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International Expansion - Essay Example
1. Compare and contrast the main theories of international expansion by means of examples from global organisations present in your case studies or other sources, highlight the strengths and weaknesses of these theories.
According to Richardson (2007), there are four main theories of international trade…
Using a common standard, which was gold in early times, a nation is wealthier if it possesses more gold. It receives gold for the products it imports and pays for its imports with gold. Therefore, the more it exports over those it imports, the more gold it will possess. The problem with this theory is that it excludes the fact that in some cases it is good to import. And if you completely refuse to import, the population would have to do with some consumer items (Richardson, 2007). In terms of business organizations, this theory was used by many companies in Japan after the second world war, to increase exports. Toyota started operations in the 1930s and was supported by the Japanese government during WWII because of the company's capability to produce trucks for military applications. Because of the scarcity of domestic resources at that time, the Japanese government stopped almost all imports. By 1945, after the allied forces won the war, Toyota was given permission by the US military to start peacetime production. In 1957, Toyota set up a sales office in Hollywood and started selling Toyopets and Land Cruisers (Toyota, n.d.). However, even for Toyota, the purist application of the mercantilist theory was not effective. The design of Japanese cars were not those desired in the new markets they opened up in other countries. ...