The Phase Model of Globalisation

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The phase model of globalisation includes the stages of exporting, cooperative contracts, strategic alliances and wholly owned affiliates. The Phase model of globalisation describes the stages that a company might go through as it sets about selling its products to a world market. The phase model starts with exporting and develops through the stages of cooperative contracts and strategic alliances to wholly owned affiliates. Not all companies follow each stage of the phase model, some companies skip stages. However, by following the stages of the phase model a company might successfully change where it sells its goods or services from a domestic orientation to a global orientation. The simplest stage of the model is exporting and it is the least costly way for a company to initially take its product to a world market. For the situation described in this question, exporting is the most appropriate approach to going global. The following paragraphs will discuss the stages of the phase model and list the advantages and disadvantages of each stage. The essay will then say why exporting is the most appropriate approach to use. The exporting stage of the phase model is when companies make something in their home country and sell it overseas. One of the advantages of exporting is that the company becomes less dependent on its home market for sales. By selling overseas the potential market is bigger. Another advantage is that the company keeps control of production quality and any design or production secrets (intellectual property). There are also some disadvantages to exporting. One disadvantage, especially for a country like Australia, is that shipping costs add to the price that a company has to charge for its products overseas. This can make the exported product too expensive and not competitive. Another potential disadvantage is that foreign

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