Corporate Growth Strategies: Internationalization and Concentration

Business Growth and Corporate Classification

Classification by Global Management

Multinational Company: A company with significant sales in other countries, possessing industrial plants abroad, and managed in a global way.

Robinson's Classification of International Companies

1. Multinational: The main company chooses from the other countries/companies.
2. National: Operates in only one country.
3. International: Every subsidiary chooses what actions to take.
4. Transnational: Origin is irrelevant; individuals from any country can hold chief executive positions.
5. Supranational: Every subsidiary must obey the law of its country (though they are not legally subject to a specific country).

Perlmutter's EPRG Framework (Strategic Orientation)

This framework classifies companies based on their orientation towards the home country versus host countries:

• Ethnocentric Orientation (E. etnocéntricas): Highly oriented towards the country of origin. Top executives are typically from the country of origin.
• Polycentric Orientation (E. policéntricas): Decentralized and oriented towards the host country (decentralization).
• Geocentric Orientation (E. geocéntricas): Subsidiaries and the parent company make decisions jointly. Top executives are chosen based on suitability, independent of their country of origin.

Business Creation and Entrepreneurship

Components of a Business Plan

A comprehensive business plan typically includes the following sections:

1. Executive Summary: Outlines the core idea, the needs the business covers, and the new products or services offered.
2. Market Study: Analysis of the competition and identification of the target market.
3. SWOT Analysis (DAFO): Identification of Strengths, Weaknesses, Opportunities, and Threats.
4. Marketing Plan: Details the strategy concerning the 4 Ps: Place, Price, Product, and Promotion.
5. Business Analysis: Defines the resources required for operation.
6. Financial Plan.

Corporate Concentration Methods

Causes and Technical Types of Concentration

Causes of concentration (Note: photo mobile). Technical types include:

• Horizontal Concentration
• Vertical Concentration (Note: mobile)

Formal Aspects of Concentration

Concentration can be achieved through formal legal structures:

• Absorption

  A + B = A. One company (A) acquires another (B) and keeps its legal personality, while B loses its legal personality.

• Merger

  A + B = C. Several legally independent companies decide to unify their capital and form a new company (C), giving up their original legal personalities.

• Groups of Companies

  A + B = AB. All participating companies keep their legal personality.

  • Holding (Trust)

    Alliances of companies that decide to submit themselves to the control of another company. This controlling company holds the majority of the shares in the other companies. Also known as a trust.

  • Cartel

    Alliances where several companies reach agreements for a limited length of time without giving up independent control of each company. Agreements may relate to the maximum volume of production, unification of prices, etc.