Types of Corporations by Multinational Expansion Strategy

Types of Corporations by Multinational Expansion Strategy

There are different reasons and strategies that drive corporations to expand internationally:

  • Raw material seekers are corporations extracting resources, processing them, and making them available on global commodity markets for industrial use. Many emerged at resource-rich locations and developed technical capabilities and scale in the extraction of specific resources. As they grew and as the resources at the initial location became scarcer, the largest corporations started looking for new reserves internationally. Firms in the oil, mining, agriculture, and forest industries are common examples. They are among the first multinational corporations to emerge in the late 19th and early 20th century since resources, unlike labor, are a factor of production that.cannot be easily substituted.
  • Market seekers are corporations mainly involved in the retailing and distribution of goods often manufactured by subcontractors. Emerging from a national market, they expand internationally to achieve economies of scale. This can lead to a large portfolio of goods and valuable brands where distributional efficiency is paramount.
  • Low cost seekers are corporations looking for comparative advantages facing competition. They expand internationally to lower their production costs, particularly input factors such as labor and land. A core goal is to remain competitive, which is particularly the case in several branch on the manufacturing sector, including apparel, furniture, electronics and mass consumption goods.
  • Knowledge seekers are corporations expanding internationally to gain access to technology, techniques or managerial expertise to increase their capacity for innovation. This often takes place to the acquisition of foreign firms holding key patents.