Assignment on International Business - Multi-national Enterprises

Running Head: INTERNATIONALIZATION
0
International
Business
Multi-national Enterprises
(Student Details: )
1/7/2020

Internationalization
1
Contents
Introduction................................................................................................................................2
Motives of internationalization..................................................................................................2
Market opportunities..............................................................................................................2
Sales Expansion.....................................................................................................................3
Risks diversification...............................................................................................................3
Resources acquisition.............................................................................................................3
Economies of scale.................................................................................................................3
How business internationalize....................................................................................................4
MNE models..........................................................................................................................4
Use of two MNE examples........................................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

Internationalization
2
Introduction
This report is based on identifying the reasons why do firms become Multinational
Enterprises (MNEs). In this context, the paper will find which factors motivate organizations
to engage in international businesses (MSG, 2020). Moreover, this discussion will contain the
procedure of how companies internationalize while exploring the reason why they switch to
become an MNE. With this paper, motives for internationalization will be investigated for
different companies specifically for two real-life examples (Yerkin, Nazym, & Gulmira,
2019). In general, there are so many reasons for which firms get to engage in foreign direct
investment. Thus, this research will be based on internationalization drivers’ theories which
motivate organizations to inaugurate themselves abroad. Here, the aforementioned categories
are efficiency, market, resource and strategic resources seeking motives ( Toni, 2011). It has
been found that most of the companies usually start their operations domestically while
conducting value-added activities in the borders of the native country only. It is because
becoming an MNE typically needs a change of mindset and view to a large extent. Thus, this
paper will explain how businesses internationalize with the help of two MNE examples to
summarize the main findings later.
Motives of internationalization
There can be a number of reasons why companies become MNE and hence these
reasons are usually known as motives behind becoming MNE while engaging in international
business. It is because companies expand internationally for so many reasons such as:
Market opportunities
This motive of an MNE explains the desire for market opportunities exist abroad.
Here, market opportunities may include the absence of competition, favourable changes for
the product into foreign markets, and demand for the organization’s product in international
markets. Thus, a company’s desire to grow through extending from saturated domestic
markets to the international market is one of the biggest motives behind internationalization
(Adams, Jeanrenaud, Bessant, & Denyer, 2016).