International Companies- DB Forum 2
Ashley DeCleene
November 9, 2012
Key Concept and why you are interested in it
My key concept for Chapter 6 is International Companies. According to International
Business: The Challenge of Global Competition, firms include half of the world’s economic
units, not nations. I am interested in International Companies, because this is the industry my
studies have always guided me towards. I studied world politics in college, as well as
international law in law school. Upon studying these issues, I have come across the magnitude
international companies really have in economies. International law intertwines with
international companies, because companies are drawn towards and repelled by countries partly
because of their laws, whether they are tax breaks, land rights, or political turmoil which could
put their employees in danger.
Explanation of the key concept
According to International Business: The Challenge of Global Competition, international
companies are referred to as ICs. ICs decide investments, research, and location on
manufacturing. These decisions are known to benefit the companies through cheaper expenses
and areas in which they manufacture by creating jobs. ICs can receive tax benefits in certain
countries or have cheaper infrastructure. ICs have larger financial capabilities which allow them
to have a large “negotiating position.”
Major article summary
In "International trajectories of Brazilian companies: Empirical contribution to the debate
on the importance of distance", the article focuses on a sample of 109 national companies in
Brazil, and the path the companies took in order to internationalize themselves. Geography is a
very important factor in a company’s quest to internationalize. Not only does geography provide
for lower costs, but it also allows a company to internationalize itself with countries that may
have more in common with the business, such as the culture and they way in which business is
handled. Throughout the years, internationalizing to countries further away has been easier;
however, there is the idea of a psychic distance. This is a distance of culture, institution,
administration, and economy. After a study of the 109 companies, this theory stood true. The
study showed 47% of the companies started internationalizing to countries in Latin America.
This was because not only were the countries close geographically, but also psychically.
According to the article, “after many years of accumulating resources and competence,
[companies] expand into international markets, usually through exports.” This allows the
companies to gain economic and influential means to allow for greater negotiation power.
It is important to note that international business is not a clear cut formula. Each sector
varies. The construction and agriculture business can do business more easily with companies
that are geographically and psychically distant than other businesses. Also, even with a
geographic and psychic divide, companies who need more technology, such as aero science, will
move to countries for access to that technology. There are many factors that are taken into
account before a country moves internationally. There is a strategy behind every move.
Discussion
The main article I chose to focus on intertwines with each article I researched by having a
clear focus with international companies (companies other than the United States) and their
strategies on how/why they went international. The main article shows a good sample of
countries and makes the argument that countries start off going international by starting with
countries that are similar to them on both a cultural and geographical level. This helps a
company assimilate more to how their product may be perceived on an international scale, and
how to go about doing business with other countries. Each article implies a certain strategy on
how and why a company goes international. One article focuses on the appeal of China as an
international strategy. Their appeal is the country is economically cheaper to do business in.
However, it makes it clear that countries need to have a certain level of laws in order for a
country to be selected as an international business potential. Another article focuses on British
companies. The article focuses on the strategy of doing research into a market before going
international with the company. It also highlights that just because a company is a success
domestically does not guarantee the company success internationally. There is also strategy
behind beer companies and their international strategy to go into Romania.
Strategy is the key player with each and every article. A strong strategy is the key to a
company’s survival and potential to become a key international player.
Annotated References
Yip, G.S., Rugman, A.M., Kudina, A., (2006). “International Success of British Companies”,
Long Range Planning, 39(3), 241-264. Retrieved from
http://dx.doi.org.ezproxy.liberty.edu:2048/10.1016/j.lrp.2006.07.001.
Picking what industry to internationalize is an art form. Companies must do extensive
research into their market and the new market they intend to internationalize into. Not all
companies succeed on an international scale, even if the company is a leader in their domestic
market. This was shown with British companies. Companies such as agriculture and utilities
proved to be the most successful for British international companies.
Cyrino, A.B., Barcellos, E.P., Tanure, B., (2010). International trajectories of Brazilian
companies: Empirical contribution to the debate on the importance of distance,
International Journal of Emerging Markets, 5(3/4), 358-376. doi:
10.1108/17468801011058424.
The article focuses on a sample of 109 national companies in Brazil, and the path the
companies took in order to internationalize themselves. In general Brazilian companies focus on
internationalizing to countries that are not only geographically similar, but also psychically or
culturally similar. This is not an exact formula. Some industries can thrive in many other places,
such as agriculture and construction, while other industries, such as aero science, need
technology only offered in certain countries.
Miltenburg, J. (2009). Setting manufacturing strategy for a company’s international
manufacturing network. International Journal of Production Research, 47(22), 6179-
6203. doi:10.1080/00207540802126629.
This article focuses on manufacturing strategy. Companies use the skeleton of
manufacturing strategy in order to determine how a company will conduct international
manufacturing. There are six topics to focus on: generic strategies for international
manufacturing, manufacturing networks, network manufacturing outputs, network levers,
network capability, and factory types. Each of these topics help a company take proper course
into manufacturing on an international scale, thus causing them to succeed or fail as an
international company.
Michelle, M. D. (2010). China patent law and implications for international pharmaceutical
companies. Expert Review of Clinical Pharmacology, 3(6), 713-6. doi:
http://dx.doi.org/10.1586/ecp.10.54.
The pharmaceutical industry is becoming more and more international. This is because it
is increasingly cheaper for manufacturing in other countries. This is particularly true with China.
The workforce is much cheaper, thus causing China to be a very attractive option. However, the
problem has always been with pharmaceutical drugs is safety. China has made great strides in
making sure their laws coincide with those similar to laws on an international scale. This then
makes the international community look at China as more of a contender to do business with.
Negrusa, A., Cosma, S., & Dumbrava, P. (2007). Strategic role of international companies for
developing Romanian brewing market. The Business Review, Cambridge, 7(1), 348-355.
Retrieved from http://search.proquest.com/docview/197308146?accountid=12085.
The world beer market is steadily growing in emerging markets. The decrease of
consumption in traditional markets marked with the increase in emerging markets has caused
more interest for traditional markets to go internationally. When looking at markets the
following is taken into consideration: market size, future growth potential, cultural and economic
distance, and the level of political uncertainty. These were why Romania seemed to be a good fit
for international beer companies to invest in doing business there.
