International Management Case Study
1. What are the advantages of a small business going international through incremental stages rather than as a global start up?
There are many advantages of a small business going international through incremental stages, rather than as a global start up. First of all a startup that utilizes the small business stage model where it has an incremental process of internationalization gives that them a much larger chance of sustainability and success, rather than trying to start large which puts them at more risk. This usually occurs passively, where a small business doesn’t solicit international business, but eventually conducts business internationally by filling normal orders, and as the business grows and receives more orders, they also increase the amount of international business they conduct. In the small business stage model of internationalization there are six typical stages that a company goes through. These are: * Stage 1 – Passive exporting * Stage 2 – Export Management * Stage 3 – Export Department * Stage 4 – Sales Branch * Stage 5 – Production Abroad * Stage 6 – The Transnational
These stages transition a small business from merely filling international orders that aren’t solicited, to seeking out export sales, to using significant resources to increase sales which creates a high enough demand to open local sales offices, which leads to production abroad and then finally developing a global network and the company becoming a transnational corporation.
The benefit of a company going through these incremental steps to develop its international business is based upon the company having a strong domestic customer base within their business system. Having a strong domestic business allows the small business to have a solid foundation of revenue which allows them to not have to rely on their international business to survive. This mitigates the risks from having the liabilities of smallness, which are the challenges facing a
There are many advantages of a small business going international through incremental stages, rather than as a global start up. First of all a startup that utilizes the small business stage model where it has an incremental process of internationalization gives that them a much larger chance of sustainability and success, rather than trying to start large which puts them at more risk. This usually occurs passively, where a small business doesn’t solicit international business, but eventually conducts business internationally by filling normal orders, and as the business grows and receives more orders, they also increase the amount of international business they conduct. In the small business stage model of internationalization there are six typical stages that a company goes through. These are: * Stage 1 – Passive exporting * Stage 2 – Export Management * Stage 3 – Export Department * Stage 4 – Sales Branch * Stage 5 – Production Abroad * Stage 6 – The Transnational
These stages transition a small business from merely filling international orders that aren’t solicited, to seeking out export sales, to using significant resources to increase sales which creates a high enough demand to open local sales offices, which leads to production abroad and then finally developing a global network and the company becoming a transnational corporation.
The benefit of a company going through these incremental steps to develop its international business is based upon the company having a strong domestic customer base within their business system. Having a strong domestic business allows the small business to have a solid foundation of revenue which allows them to not have to rely on their international business to survive. This mitigates the risks from having the liabilities of smallness, which are the challenges facing a