A report for organization expansion into global sector Assignment

A report for organization expansion into global sector - Assignment Example The third section deals with overall strategies that any global firms should take when initializing internationalization processes. The fourth section deals with specific entrant strategies that Clippy should take. The fifth and final section deals with the overall recommendations and conclusions on how Clippy should internationalize. Introduction Clippy bags is a London operation that seems like its time has come. Specializing in customizable bags that may be designed with the individuals’ favorite photographs or print, the bags may become the next big thing. That said, Clippy must roll out a careful globalization plan if it is to capitalize fully on its idea. If it attempts to globalize too soon, in the wrong markets, or with the wrong plan, then it may not be successful in all markets, which might lead to the demise of the company. Further, if it does not partner with domestic firms in the targeted countries, at least at first, then it may succumb to any number of pitfalls that would cause it to fail in that market. These pitfalls range from regulatory hurdles to cultural barriers that are subtle and must be mastered by individuals who are native to that country. The following report recommends the proper strategy for Clippy to use to internationalize. First, it must research countries with the proper analysis of the political, economical, social and technological factors (PEST), along with doing an analysis of the rivals in each country and the relative strength of buyers verses suppliers in each country, using Porter’s Five Forces. From there, it should roll out a gradual strategy of internationalizing, beginning with imports/exports to these countries combined with foreign direct investment. From there, it should gradually establish a presence in each country with a joint venture strategy, followed by a parent-subsidiary strategy, with finally implementing a strategy of opening up retail chains, along with manufacturing and distribution cent ers in these countries. Therefore, the strategy for Clippy is based upon the internationalisation process (IP) model, which states that firms must first acquire market knowledge and gradually internationalize in a series of steps. This reduces the risk that firms take when entering foreign markets. Moreover, countries with smaller cultural distance, as explained below, are the countries that will be the first countries to enter, according to the IP theory, followed by countries with gradually larger cultural distance (Eiche, 2010, p. 6). These are the steps that Clippy should take to ensure success. Exporting and Importing One way that Clippy can get involved on the international stage would be importing/exporting her goods. International trade is important to a growing firm, as it is linked to a firm having higher productivity, a larger size and greater capital intensity then before it begins to export/import (Bernard et al., 2009, p. 514). Further, multi-national companies who eng age in importing and exporting pay higher wages than firms which do not do either of these, and also tend to be the leader in innovation in their respective industry (Bernard et al., 2009, p. 514). Moreover, trading tends to be concentrated in a small number of firms. For instance, Bernard et al. found that the top 1% of firms, in terms of international trading, accounted for 82% of all trades in the United States (Bernard et al., 2009, p. 515). Moreover, while most firms trade only a small percentage of goods to a