Internationalization

Internationalization determines the procedure of designing products to meet the wishes and needs of customers across different countries or designing them in a way that they can be easily modified, to achieve this goal. In the field of economics and finance, internationalization can relate to an organization that is trying to expand its presence in the market or capture greater market share outside its own country through entering international markets. The current global tendency towards internationalization has pushed the world economy into a state of globalization, which is characterized by close interaction of the economies of different countries and cross-border trade.

What is Internationalization

When trying to sell their products overseas, a company may encounter several difficulties along the way. Even at the consumer level, there may be various technical barriers, for example, connected with distinct voltages of household electricity or plug shapes that can differ around the world. Technological adaptations make it possible to correct these differences.

The cultural barrier is another significant limitation to internationalization. For example, when trying to increase its presence in India by opening several restaurants, a company must take into account the fact that many residents in this region refrain from eating beef. That is to internationalize successfully, this firm must focus on products that most closely correspond to local customs and culture.

Nowadays, the vast majority of US companies conduct their business internationally. This is evidenced by the figures of 2019, according to which the income of 1/2 of the companies included in the S&P 500 index came from sources outside the United States. Firms stepping up their internationalization efforts should adequately assess the likely trade barriers that limit their prospects for trading outside their domestic market.

There are various reasons that can motivate firms to internationalize. One of them is that a company that incurs excessive overheads can cut costs by selling products in countries that have weaker currencies or a lower cost of living. Moreover, internationalization can be beneficial for a company due to the reduction in business costs resulting from the reduction in labor costs that are passed on to overseas markets that sell goods. Internationalization somehow leads to internationalization of products that are sold by global companies and used in different countries.

More about Internationalization

As mentioned earlier, when producing internationalized products for a wide range of customers around the world, a company should pay special attention to the localization of products. Attention to cultural differences, reflected in the tastes and habits of local residents, can allow meeting the needs of consumers located in a particular country, as well as maximize profits of the company.

At the same time, an internationalized program should take into account small details and reflect relevant information for a given region. One such example is the difference in how dates are displayed between the US and England. Analogously, units in the US are measured in feet or miles, while the metric system is used in Europe and Canada. It follows from this that cars sold in these markets must have the ability to quickly switch between miles and kilometers.