Extent of Internationalisation in Grocery Retailing and Civil Aerospace Manufacturing
Centuries ago it was a question for companies to operate worldwide but the costs to act global had been too high and the lack of knowledge about other countries, their culture, language and foreign demands caused serious impediment to internationalisation. However, a few decades ago, companies started to run for globalisation which is seen as a process of internationalisation (Margardt, 2007). Today, in almost all major economies of the world, the significance of domestic and/or foreign-based transnational corporations is increasing. The main aim of this literature is to find out the reasons why companies choose to go international, especially in grocery retailing and the civil aerospace manufacturing business. Internationalisation has been defined as developing networks of business relationships in numerous countries by ways of extension, penetration and integration. Internationalisation is a process of increasing involvement in cross national operations, which requires the commitment of resources and the adaptation to international markets, changing the attitude of the firm and influencing the decisions on further internationalisation. Often the main aim of internationalisation is stated as the need of the companies to be able to stay competitive in their respective environment (Ebner, 2001). This literature reviews the various drivers of internationalisation along with the importance of alliances and joint ventures in today’s world.
Drivers of Internationalisation
There are several drivers of internationalisation and several researchers have propounded separate theories to explain what drives a company to go global. While a variety of factors drive retail internationalisation, profit growth is the most important factor that drives internationalisation in the retail sector. In the post-1945 environment, US retailing did achieve a particularly high profile internationally, as retailers from both Japan and Europe looked to the US for inspiration and example. In Europe, for instance, Sainsbury’s was instrumental in introducing the supermarket to post-war Britain in the early 1950s (Akehurst & Alexander, 1996). Internationalisation is one of the most important trends in retailing today and it has accelerated vehemently in the last two decades (Zentes et al 2007). It was less than 30 years ago that almost all of the world’s retail firms were pure national firms with a negligible share in foreign markets. That scenario has changed dramatically. A look at the top 200 global retailers reveals that almost all players except those in the US operate in different countries to establish their business growth (Deloitte, 2006). A decade ago, the literature on international retailing was limited in quantity. The publication of Kacker’s study in 1885 heralded the increasing interest in this issue. From the mid-1980s there was a rise in the number of international retail actions. In this period it was not only the US and European retailers who began to emerge in greater numbers but also Japanese retailers. Nevertheless, the 1980s were the decade of European internationalisation. The development of formalised marketing functions within major UK retail operations in the last twenty years (Piercy & Alexander, 1988) has provided UK retailers with a far more sophisticated planning and procedure than was previously evident within international retail marketing strategies. It has been revealed that today the main impediment to foreign expansion is the domestic market conditions and the regulatory environment. According to the eclectic (OLI) paradigm model (Dunning 1980, 1981, 1988) internationalization of businesses is drive by three types of advantages which are known as ownership (firm specific) and the location of the business (country specific). The ownership advantages are asset specific that is they are related to assets...
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