Firm growth and M&A ; Firm Internationalisation Essay

Firm growth and M&A ; Firm Internationalisation - Essay Example Internationalization is a multifaceted process. Before a firm can engage in going global, a firm must grow from within. In this context, the firm must be dominant in the home country. When a company has a competitive advantage, it suggests that it has strategies, which it can apply in the global market to survive. The firm is likely to face substantial challenges before it can achieve growth. Once the firm overcomes financial, managerial issues, and gain shareholder’s confidence, then, it can go global (Buckley et al., 2007). Owing to the intention of growing in the external market, the firm can utilize mergers, takeovers, or joint ventures. On the other hand, internationalization involves entering foreign markets. The firms may employ many strategies to enter the foreign markets. This may include licensing, exporting and foreign direct investment (FDIs). Licensing involves giving another company production rights to use the licensed material. The organisation given such rights (licensee) will have paid the other organisation giving the license (licensor) some payment. Exporting is another strategy that companies employ to enter foreign markets. Exporting involves selling of goods produced in the home market of the company to other markets in the world. On the other hand, FDIs involves the intention to obtain a long-term interest in a business, which operates in a different economy (Rugman, 1975). Companies can seek to serve goods or services through licensing. Licensing is the easiest way to enter international markets, and companies prefer this strategy owing to the minimal risk and low investment. Producing in the target market will help the company overcome trade barriers, such as potential cultural distance. This is possible because people in the target market can view the company as an outsider (Rugman and Verbeke, 2004).