Essay, answering questions:
What are the major motives underlying a firm's international expansion?
How do you measure a firm's degree of internalization?
Do you agree that political risks exist in every foreign country, and why so?
What is your advice for international executives concerning dealing with host country governments?
Executive summary:
The internationalization of business processes is one of the most common trends in the contemporary commercial world. Foreign markets are not only new opportunities for producers but also a single way for them to remain competitive. Today the demand is not local anymore. Companies may have different reasons to go global. However, the only goal of any international expansion is either growth or preservation of its positions and returns. Generally speaking, the motivations for conducting international business include Market motives, Economic motives, Strategic motives, and Political motives[footnoteRef:1]. The motives may vary from one business to another within the activity band around the globe. The measurement of the MNEs' activity scale, their geographical spread and etc. has always been a challenge for researchers. In order to estimate the scale of MNEs' international activity, a chain of special indexes has been elaborated. The international business expansion led to the internationalization of productive activity and economic openness. On the other hand, these processes do not necessarily lead to liberalization of international relations. Political risks are always part of MNEs' external environment. They are unavoidable and are present in every country. Theoretically, political risks can be divided into three groups: Ownership Risk, Operational Risk, and Transfer Risk. International business does not possess many instruments to avoid political risks. However, risk analysis is not the only tool to define and protect businesses against political interference. [1: Oded Shenkar, Yadong Luo, Tailan Chi, International Business, Routledge; 3d edition, August 16, 2014, p. 14] What are the major motives underlying a firm's international expansion?
The internationalization of business processes is one of the most common trends in the contemporary commercial world. Foreign markets are not only new opportunities for producers but also a single way for them to remain competitive. Today the demand is not local anymore. Consumers have access to goods from any other country through the Internet and can choose the cheapest and the most qualitative product. Globalization is not a new term. Companies have always been looking for new demand, but lately, the progress of the world economy, relocation of capital, human resources, technology, and commodities has reshaped the world of trade, forcing the producers to follow the global trend.
Internationalization can be defined as the "Growing economic interdependence of countries worldwide through the increasing volume and variety of cross-bor...
