Analyzing Evolutionary Stages in MNC Internationalization Process

This report provides an analysis of the evolutionary stages of internationalization for multinational companies (MNCs). It explores five key stages: domestic company, international company, multinational company, global company, and transnational company. Each stage is defined, and real-world examples, such as Pizza Hut, Starbucks, McDonald’s, Adidas, Coca-Cola, and Nestle, are used to illustrate the strategies and characteristics of each phase. The report highlights the advantages of internationalization, such as faster growth and attracting investment, while also acknowledging potential disadvantages like cultural issues. The conclusion emphasizes the importance of understanding these stages for effective decision-making in global business expansion. The report includes an executive summary, table of contents, introduction, conclusion, and a list of references, adhering to Harvard referencing style.

Running head: MANAGING ACROSS BORDERS
Managing Across Borders
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Executive Summary
The report has assisted in understanding the different evolutionary stages in the
process of internationalization which will be suitable for the growth of the companies
in the international market. It has been seen that there are different kinds of
advantages and disadvantages of the stages in process of internationalization which
includes the faster growth, however on the contrary, there are issues related to
cultural issues which affects the process negatively. With the help of the suitable
examples, the different kinds of stages have been analyzed appropriately.

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Table of Contents
Introduction...................................................................................................................3
Analysis of Evolutionary Stages in Internationalization of MNC..................................3
Conclusion....................................................................................................................5
References...................................................................................................................7

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Introduction
The report assists in analyzing the different evolutionary stages in the
internationalization of the multinational companies. In economics, the
internationalization is defined as the process of increasing the entire involvement of
the different enterprises in the international markets. Internationalization is the
designing of product in such a manner which will be suitable for meeting the different
needs of the users in different countries or which can be adopted in an easy manner.
There are five stages in the internationalization of the different MNCs which will be
suitable for fostering the faster growth and it will be suitable for attracting investment
and meeting the different needs of the customers in a suitable manner.
Analysis of Evolutionary Stages in Internationalization of MNC
While internationalization of the multinational corporations, there are five
evolutionary stages in the internationalization of the MNCs which will be suitable for
growth of the companies in the other markets appropriately.
Stage 1- Domestic Company
It is the first and foremost step in the internationalization process of MNC
wherein it limits their operations, mission as well as vision to the different national
kind of political boundaries. These are the different kinds of companies which mainly
focuses in the domestic market related aspects and they never think of growing
globally (Smagina 2017). In order to expand their business, the companies follow the
diversification strategy for entering in the different domestic markets which helps
them in improving their functions and effectiveness positively.
For instance- In case of Pizza Hut, they have their presence in different parts
of the world, in such scenario, the company has been successful in introducing the
different ham pizzas or burgers which are preferred in different parts of the world. It
is considered to be the diversification strategy which will be beneficial in making the
customers happy by customizing the items (PizzaHut.com 2019).
Stage 2- International Company

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As opined by Engelman, Carneiro Zen and Fracasso (2015), the different
organizations which starts trading in the different abroad countries, there are few
companies which try to internationalize their aspects and operations as per the
demands of the respective country. The international companies hold marketing mix
constantly as well as extend the different operations to the different new countries
and thus, in such scenario, the business model extends the domestic country
prospects and it is practiced in the different foreign countries.
For example- When the different companies in Canada are extending the
different kinds of operations in international countries such as in United Kingdom, in
such scenario, the companies will be trying to address the different market related
requirements first for gaining competitive advantage in the market (Eriksson et al.
2015). In making the scenario more relevant, Starbucks is one such companies
which has introduced their presence in the Indian market and due to the same, they
have included the products in their menu which costs less in comparison to the other
countries in which it is situated.
Stage 3- Multinational Company
As commented by Estrin, Nielsen and Nielsen (2017), in the respective
scenario, the firms become fully fledged multinational companies with the proper
assembly of the different production facilities in several regions or countries of the
entire world. The proper decentralization of the decision-making is common,
however there are different personnel decisions which are being made still at the
corporate level in the headquarters of the company (Alves et al. 2017).
For instance- McDonald’s is one such companies which is performing
effectively and they have their presence in the entire world in different locations
which is suitable for the enhancement of the business operations successfully. The
MNCs play a vital role in different locations and they try to serve the different
customers as per their demands which is efficient in nature.
Stage 4- Global Company
It is the other aspect which is involved in the evolutionary stages of the
internationalization of the MNCs wherein it produces and market the different
products as well as services as per the global strategy (Felício, Meidutė and Kyvik

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2016). The main aspect of the different global companies is to focus on the
marketing of the respective products domestically which will be enhancing the
growth prospects of the company suitably and it will be enhancing their effectiveness
in selling the products.
For example- Adidas is one suitable examples of the global company which
have their presence throughout the world. While selling the different products in the
various kinds of markets, it is necessary for them to sell as per the demands of the
customers which satisfies the needs of the customers thoroughly. In Indian market,
Adidas has introduced several items which can be suitable for the niche group of
customers and it customized their products as per the demands of such clients
(Adidas.com 2019).
Stage 5- Transnational Company
In the respective aspect, the different multinational companies which reach
the particular stage are known as transnational companies as they are capable of
achieving both global kind of efficiency along with local type of responsiveness
(Kraus et al. 2017). These transnational companies utilize the global market along
with resources for the functioning which enhances the growth of the company and it
is suitable for them in managing needs of customers appropriately.
For instance- Coca-Cola and Nestle are the two suitable examples which can
be termed as transnational companies as these are present in different parts of the
world (Coca-Cola.com 2019). They utilize the global marketing and resources for
functioning positively in different markets (Nestle.com 2019).
Conclusion
Therefore, it can be concluded that these are the different five stages of the
internationalization of the multinational corporations which will be suitable for
understanding the importance of decentralization of the decision-making aspects
suitably and in such situations, it is essential for the different companies such as
Coca-Cola or the other companies to attract investments and growth becomes faster
which enhances the effectiveness of the company in an effective manner. On the
contrary, there are few disadvantages of the internationalization which includes
political issues as well as cultural identity issues which affects their effectiveness in

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performing in different countries. Through the evolutionary stages of MNCs, it can be
beneficial for such companies to enhance their growth.

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References
Adidas.com 2019 Adidas (online) Retrieved from https://www.adidas.com [Accessed
on 23rd August 2019]
Alves, M.F.R., Galina, S.V.R., Macini, N., Cagica Carvalho, L. and Costa, T., 2017.
Internationalization and innovation in nascent companies: does gender
matter?. Journal of Small Business and Enterprise Development, 24(4), pp.887-905.
Coca-Cola.com 2019 Coca-Cola (online) Retrieved from https://www.coca-cola.com/
[Accessed on 12th August 2019]
Engelman, R., Carneiro Zen, A. and Fracasso, E.M., 2015. The Impact of the
Incubator on the Internationalization of Firms. Journal of technology management &
innovation, 10(1), pp.29-39.
Eriksson, K., Johanson, J., Majkgård, A. and Sharma, D.D., 2015. Experiential
knowledge and cost in the internationalization process. In Knowledge, Networks and
Power (pp. 41-63). Palgrave Macmillan, London.
Estrin, S., Nielsen, B.B. and Nielsen, S., 2017. Emerging market multinational
companies and internationalization: The role of home country urbanization. Journal
of International Management, 23(3), pp.326-339.
Felício, J.A., Meidutė, I. and Kyvik, Ø., 2016. Global mindset, cultural context, and
the internationalization of SMEs. Journal of Business Research, 69(11), pp.4924-
4932.
Kraus, S., Mitter, C., Eggers, F. and Stieg, P., 2017. Drivers of internationalization
success: a conjoint choice experiment on German SME managers. Review of
Managerial Science, 11(3), pp.691-716.
Nestle.com 2019 Nestle (online) Retrieved from https://www.nestle.com [Accessed
on 23rd August 2019]
PizzaHut.com 2019 Pizza Hut (online) Retrieved from https://www.pizzahut.com
[Accessed on 23rd August 2019]

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Smagina, N., 2017. The internationalization of the Meetings-, Incentives-,
Conventions-and Exhibitions-(MICE) industry: Its influences on the actors in the
tourism business activity. Journal of Economics & Management, 27, pp.96-113.