Rethinking the O in Dunnings OLI Paradigm Free Essay Example, 2500 words

A firm may expand into another nation using techniques such as franchising, exporting, licensing, acquisitions or joint ventures. The technique which a firm would use for entering into a foreign market would essentially depend upon the market conditions, capital procurement and the level of industry competition. Firms are seen to indulge in internationalization mainly for enhancing market opportunities and diversification of risks. Sometimes it is observed that manufacturing in a different nation provides MNE s with cost and resource advantages. This is considered to be one of the main reasons behind internationalization. Without distinctive advantages, a firm would not consider expanding internationally. International expansion requires the investments of much capital and takes many efforts. Hence, the decision to expand internationally would only be feasible if it generates adequate returns. International expansion aids firms to have an international recognition, ultimately, leadi ng to enhancing their goodwill in the international front. Operating in the international market also enhances a firm s possible to operate in a number of stock exchanges. Internationalization is mainly coupled with the motive of enlargement one's market stand. Firms are required to constantly procure market advantages so that their competitive position in terms of size and revenue in the industry can be maintained. We will write a custom essay sample on Rethinking the O in Dunning's OLI Paradigm or any topic specifically for you Only $17.96 $11.86/page Usually, international expansion is undertaken when a firm is in the stage of growth or maturity. In the initial stage of business, a firm should generally focus upon increasing its market strength and develop a strong base. International expansion at this stage might not be suitable as it may lead the firm to get distracted from its main objectives. International expansion is best suited when the firms have set up a good base in its home nation.