Internationalization refers to the channel in which an organization can gain access into a new market. This paper will focus on the various internationalization strategies that a firm can use to diversify its products and services. Licensing
Licensing is whereby an organization charges a fee or royalty as a result of using its technology, brand or expertise (Friesner 2014).
Licensing therefore involves giving a foreign organization the right to create a product in a foreign country at some fee. Although the licensing firm will therefore be able to cut a lot of costs, its overall profits will be limited to the fees collected from the local organization. Franchising
According to Friesner, Franchising implicates that the franchiser provides branding, ideas, expertise, and other aspects needed for a firm to operate internationally, to the franchisee (2014).
Management of these firms is usually controlled by the franchiser. Companies such as Domino’s Pizza, Coffee Republic and McDonald’s Restaurants have adopted this method of internationalization. Turnkey Contracts
Turnkey contracts are key strategies that are used to construct large plants. Friesner points out that turnkey contracts often includes the training and development of main workers wherever skills are sparse (2014).
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A turnkey contract therefore, the client is usually left out of the construction process since the contractor is the one with the duty of handling all decisions and problems related to construction. International Agents and International Distributors
A company can use agents and distributors as a strategy of entering an international market. Organizations contract agents to market their products on their behalf in foreign countries (Friesner 2014).
Therefore, agents do not have the real ownership of products but they are entitled to a commission on the goods that they have sold. Distributors are also similar to agents (Friesner 2014).
However, the main difference between them is that distributors have the ownership rights of the goods. Therefore they possess the absolute right to market the products and sell them at their set price in a bid of making profit. Strategic Alliances (SA)
Strategic alliances are also ways that a firm can enter into a foreign market. According to Friesner, Strategic alliances is a term used to describe an entire sequences of different connections between corporations that market their goods internationally (2014).
At times, these connections are between competitors. For instance, a shared manufacturing deal such as Toyota Ayago which is also marketed as a Citroen and a Peugeot. In strategic alliances, companies remain autonomous and separate. Joint Ventures (JV)
A joint venture (JV) refers to a business treaty whereby organizations reach an agreement to develop, new entity and assets for a finite period time by cumulatively contributing equity. They usually take over control of the enterprise and subsequently share profits, expenses and assets. Friesner argues that “Joint Ventures tend are equity-based” (2014).
For instance, a new corporation can be formed up with the merging parties owning a share of the new company. Companies form up joint ventures for a couple of reasons which may include access to technology, gaining entry into a foreign market, access to distribution channels among others.
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The Global Product Company concept means ”to concentrate manufacturing – and ultimately other activities – wherever in the world it could be carried out to GE’s exacting standards most cost-effectively”. That means that the production is moving to countries where people are mostly underutilized (the example given in the case study tells about engineers from Eastern Europe, who cost only $1,5/h). ...
Exporting
Exporting can either be direct or indirect. Direct exporting is whereby an organization essentially makes a guarantee to market internationally on its own behalf. This therefore gives it a greater control of its products and operations in the international market. On the other hand, indirect exporting is whereby an organization uses intermediaries to export its brands (Friesner 2014).
However, although this method usually requires less marketing investment, the exporting company has little or no control over its products in the international market.
