Our organisation like most organisations will pass through several stages of organisational development as the nature, and size, of their international activities grow. As they go through these evolutionary stages, things can change due to:
·1) The strain imposed by growth and geographical spread
· 2) The need for improved coordination and control across business units.
Some organisation goes through the various steps rapidly while others evolve slowly over many years, although of recent it has become apparent a speeding up of the process accelerates the process through acquisitions. In other words, the number of steps, stages, along the path of any organisational status varies.
This typically is the initial stage for manufacturing organisation entering international operations. As such, simple exporting may be difficult for services companies, so that may be forced to make an early step into foreign direct investment operations.
Although, exporting often tends to be handled by an intermediary (for example, a distributor) as the local market knowledge is deemed critical. As the firm develops expertise in foreign markets, agents and distributors are often replaced by direct sales, however at this stage exporting is controlled from the domestic-based home office through designated nominated person.
For most organisations, it is a short step from the establishment of sales subsidiary to a foreign production or services. This step may be considered small if the organisation is already assembling the products or services to take advantage of cheap labour or to save shipping costs or tariffs. Alternatively, the organisation may have well established export and marketing program that enables it to take advantage.
However, if an organisation decides to produce overseas, the organisation may establish its own foreign production facilities or enter into a joint venture with local organisation. Regardless of the methods of establishment, foreign production/services operation tends to trigger the creation of a separate international division in which all international activities are grouped. With the spread of international activities, typically the organisation establishes what has been referred to as “miniature replicas” because they are structured to mirror that of the domestic organisation.