Global operations management Essay Example | Topics and Well Written Essays - 2000 words

Global operations management - Essay Example To increase its influence and reach more customers in various parts of the world, Huawei has also entered into partnerships with numerous companies. Theories of Internalisation The term internationalisation is descriptive of the methods that are used by business organisations to adapt their numerous operations, in regards to company policies, resources and organisational structure, to suit foreign environments (Dunning 2006). Before embarking on the process of internationalisation, business organisations have to take into account factors such as the geographic distance of the overseas market being considered, the different company associated operations that the company will engage in the foreign branch, and the level to which the company would like to integrate corporate activities (Mitgwe 2006). There are different theories that seek to explain the ways through which internationalisation may occur. ... Dunning’s Theory in the Internationalisation of Huawei According to Dunning’s OLI model, foreign subsidiaries usually demonstrate higher productivity rates than their local counterparts due to the existence of ownership competitive advantages (Dunning 2006). Dunning’s eclectic (OLI) model stipulates that there are three critical elements that are evident in any firm that invests in a foreign branch or subsidiary. The three factors are location advantages, ownership advantages, and internalisation advantages (Dunning 2009). Ownership advantages have to do with the existing conditions that accompany of foreign direct investment (Contractor 2007). For example, to be successful in foreign investment, a firm has to have comparative advantages over other foreign corporations before it determines that a branch will be set up in a foreign nation. Location advantages have to do with the extent to which foreign business-related conditions are favourable to the company in q uestion (Sethi, Guisinger, Phelan, and Berg 2003). Internalisation factors, on the other hand, have to do with how well the multinational corporation can internalise ownership advantages in order to prevent the escalation of transaction costs which are naturally incurred in the course of international production. The Huawei Technological Corporation is a firm that was launched long after other telecommunications corporations had already been launched in the Western nations (Dunning 2009). Huawei therefore focused more on meeting particular objectives in order to realise its internationalisation. Huawei has traditionally used low cost as a technique to enter markets in both developing and developed nations. Huawei also invests in developed nations mainly to realise the adoption of new technologies.