension, i.e., the marketing mix for the home market is extended into the foreign markets. These companies select the strategy of locating the branch in the foreign market and expand the same domestic operations into foreign markets. In other words, these companies extend the domestic product, price , promotion and other business practices to foreign market. International companies normally rely on the international business.

3. Multinational company: Sooner or later the international companies learn that extension strategy will not work. When the orientation shifts from ethnocentric to polycentric, the international company becomes multinational. In other words, when a company decides to respond to market differences, it evolves into a stage three multinational that pursues a multi-domestic strategy. The focus of the stage three company is multinational that pursues a multinational or, in strategic terms, multi-domestic. The marketing strategy of the multidimensional company is adaptation. It starts responding to the to the specific needs of different country market regarding product, price and promotion. In multinational companies each foreign subsidiary is managed as if it were an independent city state. The subsidiaries are part of an area structure in which each country is part of a regional organization that reports to world headquarters. 4. Global company The global company will have either a global marketing strategy or a global sourcing strategy but not both. It will either focus on global markets and source from the home or a single country to supply these markets, or it will focus on the domestic market and source from the world to supply its domestic channel. However, according to the interpretation of some others all strategies product development, production marketing etc- will be global in respect of the global corporation. 5. Transnational company The transitional corporation is much more than a company with sales, investments, and operations in many countries. This company, which is increasingly dominating markets and industries around the world, is an integrated world enterprise that links global resources with global markets at a profit.

Stage and company/ Attributes Strategy Model View of World

Domestic

International

Multi-domestic

Global

TNC

Domestic NA

Home country

International co-ordinated federation Extension markets Ethnocentric Core centralized, others dispersed Adapting and leveraging competencies Created at centre and transferred

Multidomestic decentralized federation National Markets Polycentric Decentralized self sufficient

Orientation Key Assets

Ethnocentric Located in Home country

Role of country Units Knowledge

Single country

Exploiting local opportunities Retained with in operating units

Global centralized hub Global Markets and resources Mixed All in Home country except marketing or sourcing Marketing or sourcing Marketing developed jointly and shared

Global integrated network Global Markets and resources Geocentric Dispersed interdependent and specialised

Home country

Contributions to company world wide All functions developed jointly and shared

REFERNCES http://www.citeman.com/2178-internationalization-stages.html