Throughout this essay the internationalization process will be examined in depth and supported by evidence from the organisation known as ‘British Petroleum’. The purpose of this assignment is to grasp a comprehensive understanding of the critical aspects of British Petroleum’s internationalization process, the implications it holds for the international business environment and achieving their internationalization objectives through contemporary context.
Overview of organisation
When discussing globalization it is critical to emphasis the importance a multinational corporation holds over the international business environment. A Multinational corporation (MNC) is an organisation ...view middle of the document...
One of their key values is to ensure that they efficiently test their project to ensure they are at the benchmarking standards. By ensuring that BP places a high level of emphasis on conducting their business ventures in social and environmentally friendly manners, it assists their public image. In order to be a successful MNC, the organisation must adjust every facility it handles to the specific demographics to be accepted socially in each country they produce. BP produces on average 4.1 million barrels of oil a day from 16 various refiners in over 80 countries around the world. (BP,2012).
Reasons to invest
Prior to examining how MNC’s orchestrates a blueprint to go worldwide, it’s important to break down why the organisation wishes to go global. In accordance to Dunning and Lundan (2008), there are three reasons why corporations become multinational and this is known as the OLI paradigm (Ownership, Location and Internalization). In theory, Ownership is referred to as gaining a competitive advantage over local companies in the same market. When investing in another country, in order to gain a competitive advantages, organisations can look to possess new technology or employ skills of management that are unique to the country. Location is denoted as the raw materials, working conditions and skill level of employees that can benefit the corporation. The raw materials the country holds are essential to MNCs as access to these natural resources allows for production operations to be easier and may lead to cost cuts. A high level of skill with local employees is another factor than can invite companies to become MNC as this can result in a higher level of efficient and effective outputs. Internationalization is referred to as when an organisation enlarges its projects into another country by obtaining assets that are in that country. Two key investments issues are political stability and cultural differences. Cultural differences between the MNC and the investment country can easily become a problem, as working methods and thought process often result in a poor working relationship between the country, its people and the MNC. The government will ultimately decide whether or not the corporation can globalize into their country so it’s important to recognise that a countries political stability can greatly affect the way in which the organisation operates. There are countless reasons to invest into another country, with countless barriers that must be overcome. It is important to recognise that there are many issues when globalizing and in order to be successful, the corporation must address every issue and provide a solution if necessary.
When applying the OLI paradigm to BP, it is simple to deconstruct why BP has chosen to invest in Australia. The cultural similarities are evident due to the fact that Australia is a colony of England and therefore share certain cultural aspects. Australia has a wide range of raw...