The stages in the phase model of globalization and level of risk
The world today has developed into a fast-growing market. More and more companies followed the phase model of globalization to achieve organizational goals. It has been defined as a company makes alteration by exporting, contributing cooperative contracts, structuring strategic alliances, and launching new wholly owned affiliates (Williams & McWilliams 2010). The purpose of this essay is to clarify the four phases, to identify the level of risk encountered by providing an example of a Malaysia’s company operating at each stage. Therefore, the aims are mentioned in this area.
The first stage is exporting. Williams and McWilliams (2010) identify that, exporting is to produce products domestically and sell products internationally. Exporting is a long-established operation and has to focus on the behavior of the international manufacturing firms (Khemakhem 2010). It also provides a better research of the products (Williams & McWilliams 2010). For instance, Alumtan Union Metal Sdn. Bhd. (ATUM) is a stainless steel manufacturer in Malaysia. ATUM exports stainless steel pipes to Singapore, India, and multiple countries to meet the foreign countries’ needs (Alumtan Union Metal Sdn. Bhd. 2010). Hence, a company should prepare well for the exporting goods before hand to achieve country’s desires.
According to Williams and McWilliams (2010), the next stage is cooperative contracts which means, an agreement that is signed by two parties by paying a company for the right to conduct business. Licensing and franchising are the two kinds of cooperative contracts. Licensing is an agreement of permission to use its rights, manufacturing or trademarks in a particular foreign market (Williams & McWilliams 2010). Licensing is gradually more in market due to low cost and trade barriers are eliminated (Hitt, Hoskisson & Ireland 2007). Hence, the licensee takes the risk...
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