MGT 125 Chapter Notes - Chapter 1: Global Sourcing, Franchising
Document Summary
Describe the structures and techniques organisations use as they go international. When companies go international, they usually use different approaches depending on what they are just starting or have been doing internationally. Companies start with global sourcing: purchasing materials or labour from around the world wherever it is cheapest. The global of this practice is to take advantage of lower costs and be more competitive. The next step may be exporting the product to other countries: making produces domestically and selling them overseas. An organisation may also choose to initially import products: selling products in the domestic market that are made overseas. No special understanding of culture is necessary, and involves minimum risk. A company may then choose to enter into licensing or franchising agreements. Licensing: an organisation gives another organisation the right to make or sell its products using its technology or product speci cation (primarily used by manufacturing organisation).
