Another benefit is the
global differences in wage rates and government regulations that allows for cheaper
wages, the absence of minimum wages and exploitation of lax environmental laws.
Similarly, they can take advantage of ‘special economic zones’ (SEZ). This is
an area in which business and trade laws differ from the rest of the country.
SEZs are located within a country’s national borders, and their aims include:
increased trade, increased investment, job creation and effective
administration. Special zones are set up with lower company tax rates, lax
environmental laws and no minimum wages.
Operational purposes of
the firm focus on convenience. Companies, such as Alcoa and Adora, are involved
in extractive industries like petroleum or mining. These industries are often
located near to their sources of raw materials to prevent the high costs of
transporting raw materials and production. In addition, firms go international
to receive better-value factors of production. Taiwanese computer manufacturers,
such as Acer Inc. and Asus, establish subsidiaries in the US, in order to
access low-cost capital and better-value investors. The US is home to many capital
sources in the high-sector, such as Silicon Valley. This makes it more
efficient for firms to find investors and capital through venture capital or
stock exchange. Furthermore, there are cases where firms go international as
they wish to learn new ideas about products, services and business methods. For
example, car manufacturers, such as Yamaha, opened their subsidiaries in Japan
as they want to learn from Toyota about Just-in-time production to lower down
their costs and serve customers much faster.
Focusing on relational, international
collaborative relationships via strategic alliances have always been useful
internationalisation strategy for firms, as they can help in building
competitive global value chains either by integration with potential
competitors or integrations with potential customers and suppliers of the firm.