What is the international operation of an enterprise?
International operation of enterprises means that enterprises break through the boundaries of one country and engage in production, sales, service and other activities in two or more countries in order to seek a bigger market, better resources and higher profits.
Motivation of enterprise internationalization
The specific reasons for internationalization of different enterprises vary widely, and are driven by many factors for different considerations. However, for whatever reason, the internationalization of enterprises is fundamentally based on overall strategic considerations, that is, in order to seek a broader competitive advantage. There are three motives for enterprise internationalization:
(a) Finding new customers for existing products and services.
The most direct motivation for enterprises to engage in internationalization activities is to develop overseas markets and find new customers for existing products and services when the domestic market tends to be saturated. With the development of economic globalization, consumers in different countries tend to converge in demand preferences and consumption habits, which provides the possibility for enterprises to push their products and services to a broader market.
(2) Looking for low-cost resources.
Enterprises look for better and cheaper resources in overseas markets to reduce production costs and gain low-cost advantages. The resources that can bring low-cost advantages mainly include raw materials, labor and technology.
(3) Build core competitiveness.
Core competitiveness is the source of competitive advantage of enterprises and the fundamental reason why enterprises are superior to competitors. Enterprises can expand their business activities from a single domestic market to overseas markets, learn new technologies and management experience in a wider range, and accumulate customer demand knowledge, thus building stronger core competitiveness.
Analysis of enterprise's international operation environment
The international business environment of an enterprise is far more complicated and changeable than the domestic environment. The complexity and variability of the international business environment are intertwined with many factors, including political and legal factors, economic factors and social and cultural factors. Therefore, in the process of internationalization, enterprises must pay more attention to environmental variables and carefully prepare countermeasures on the basis of in-depth investigation of various environmental variables.
(1) Political and legal factors.
The political and legal factors involved in international operations mainly include:
1. Political system;
2. National security;
3. Commodity inspection laws and regulations;
4. Labour Bill;
5. Protection of knowledge products.
(2) Economic factors.
Economic factors that need special attention include:
1. Economic system;
2. The level of economic development;
3. Economic stability;
4. Exchange rate changes;
5. Tax policy;
6. Inflation rate
(3) Social and cultural factors.
Every country has its own social culture. National culture is the values of a country's residents, and these values shape people's ways of behavior and understanding the world. Which has greater influence on employees, national culture or corporate culture? Research shows that the influence of national culture on employees is greater than that of corporate culture. In this sense, enterprises engaged in international operations must deeply understand the local culture of the host country and integrate into the local social and cultural environment with respect and tolerance. In the process of internationalization, the main challenge faced by enterprises is how to formulate and implement effective internationalization strategies in the diverse social and cultural environments of different countries.
International strategic choice.
The choice of enterprise internationalization strategy includes two parts: one is the internationalization strategy of the company; The second is to choose the right way to enter the international market.
(1) internationalization strategy.
The internationalization strategy of an enterprise is the development plan of the company in the process of international operation, and it is the general name of a series of decisions made by multinational companies in order to make the company's growth step into an orderly track and continuously enhance the competitive strength and environmental adaptability of enterprises. The internationalization strategy of enterprises will greatly affect the internationalization process of enterprises and determine the future development trend of enterprise internationalization. The internationalization strategy of enterprises can be divided into three types: country-centered strategy, multinational company-centered strategy and global-centered strategy.
1. Family-centered strategy. The business strategy formulated under the judgment of the interests and values of the parent company aims to take the initiative in international competition and gain competitive advantage with a highly integrated image and strength. The characteristics of this strategy are that the parent company concentrates on coordinating the design, development, production and sales of products, and the management mode is highly centralized, and the management decision-making power is controlled by the parent company. The advantage of this strategy is that centralized management can save a lot of costs, but the disadvantage is that the product has poor adaptability to the local market demand of the host country.
2. Multinational center strategy. Under the guidance of unified management principles and objectives, organize production and management according to the local actual conditions of each host country. The parent company mainly undertakes the formulation of overall strategy and the decomposition of business objectives, and implements target control and financial supervision over overseas subsidiaries; Overseas subsidiaries have greater business decision-making power and can respond quickly according to local market changes. The advantage of this strategy is good adaptability to the local market demand of the host country and fast market response, but the disadvantage is that it increases the difficulty of coordination among subsidiaries.
3. Global center strategy. The strategy of the global center is to regard the world as a unified big market, obtain the best resources and sell products around the world. Enterprises adopting global center strategy connect their subsidiaries through global decision-making system, and realize resource acquisition and product sales through global business network. This strategy takes into account the specific needs of the host country and the overall interests of multinational companies, and has become the main development trend of enterprise internationalization strategy. However, this strategy also has some defects, such as high requirements for enterprise management level and large investment in management funds.
(two) the way to enter the international market.
Enterprises can enter the international market through import and export commodities, licensing agreements, mergers and acquisitions, joint ventures and the establishment of new wholly-owned subsidiaries. Each method has its own advantages and disadvantages, and choosing the most suitable way to enter the international market is very important for the company to achieve its predetermined international business goals.
Types of globalization strategy of international enterprises
The globalization strategy of international enterprises has a gradual development process. From the initial stage to the complete international operation stage, the business strategy of international enterprises can be summarized into the following four types: product export strategy; Contract agreement strategy; Foreign direct investment strategy; International strategic alliances. These four strategies show the vertical growth trajectory of international enterprises, but they are not completely replaceable, but relatively independent and interdependent.
Product export strategy
Product export strategy is not only widely adopted by small and medium-sized enterprises, but also an important part of international operation of large enterprises. Its most important significance lies in that it is the starting point of globalization strategy and lays the foundation for international cooperation in a deeper sense.
For most international enterprises, it is still an important strategy to directly participate in global economic competition through exports. However, the essential characteristics of maintaining the domestic production base and vigorously promoting exports have changed. For example, China's exports are decreasing, while the exports of factories built in other countries are increasing. This proves the increasing complexity of export strategy in the global economic market and the inseparable relationship between this strategy and other strategies.
superiority
1, enhance the ability to resist market risks and reduce the adverse effects brought by the shrinking domestic market.
2. By selling domestic products overseas, enterprises can maintain a high degree of control over research, design and production decisions; However, if the production facilities are located in several parts of the world, or the enterprise has some form of business relationship with foreign companies, this macro-control relationship is not so strong. It is very important for enterprises to keep strict control over research and production decisions. Because this is conducive to protecting key technologies and promoting the rapid upgrading of products.
3. Export strategy enables enterprises to maintain the scale of domestic production and continue to use domestic production resources.
disadvantaged
1. Enterprises must deal with various obstacles in foreign markets, such as tariffs and various forms of non-tariff barriers.
2. The irregular fluctuation of exchange rate also makes domestic enterprises face risks in export trade.
3. It is difficult or difficult for foreign importers to maintain a successful cooperative relationship.
4. All kinds of expenses that need to be paid for export will also increase the burden on enterprises.
Contract agreement strategy
By signing cooperative contract agreements, enterprises can gain a share in the international market without large-scale capital and technology investment in foreign territories, which has become another choice for international enterprises to implement globalization strategy. This strategy has achieved remarkable results in avoiding import restrictions or investment obstacles set by foreign governments, and it is also a prelude for international enterprises to establish a higher-level strategic partnership.
At present, there are three main forms of international cooperation contract agreements: licensing trade, franchising and subcontracting.
1. License trade
It means that by signing a licensing contract, the exporter who enjoys patented products, services or technologies will sell a certain number of production and sales rights to the importer, and the importer will pay royalties to the exporter.
International license trade was originally conducted between monopoly enterprises in different countries, and direct conflicts between them were avoided by exchanging licenses. In recent years, in high-tech enterprises, licensing trade has become an effective way to make up for R&D expenses.
Advantages:
(1) You can profit from existing products or technologies without spending a lot of investment.
(2) It is a powerful weapon to penetrate foreign market barriers.
Disadvantages:
(1) Low degree of control
(2) Cultivate competitors
2. Concessions
It is a variant of licensing trade, in which the franchisor transfers the whole operating system or service system to an independent operator, who pays a certain franchise fee.
Franchising is becoming the fastest growing form of trade in the United States.
Advantages:
(1) is a very quick way to enter the international market without large-scale capital investment.
(2) By selling a package of special management rights, the popularity of franchised professional companies has been improved.
(3) Royalty fees are often recorded in the "advance payment" received by enterprises, which can be said to be a considerable extra operating capital income obtained by enterprises.
Disadvantages:
(1) Franchising is mainly suitable for those service industries, but not for high-tech industries or general manufacturing industries, so it is difficult to promote.
(2) Similar to licensing trade, once the franchise agreement is signed and takes effect, it is easy to get out of control in management, especially in developing countries, because of government intervention in the economy or unstable political situation, it is difficult to supervise local business activities. In addition, cultural and language barriers may also inhibit the effective development of franchising abroad.
3. Subcontract
Refers to an enterprise contracting a specific production task or a business department of an enterprise to another company.
Advantages:
(1) lean main business
(2) Reduce costs
(3) Obtaining technological competitive advantage.
Disadvantages:
(1) the weakening of its own production capacity, and the decline of the overall business flexibility and management control ability of the enterprise in the future.
(2) the hollowing out of production and operation.
Foreign direct investment strategy
Foreign direct investment (FDI for short) refers to the overseas investment made by enterprises with the control of enterprise management rights as the core and the main purpose of obtaining profits. Its biggest feature is that investors have operational control over the invested enterprises, that is, investors have control over the invested foreign enterprises, can exercise their voting rights and have a say in management.
Foreign direct investment has become the main engine of world economic globalization. The vigorous development of foreign direct investment mainly benefits from the stability of the world macroeconomic environment, the rapid development of the information technology revolution and the continuous advancement of trade liberalization, investment liberalization and financial liberalization. As long as this trend remains unchanged, the foreign direct investment of international enterprises will still become the engine of globalization and promote the development of the world economy.
There are two main ways for international enterprises to expand through foreign direct investment: one is to adopt green space; The other is mergers and acquisitions.
1. Newly-built enterprise (green land investment)
That is, wholly-owned enterprises are all owned by investors, who provide all the funds, operate independently and obtain all the profits.
Advantages:
Effectively overcoming import restrictions can penetrate the target country's market more deeply than export, and there are more profit opportunities than using license trade. And can be more deeply familiar with the local sales network and management mode.
Disadvantages:
Creating a new enterprise is expensive, slow, long-term and uncertain.
Especially under the influence of various policies to attract foreign investment in many countries, new enterprises have become an important way for international enterprises to implement the globalization strategy. However, with the passage of time, its disadvantages have become increasingly apparent, and the main position of new enterprises in FDI has been replaced by another form-mergers and acquisitions.
2. Cross-border mergers and acquisitions (M & amp； answer
Enterprise M&A is the general name of enterprise merger and acquisition. The former refers to the behavior that the dominant enterprise buys all the property of another enterprise and merges to form a company. The latter refers to the behavior that an enterprise obtains the control and management right of another enterprise by publicly purchasing a certain number of shares.
At present, the transnational mergers and acquisitions of international enterprises are extensive and huge. This unprecedented M&A scale may lead to major changes in an industry, a region or even the whole world economic model.
Advantages:
(1) M&A can enable enterprises to enter the target market quickly.
(2) M&A can rapidly expand product categories.
(3) M&A and "localization" strategy complement each other.
(4) M&A can benefit from the undervalued assets of the "eaten" enterprises.
Disadvantages:
The value in (1)M&A process is difficult to evaluate. ..
(2) There are differences in geography, tradition, culture and corporate image among enterprises in different countries, so it is difficult to greatly improve the differences between the two enterprises through mergers and acquisitions. After mergers and acquisitions, seemingly unrelated situations often occur, leading enterprises to face the risk of management control failure.
(3) M&A will polarize enterprises, forming a pattern of "too few enterprises, too little competition and too high price", which will lead to an increase in the market price of products and a large number of unemployed people in the factor market, while enterprises will have problems such as inertia breeding, weakened innovation motivation and excessive scale leading to inefficiency.
international strategic alliances
International strategic alliances refers to that the alliance partners of enterprises transcend national boundaries and form cooperative partnerships with their own beneficiary enterprises in the world. The alliance of these enterprises is to have resources, take risks and enjoy benefits. In essence, cooperation instead of confrontation is the beginning of a higher form and more intense competition.
1897 Thomas Edison, founder of general electric company, and corning glass industry jointly established a cooperative enterprise. Toshiba also began to be keen on establishing joint ventures as early as 1906. International strategic alliances was first concluded in 1979, and Ford Motor Company of the United States and Mazda Motor Company of Japan formed the first international strategic alliances.
1. Formation conditions of international strategic alliances
Their respective comparative advantages
Similar strategic goals
Independent legal personality
Long-term partner
Synergistic effect of alliance
Global market orientation
2. Types of international strategic alliances
R&D strategic alliance
Two or more completely independent international enterprises * * * develop new technologies * * develop a new product, * * * provide, * * * share the resources needed for development, * * * take risks, * * * enjoy the benefits generated by development, but do not form an operating entity.
Strategic alliance of manufacturing production
A form of cooperation between international enterprises to provide each other with spare parts and related technologies for the production of inputs. This alliance has shifted the field of cooperation to the middle reaches-product manufacturing and production. In the strategic alliance of manufacturing industry, it is often the alliance of product brands.
Joint sales strategic alliance
An agreement between international enterprises to sell each other's products (or products produced jointly). This is the state that the alliance cooperation field enters the downstream.
Joint venture strategic alliance
It means that international enterprises combine their different assets, * * * with production, * * * with risk and * * * with income.
3. Advantages
(1) Enhance competitiveness.
(2) Share risks and obtain economies of scale and scope.
(3) expand the market.
(4) prevent excessive competition.
(5) Challenge the "big enterprise disease"
4. Shortcomings
(1) Cooperation is difficult.
(2) The balance of interests is difficult to achieve.
(3) The jointly developed technology is abused.
The Road to Globalization of China Enterprises
(A) the internationalization of enterprises in China has entered a new stage.
In 2005, China's foreign trade continued to maintain rapid growth. According to customs statistics, in the first three quarters, the national total export value was 10245 1 billion dollars, up by 23.7% over the previous year, of which exports were 546.42 billion dollars, up by 3 1.3%, and imports were 478.08 billion dollars, up by 1.6%. The accumulated trade surplus was $68.34 billion. The contribution of net foreign trade exports to economic growth reached 3.5 percentage points. Foreign direct investment has grown rapidly. Overseas M&A activities have entered an active period.
(B) The main obstacles facing the internationalization of enterprises in China.
Although the internationalization of Chinese enterprises has entered a new period of development opportunities and made great achievements, the degree of internationalization is still not high and the development is not mature, and there is still a big gap compared with the internationalization level of world-famous multinational companies. The main obstacles affecting the improvement of the internationalization level of Chinese enterprises include the following aspects:
1. Financial obstacles. Enterprises in China generally face the obstacles of insufficient funds in the process of international operation, which leads to the long-standing situation of slow development, small investment scale, small production and operation scale and low quality of overseas M&A targets.
2. Talent barriers. Internationalized enterprises need internationalized talents, and China enterprises are facing the outstanding problem of lack of internationalized talents in the process of internationalization. The existing talents of domestic enterprises can not adapt to overseas markets, which is the most headache for enterprises at present. The lack of marketing talents, international management talents, legal talents and financial talents with international operation experience has seriously restricted the international development of China enterprises.
3. Management obstacles. International operation puts forward higher requirements for enterprise management. At present, China enterprises generally lack the experience of transnational operation, and the existing management ability of the organization is difficult to meet the needs of enterprise internationalization. Management obstacles are highlighted as follows: first, there is no global organizational structure; Second, lack of cross-cultural integration ability; Third, there is no global thinking mode.
4. Brand barriers. Brand value is the embodiment of enterprise's comprehensive strength. How to get their brands recognized by overseas consumers is an obstacle that almost all China enterprises must overcome.
Ways to Internationalize Enterprises in China
The internationalization of enterprises in China should do well in five aspects:
1. Cultivate international management talents.
2. Establish a global organizational structure.
3. Cross-cultural integration.
4. Engaged in international brand promotion.
5. Build the core competitiveness of enterprises.
I hope the information I provided is helpful to you.