International Operations Companies Decide to Internationalize Operations Essay

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International Operations

Companies decide to internationalize operations when the local market becomes saturated as a method to continue to grow and increase market share. Internationalization is the process by which companies shift operations from their home country into foreign markets. This process can be accomplished through a number of methods depending on the size, resources and strategy of the company.

Methods of International Operation

Companies will normally expand into international operations by exporting to overseas markets through independent channels or by licensing foreign manufacturers to produce products for overseas markets (Dicken 2003, p. 207). The next step is for a company to establish sales outlets in overseas markets by either buying a local company or setting up a new facility (Dicken 2003, p. 207). The last stage in internationalization is when a company establishes production facilities overseas by either buying another firm or setting up facilities (Dicken 2003, p. 207).

III. International Strategy for Polymer Technology Systems (PTS)

PTS is a medical diagnostic tools company founded in 1992 in Indianapolis, IN, USA (Cardiochek, 2008). Its main product is cardiochek, a handheld point of care diagnostic device to test blood cholesterol (CardioChek, 2008). The product was launched outside of the U.S. In 2002 and is currently available in 100 countries and six different languages (CardioChek, 2008).

PTS began its international operations by exporting its devices to 70 different countries (Wall, 2007). This is a good entry strategy for PTS because it was a newer company that did not have the experience or capital to open facilities or purchase local companies for distribution. PTS made a good move by hiring Hans Fredman as its international sales director in January 2003 (Wall, 2007). Fredman, based in London, is well connected with medical-device makers and worldwide distributors (Wall, 2007).

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Finding local distributors in each of its markets has been vital to the success of PTS's business (Wall, 2007). Exporters need the local expertise that distributors provide.

Many companies from the U.S. that expand internationally do not understand that doing business in other parts of the world cannot be conducted in the same way as they are accustomed to doing business locally. PTS focuses on finding, supporting and keeping good distributors because each country has different rules, regulations and customs, therefore the company relies on local distributors to represent the company's product (Wall, 2007). Relationships are very important to building international export strategies because suppliers and distributers want to make sure they are dealing with a reputable and stable company that won't disappear overnight. The same is true for a company looking for a reputable distributor. This can only be accomplished by making the right contacts and investing in developing the relationships over time, which is what PTS has done.

PTS tapped a good market and created a niche for itself early in the home medical device market. Beginning with doctor's offices and home models the company expanded the devices for use by pharmacies to use in promotional health screenings which launched the devices into high use around the world (Wall, 2007). Boots, the largest pharmacy chain in the U.K. approached PTS to use the device in promotional cholesterol screenings in 1,400 of its stores and other companies in Europe soon followed (Wall, 2007). Promoting its device for use in medical screenings became a major growth strategy for PTS in all of its foreign markets after its initial success in Europe (Wall, 2007).

PTS further developed its operations strategy by partnering with European pharmaceutical companies that wanted to use.....

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