Dilemma of Internationalisation

On the basis of the above context, it can be said that the enterprises know considerably well, which type of strategy of internationalisation they should select. However, after they have decided the effective strategy it is be implemented. But it is commonly found that the implementation of the said strategy is not very easy. Further, it is rather difficult to obtain the anticipated results and effects from the said strategy. These are related to the problems regarding method of management and the organisation of multinational companies and is an important topic of discussion for the Japanese enterprises also. Finally, let us try to consider the dilemma which has originated from the exercise of internationalisation. There are basically two dilemmas which originate as a result of internationalisation progress. These are:

1. The dilemma of economic logic and political logic;

2.The dilemma of management of organisation and management strategy.
In the first dilemma, the enterprise gets sandwitched between economic and political logic. This is an absolutely unavoidable phenomenon which occurs in every case of internationalisation. Many enterprises move and cross the national borders with ease, looking for places with low cost. If the cost is low, any country would like to import and anyone would like to place its production facilities in that country. This is the logic of economy.

In contrast, the human beings do not move from one border to another very easily (in combination with the logic of economy). He lays emphasis on the interest of loss or gain, on the basis of nation as a unit. This forms the logic of the politics and also clashes with the logic of the economy. For example, the trade friction in the automobile industry, which is the prime cause behind the present day economic trade friction between America and Japan, besides the problems of import of rice into Japan, is a typical example of this type.

The second dilemma originates between the management strategy with main focus of economy, and the management of internal organisation. For example, it can be said that the internationalisation of the enterprise activity is inevitable. However, as the enterprise activity expands beyond the borders, it interacts with the geographical problems or the problem of difference in culture or language between the constituting members of the organisation. Therefore, there is a very probability of facing difficulties in communication within the organisation to that extent. As a result, the joint working by all the constituting members of the organisation may not yield the necessary and anticipated effect.

The strategy of internationalisation does exist in the present day enterprises, but is not sufficient. Rather, it is more important to bring about a feeling of commonness among the members of the organisation, which supports the activities and provide the necessary infra-structure in the organisation, solving the problem of contradiction which develops as a consequence of internationalisation. The building of a management concept where the local people as well as the Japanese people can participate with a feeling of belongingness, shall form the key for finding solutions to such problems.

Strategy for Internationalisation types

Multi-national enterprises are in a position to decide the basic pattern of how the countries in which they are present should compete with each other by having international portfolio.

Let us try to understand the patterns which one followed in the actual management strategy adopted by the multi-national countries.

Berthrette & Gosharu have classified the international strategy into three types on the basis of case studies of 9 enterprises. These three types are given below.

1. Global type strategy
2. Multi-national type strategy
3. International type strategy

1. Global type strategy
In the case of global strategy the intensive development and production by present company in the country of origin forms the basis and in this strategy, the efficacy at global scales is given importance.

2. Multi-national type strategy
In this strategy, the overseas subsidiary with higher degree of autonomy carries out the operations, while matching the diversified environment of the respective country.

3. International type strategy
Basically, importance is given to the transfer of technology and knowledge from the parent company in the country of the origin or the overseas subsidiaries.

International Portfolio

The enterprises which are moving into multiple number of countries will have international portfolio (overall combination). The selection of pattern also requires strategic decision.

Let us try to learn in brief regarding the theory concerning the selection here. The first selection concerns the relationship between the individual operations which constitute the portfolio and the making of overall characteristic. The second selection deals with the distribution of roles for respective country. These two selections, of course are not independent of each other.

The first selection deals with the selection of basic policy regarding the way the countrywise competition should be, and the basic selection branches are multi-domestic, global and glocal.

· Multi domestic
This is a policy of adopting the strategy of product, production and marketing, maching the requirements of the respective countries, where the individual country considers it as a diversified existence. The strategy of internationalisation of overall enterprise is the simple composite of the respective countrywise strategies. The degree of cooperation of operations carried out countrywise is not very strong.

· Global
The world is seen as one entity and common products are provided to as many countries as possible if there is common demand trend. The global policy concerns building up a world level system for the product and supply of such goods in the most efficient manner. The respective countrywise strategies form part of global strategy.

· Glocal
The term glocal has been derived by combining glocal and local. This is an intermediate policy between multi domestic and global. In the case of glocal, the policy, which forms the core fore for the global strategy is retained while an autonomous strategy to deal with the requirements of each country is also formulated. For doing so the respective countrywise strategies do not form a part of global strategy and the global strategy also does not work for simplification and harmonisation of the respective country strategies.

The second selection deals with the problems of distribution of roles of the respective countries in the portfolio. For example, there can be a case where the plant responsible for research and development is located in Japan, the production base is located in America and Europe is targeted as sales market.
Various type of patterns can be considered for the selection of such types of distribution of roles.

Various Issues related with Internationalisation

1. Environmental factors
Internationalisation gives birth to problems peculiar to internationalisation. This is because of change in various environmental factors for any enterprise due to crossing of borders with regard to market and activity zones. There are basically three factors, namely the market environment (types of domain, the market structure, business transaction. customs etc.), political system and military system and the culture and language of the nation’s concerned.

The internationalisation involves a situation where the enterprise activity is to carried out under these three environmental factors where these factors from a complex state (two or more than two environments including that of one’s own company).

2. Three movements and the related topics
Let us now see what type of effect internationalisation has on the enterprise activity?

The effect of internationalisation which is visible to the eyes is the working of man, material and money beyond the borders of the nation. However, in the background, there are three movements, namely information resources (technology, knowhow, brand and management control capability etc), added value (the value generated by the organisation; this is almost the total of the manpower cost and the profits) and the culture (life, customs, behavioral pattern and value or standards etc.) These three movements are considered to have big effect on the enterprise activity.

The internationalisation progresses smoothly provided these three movements do not fluctuate beyond a limit with the internationalisation of enterprise.

For example, the fountainhead of international competitive strength cannot be obtained, if the resources like knowhow and brand etc. do not move. The sources of direct investment in overseas production cannot be materialised unless the added value is transferred locally to some extent. The products or the services cannot become acceptable unless the transfer of culture is permitted to some extent. In the event of lack of such flexibilities, there is possibility, of repercussion also.

Considering from the viewpoint of such relationship two issues can be thought of concerning the internationalisation of enterprise activity. One is “strategy of transfer”, in the other words, how to move the three factors which have impact and the second is “how to deal with the problems arising due to the movement”, in another words, how to move these three factors in more effective manner. The enterprise has to select which country it should move to for internationalisation while considering these two issues.