Forms of Global Business

Besides determining whether to adapt organizational policies and procedures, a company must also determine how to organize itself for successful entry into foreign markets. When companies produce products in their home countries and sell those products to customers in foreign countries, they are exporting.

Exporting as a form of global business offers many advantages. It makes the company less dependent on sales in its home market and provides a greater degree of control over research, design, and production decisions.

When an organization wants to expand its business globally without making a large financial commitment to do so, it may sign a cooperative contract with a foreign business owner who pays the company a fee for the right to conduct that business in his or her country. There are two kinds of cooperative contracts: licensing and franchising.

This combination of developments has made it possible to start companies that are global from inception. With sales, employees, and financing in different countries, global new ventures are companies that are founded with an active strategy.