The Internationalization Process of Companies and Globalization: Why Become Internationalized?
The internationalization of companies comes as a result of their adopting a series of strategies that consider a company’s resources and its strengths as well as the resulting opportunities and weaknesses. However, there are many different types of international companies. Would you like to know what they are?
We are dealing with a universal process that is marked by:
- An increase of international financial flows: stock exchanges are the economic centers for globalization.
- Growing trade: improved and more economical maritime transportation promotes international trade.
- The globalization of production: companies identify each phase of production in the corners of the globe they consider to be most suitable.
- Interrelations around the globe: a decision that is taken by a government, a large company or a financial institution triggers reactions in the rest of the world.
Once we have understood the whys of globalization, the question to be answered is, would it be possible today to operate only in our country or does internationalizing make sense?
” Thanks to globalization, we are able to acquire products at lower costs, gain access to new technologies and know-how and drum up new businesses.
This being so, we can conclude that internalization is much more than merely exporting goods, as it allows activities to be carried out that are beyond the usual and original environment of the company. In this way, the organization can take advantage of the opportunities that exterior markets offer and face up to international competition. At the same, a time a profound transformation takes place in a company’s philosophy and procedures, as well as change from a reactive position to a proactive and strategic one. Therefore, thanks to globalization we are able to acquire products at lower costs, gain access to new technologies and know-how and drum up new businesses.
Also, internationalization is not just limited to large or the well-established companies, but rather the most agile and prepared ones. There are different types of international companies:
- Exporter: an enterprise that is implemented nationally that exports its products abroad. Its key activities are centralized while distribution is decentralized. The parent company conducts its development of knowledge and transfers it all to other countries.
- Multinational: operates in many countries and each subsidiary is independent. They are focused on adapting their products to serve each local market.
- Global: centralized yet with international implementation. Implementation of the parent company’s corporate strategies. Its products are sold with the same brand image and trademark in all markets.
- Trasnational: large enterprise that is focused on the production of goods and services that has subsidiaries in different countries, therefore enabling it to respond to local markets and giving it the flexibility to transfer both the experience and innovation that is found in some of these countries to the entire organization.
So what category does Abengoa fall into? According to these definitions, it would be a global enterprise that has the same operating structure no matter where it is found geographically, and is one where know-how is developed and cultivated from the parent company.