Most companies pass through different stages of internationalization. Expanding a company into international markets is not something that can be done overnight. There is so much thought that goes into it and most businesses struggle to navigate the complexities involved in global growth. There are, of course, many firms which have international business since the beginning, including hundred percent export-oriented firms. Even in the case of many of the hundred per cent export-oriented firms, the development of their international business would pass through different stages of evolution. A firm which is entirely domestic in its activities normally passes through different stages of internationalization before it becomes a truly global one. There are many firms which enthusiastically and systematically go international as part of their corporate plan. However, in the case of many firms the initial attitude towards international business is passive and they get into international business in response to some external stimuli. A firm may start exports on an experimental basis and if the results are satisfying in due course it would establish offices, branches or subsidiaries or joint ventures abroad. The expansion process may also be characterized by increasing the product mix and the number of market segments, markets and countries of operation. In this process the company could be expected to become multinational and finally global.

 Many experts have given different views on stages of internationalization. The journey through these key stages of internationalization of business offers a complete roadmap to overcome various challenges. This process transforms a business from a domestic player into a global enterprise, with each stage introducing new strategies and obstacles.

Before you decide to go global, it’s important to understand these stages, as they help businesses manage growth effectively. Each stage requires distinct strategies, operations, and market focus, making it essential to approach them with specifically tailored plans.

 For our understanding we will consider the following stages of internationalization. There are basically five stages of internationalization and these are:

1.    Domestic Stage: A domestic stage is where a business limits its operations, mission and vision to the national political boundaries. The company at this stage focuses its view on the domestic market opportunities, domestic suppliers, domestic financial companies, domestic customers etc.

The company at this stage analyse the national environment of the country, formulate the strategies to exploit the opportunities offered by the environment. Here the company’s unstated motto is that, “if it is not happening in the home country, it is not happening.”

A company in domestic stage never thinks of growing globally. If it grows, beyond its present capacity, the company selects the diversification strategy of entering into new domestic markets, new products, technology etc. It doesn’t select the strategy of expansion/penetrating into the international markets.

A solid example of this would be, Reliance Industries Limited, which started out by dominating the local market before it expanded its operations internationally.

2.    International Stage: An international stage begins when a business expands its operations beyond its home country, serving international customers by setting up its branches and subsidiaries in foreign markets. This stage marks the company’s initial steps into international business, where the company intends to explore and look out for new market opportunities. This is the stage where the company starts to analyse the market and slowly adapts its strategies to fit the new markets but still maintains a significant focus on its domestic base. These companies believe that the practices adopted in domestic business, the people and products of domestic business are superior to those of other countries. The focus of these companies is domestic but extend the wings to the foreign countries.

These companies select the strategy of locating a branch in the foreign markets and extend the same domestic operations into foreign markets. In other words, these companies extend the domestic product, domestic price, promotion and other business practices to the foreign markets.

           Tata Motors Limited is a company that extended its operations by setting        up international subsidiaries.

3. Multi-National Stage (MNC): A Multi-National stage involves operating in multiple countries, fully customizing its products, pricing, and marketing strategies to fulfill the specific needs of each market. This stage of multi-national company is also referred to as multi-domestic. Multi-domestic company formulates different strategies for different markets; thus, the orientation shifts from ethnocentric to polycentric. Under polycentric orientation the offices/branches/subsidiaries of a multi-national company work like a domestic company in each country where they operate with distinct policies and strategies suitable to the country concerned. Instead of using a one-size-fits-all approach, the company treats each market separately, to offer relevant products to local consumers. Thus, they operate like a domestic company of the country concerned in each of their markets.

• • McDonald’s, Coca-Cola, and Samsung are prominent examples of Multi-National Companies. McDonald’s operates globally, adapting its menu to local tastes while maintaining its brand identity.
  • Coca-Cola on the other hand, offers localized products and marketing strategies across various countries, maintaining a consistent brand image across the globe.
  • Samsung is a company that adapts its technological products and strategies to regional markets while utilizing the global resources to the fullest.

4. Global Stage: Unlike the rest of the above stages of internationalization of business, the global stage adopts a comprehensive global strategy, focusing on achieving efficiency and market penetration on a global scale. This ensures that its brand and products have consistent quality no matter which corner of the world it’s sold in. The company integrates its operations around the world, making the best use of resources like manufacturing, technology, and worldwide talent to strengthen its global presence and reach more and more customers across different markets.

One great example of the global stage is Apple. Apple operates with a unified global strategy, where its products like the iPhone, iPad, and Mac are designed and marketed across the globe, keeping in mind the consistent quality.

Though Apple’s manufacturing spans across various countries, its products and brand image have stayed the same throughout, impressing users from every part of the world.

5. Transnational stage: The most ultimate expression of global business is the Transnational Stage that blends worldwide efficiency with local adaptability. Companies in this stage have mastered the art of operating with utmost precision across borders, balancing a unified strategy with the flexibility to meet unique market demands.

Unilever is a standout example of the Transnational stage. With a global presence, Unilever operates across continents while customizing its products and marketing strategies to closely resemble the needs of local cultures.

From Dove to Lipton to Ben & Jerry’s, Unilever’s diverse brands cater to the distinct preferences of consumers worldwide, achieving a perfect synergy between global integration and local relevance.