13.1 Early Theories of Internationalization American firms had their infrastructure intact in the 1950s Expanded their marketing and production to Europe, Asia, and other parts of the world in the 1950s to 1970s

The Product Cycle Theory of Internationalization The theory was made by Raymond Vernon Companies develop new products to be competitive in markets in developed economies Product is moved to less developed countries

Maintain a “Non-Expiring Bargain” with Host Countries Firms face the ongoing threat that their businesses could be nationalized Firm must bargain with host country “Greasing the politicians” Must have a core competency

The Transactions Costs View of Foreign Direct Investment Managers must know not only what they are doing well but how they are doing them Learn from failures, not successes Example: Ben and Jen Organization may choose to expand using capable suppliers of certain activities rather than FDI

The Opportunistic Growth Theory of International Expansion “The harder I try, the luckier I get” Goal is to improve a firm’s ability to respond successfully to opportunities Learn while doing

Goshal and Bartlett’s Model of Innovation Processes in Multinationals Four patterns of centralization and localization of innovation activities 1.Center for Global 2. Local for Local 3. Local for Global 4. Global for Global Synergy