Making the business global is now a common thing for many companies. Renault, Nissan Motors and Daimler have made a common arrangement which helps share their technologies and other aspects which has helped them to compete in a better environment and has played a crucial part to develop the business for all these companies.
The concept of making a global business is nothing new. There are plenty of Multinational companies which do their business in two business models. One of them is Multidomestic Corporation. In such companies the business is spread worldwide and the management is not done by the home country. Rather than that these companies hire local people to handle the management of their company in any particular company. In this kind of polycentric nature of business the local people will understand the local characteristics of the customers and accordingly they will promote the business. For example Nestle does not sell the same products in United States and Europe.
In case of global companies the management is done from the home countries but they keep a very strong control and hold in the various countries to promote their business in the different countries. This kind of global trading can be considered as ethnocentric. In such cases the decisions of the management is done from the home countries. Some of such companies are Merrill Lynch, Sony, Starwood hotels, Deutsche bank and many more.
Transnational MNCs are also becoming more and more popular day by day. In such kind of global trade the company follows the geocentric attitude. Companies like IBM or Ford are legally having their home countries but they have a strong presence in the other locations. They believe in a concept that they will not create their base depending on a particular country. The effectiveness and the efficiency of the company are done globally in this case.
To make the company international different companies have different approaches. Some of the companies believe in the concept of outsourcing. In this process the company tries to buy products or hire people from the countries where they can find it in cheapest price. In this way they can make the process more cost effective. However, in this process is the investment is bigger and this is why the risk factor will be more.
At the same time the companies also try to export their domestic products to the other countries. At the same time they also import products from the other countries and sell them in their country. In this process the investment amount is less and because of the same reason the risk factor is less.
Franchising and licensing are considered to be the other two processes of making the business international. The Franchising module is taken by the service industry and the licensing thing is followed by the manufacturing companies. In the first process the business methods of another brand is taken by a smaller company which is the Franchise. In the second process one company takes the brand name of the other reputed company and manufactures products and sells the same to the customers. Against the same they pay a large amount to the branded company.
Now, when a company becomes international and does their business being an international brand for longer time their managers can think more about the foreign investments. Through the process of Strategic alliance the investment can be increased. In this process the company makes partnership with the foreign companies and share the knowledge and resources to manufacture new quality products and sell them in the foreign countries. For example a new jet engine was produced by Honda when they made partnership with General Electronics.
When one company ties up with the other foreign company to provide a service or manufacture products then it is considered as joint venture. In this process huge amount of resources are shared between the two companies and as a result it also involves huge amount of risk factors. So, before plunging into this sort of model of business a company needs to gain experience being an international brand for some time in any particular business field.