STAGES OF INTERNATIONALISATION

STAGE 1] DOMESTIC COMPANY :

A company that limits its operations to national political boundaries.
STAGE 2] INTERNATIONAL COMPANY :
Companies that focus on domestic practices but extend wings to foreign
countries. International companies are importers and exporters, they
have no investment outside of their home country.
STAGE 3] MULTINATIONAL COMPANY :
MNCS formulate different strategies for different markets. Multinational
companies have investment in other countries, but do not have coordinated
product offerings in each country. More focused on adapting their products
and service to each individual local market.

STAGE 4] GLOBAL COMPANY :

Global companies either produce in one country and market
globally or produce globally and market domestically. Global
companies have invested and are present in many countries.
They market their products through the use of the same
coordinated image/brand in all markets. Generally there is one
corporate office that is responsible for global strategy. Emphasis
on volume, cost management and efficiency.

STAGE 5] TRANSNATIONAL COMPANY :

Transnational company produces , markets, invests and operates
across the world.
Transnational companies are much more complex
organizations. They have invested in foreign operations, have a
central corporate facility but give decision-making, R&D and
marketing powers to each individual foreign market.

MNC vs Global Company:

1.A multinational corporation, or MNC, is a company which
produces goods and services and has offices in several other
countries while a global corporation or company is a
company which also has trade relations with several other
countries.
2.MNCs usually pay local workers a lower salary rate than
global companies.
3.MNCs have official headquarters while global companies do
not.
4.Global companies sell the same product with their

o domestic
INTERNATIONAL BUSINESS APPROACHES :

I. ETHNOCENTRIC APPROACH :
All key management positions are held by parent country nationals.
The maintenance of domestic approach towards international business is
called ethnocentric approach.
Under ethnocentric approach, the domestic companies view foreign
markets as an extension to domestic market.
II. POLYCENTRIC APPROACH :
The domestic companies, which are exporting to foreign countries using
theethnocentric approach ,find at the latter stage that the foreign
markets need analtogether different approach.
Then, Under polycentric approach, the company establishes
aforeignsubsidiary company and decentralists all theoperations
anddelegates decision-making and policy-making authority to its
executives.

III.REGIOCENTRIC APPROACH :
The company after operating successfully ina foreign country, thinks of
exporting to the neighbouring countries ofthe hostcountry. At this stage,
theforeignsubsidiary considers theregions, environment
for formulating policies and strategies.
However, it markets moreor less the same product with different market
strategies .
Under regiocentric approach subsidiaries consider regional environment
for policy/strategy formulation.
IV. GEOCENTRIC APPROACH :
Under this approach, the entire world is just like a single country for the
company. The companies select the employees from the entire globe and
operate with a numberof subsidiaries. The headquarter coordinates the
activities ofthe subsidiaries. Each subsidiary functions like an independent
and autonomous company in formulating policies,strategies, product
design, human resource policies,operations etc.