Monday, 6 May 2013

The Five Simple Stages of International Development

stages of international development
Any business that is working on an international scale goes through five stages of development. These stages relate to the building of relationships as well as the structure of their operations.

1.  The domestic company exports their goods often through distributors and local dealers based in other countries. At this stage the impact this has on the organisational structure of the firm is quite small as the corporate headquarters are able to handle everything.

2.  One the first stage has been successfully mastered it is time to establish the sales company and begin opening offices in other countries. By doing this it is possible to eliminate the middle man and take a lot stronger control of the market.  In addition to new sales offices it is necessary to open an export division who will take control of the sales offices overseas.

3.  The third stage is when manufacturing facilities are added to the sales offices in the most beneficial countries. An international division is opened and this is responsible for the business functions that take place abroad.

4.  International investment is the fourth stage. Establishing the local operating division in the host country is able to ensure that market is served well. Increasing the product line and the capacity of manufacturing in the host countries further establishes the position of the firm.  New companies are purchased which relate to the business and this supports the local operating division enabling self-sufficiency.

5.  Finally the fifth stage involves creating a worldwide resource team, financial strategies and R&D. As a global player the business is able to denationalise marketing, design and manufacturing. The structure is built around product lines, functions, geography and functions. The managers are now in charge of domestic and global issues and conducting research helps to increase international development further..

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