Does the internationalisation process model explain the Essay

Does the internationalisation process model explain the internationalization strategy of Lenovo In your view what are the succe - Essay Example Outward investment also includes mergers and acquisitions and it is observed that ODI is steadily increasing due to the increasing productivity of the organizations. However, it has been observed that only productive companies can invest in foreign country operation facilities. There is a huge difference in the steadiness and competitiveness of the companies, which results in different productive indigenousness in the host countries. The study will deal with the various outwards opportunities faced by the Chinese organizations in the last two decades from the developing and developed countries. The recent evolution procedure in internationalization process has helped in the significant growth in the outward foreign direct investment. The developed countries are the main source of ODI for the developing economies, which is increasing steadily. It has been observed that China has been the leading source of ODI since the 1990’s and it has also helped in cross border investment fa cilities through the Foreign Direct Investment (FDI) (Vox, 2008). It has been observed that among all the developing economies, China is one of the highest outward investor and the ratio of outward China has been 17 percent. China earns most of its ODI earnings from its manufacturing operations overseas, joint venture mining activities and also by setting up increasing sales office in the overseas operations (Ning, Lane and Sutherland, 2010). The Uppsala Internationalization Process Model As per authors Johanson & Wiedersheim (1977 cited in Ning, Lane and Sutherland, 2010) the internationalization is an incremental process, which involves no regular export activities, export through independent representatives, production and sales subsidiary. These authors developed a theoretical model regarding the internationalization process model. The internationalization process model focused on the development of the individual business organization and the gradual acquisition, integration of activities and the utilization of the operational facilities for overseas expansion. The basic fundamental aspect of the organization is that lack of understanding of the knowledge, which is an important obstacle in the development of the international operational facilities. These need to be acquired through necessary knowledge about the foreign markets, which can lower the perceived risks and the transaction costs and increase the commitment to the foreign markets (Lou and Tung, 2007).The market knowledge and the commitment will affect both the managerial and commitment decisions. It is assumed in the model that the organization strives to keep the risk taking decisions at lower level. The internationalization model assumes that the state of globalization or internationalization affects the perceived opportunities and the risks, which in turn have the potentiality of influencing the commitment decisions. The model describes the various operational phases especially at the multi s tage level. In the first stage the organization’s engagement in a particular country develops according to the chain; the chain involves established market pattern of a particular company (Sauvant, Maschek and McAllister, 2009). In the second stage, the organization enters the developed economy with a psychic distance (Environment.fi, 2012). Although, there are various restrictions regarding the internationalization model which is consistent among the different actors. These elements between the actors can only be judged an