Dunnings eclectic Principle - Essay Example

?Question Dunning’s eclectic Principle: John Dunning was the person behind developing the framework, which has helped in integrating various stratum of integration. A suggested set of interrelated and general principle of three has been given in order to get the grip of production in international sphere. The given three principles have been taken from various theoretical approaches; hence John Dunning labeled his approach as ‘eclectic’. It was Dunning who in the year 1980 which was given in Dickens in the year 1992 that any company would like to get itself engaged in the production arena internationally if the following three conditions are present. (Dicken p.109)          1. Every company possesses few specific advantages which if not in possession by any competing companies belonging from other nationalities where the advantage should be owner-specific in nature. (Dicken p.109)          2. These kind of advantages are mostly exploited by certain companies itself rather than leasing or selling them to different companies. Citing it in different words, every company tries to internationalize the nature of ownership-specific advantages; and(Dicken p.109)          3. it is more profitable for every company in exploiting the assets in international market other than doing it in domestic areas. It is true that factors like location-specific plays an important role with internationalization of the very nature of owner-specific while determining whether and where the overseas production takes place. (Dicken p.109)     The Advantage of ownership-specific is an asset which is internal to the company itself. In this case knowledge of specific type, human skill or organization and all these do require proprietary right for its use, like any right which is legally protected. (Dicken p.109) Extent and pattern of the internationalization its value-chain operations abroad: Calypso Rose when she was 29 became renowned in the business of accessories and bags. This particular business is now six years now and it is aiming at young women and teenage girl. This is a age of globalization and in this time it is necessary to make the business global. Clippy bags are the brand name and have gained recognition. They have kept this thing in account that global expansion strategy is in needful of the present hour. Presently the business surrounds the Japan and European market. (GLE Group pp. 1-3) Calypso Rose the tycoon business woman has been successfully running the business since the age of 23. The particular brand name ‘Clippy’ now has been successful in carryimg out international venture in different markets thereby gaining the company to strengthen its fundamental base in UK. They could do so by taking the help from the team of London International of UK Investment and trade. (GLE Group pp. 1-3) The brand Clippy brand has established a good stronghold in UK market before they were recognized internationally in the year 2007 by London International Trade Adviser, Gail Williams. the advice given by Gail Williams in the strategic area was useful in the early stages of the company especially in the export journey which helped the company to bring forth the brand Clippy in the international market. During the time of recession in the year 2008, Calypso in a very intelligent manner expanded and modified her business for survival in this weird market. (GLE Group pp. 1-3) Utilization of certain schemes, by Calypso, likes the Trade Access Program (TAP) and Passport for Export so that their product can be put up on international base. In addition, the assistance from an international adviser on trade has helped Clippy a lot in formalizing the export strategy for targeting the markets of Europe. The funding which the company received from TAP helped them in exhibiting in the European market. During this period Calypso met her European distributor. Being a small company it believed in cash flow so funding became invaluable. With the success, which it got initially, helped the company to spread its branches across Europe. In the recent times Calypso has also been able to spread the branches in Turkey and Italy. Enquiries started to come up from Japan for following the brand, then not knowing the way to respond the queries Calypso tried contacting the London ITA Toyin Laketu. He was able to recognize the serious potential of this company and the product. According to Toyin the product by Clippy was synonymous to other products of the Japanese market and definitely these products had a better chance in success. The adviser suggested them to get them signed up in the gateway to the Global Growth program which will help them for gaining more experience in the export market for formalizing new strategies in targeting Japanese market. (GLE Group pp. 1-3) In Clippy’s record book, the most hyped and successful venture done by Clippy was the visit of the Japan market by Calypso which got them around $45000 worth orders just the next 6 months of their visit. She made the number of deals while she was in the round in Japan. She signed a distributor and got the contracts dealed with Isetan. Isetan is a large departmental store in Japan. The contract was made with Plaza style which is a retail outlet having ninety branches. They did so that they can stock their products. The result was fantastic with only small investment. (GLE Group pp. 1-3) Question 2 Main features of 1997 Asian Currency Crisis Firstly, during the period of crisis almost every event started with sharp increase in the inflows of capital by sharp reversal. The countries, which were affected with crisis the rapid increase and growth were done by the foreign investments. In addition, all the financial organizations and institutions in such countries were leveraged with the help of foreign investments. ( Cavusgil etal. P. 25-32) Secondly, it was seen in most of the case financial liberalization did not get enough back up with strong and rigid vigilant regulations and financial infrastructure. Hence all the countries which were emerging from an infant state had to take care of their own stature and careful for implementing various strands of financial liberalization. ( Cavusgil etal. P. 25-32) Thirdly, the effect of “contagion” on various drops in market built up confidence in helping financial instability for becoming financial chaos, if the case is Indonesia. Some similarities were found in contrasting between Latin American and Asian crisis, which was given by Carmody and Glassman in the year 2001. Both of these two regions shared some similar financial crisis which was great inflow of capital to those regions which were followed by huge outflows of equal amount. ( Cavusgil etal. P. 25-32) Implication of currency crisis on Asian ‘economic paradigm’ The financial crisis of Asia has raised several fundamental ambiguous questions, like, the basic relationship between the regulated, transparent, integrated economic system which is market based into the huge sphere of global economy and the institutionalization of the participation of the democratic practices. The second question is the impact provided by global interdependence on the national sovereignty. The last question is that whether United states is willing in long term extension of its various role in those regions with political and economic security stabilizer? (Goldstein pp. 65-67) Most of the great events during the period of currency crisis with time get a reshape in political and relationships and security trends within the close regions of Asia Pacific. The following changes would bring in new challenges and face for the wide range of policymakers and leaders for seeking in restoring the stability as well as the growth in every region. “Paradigm shift” in the economic sphere of Asia took place since currency crisis era. (Goldstein pp. 65-67) The important lesson mainly for every emerging market socio-economies from currency crises and Asian financial is related with the financial and banking sector. The major and the most important elements which are underlying the base of Asian crisis were the weakness and deficiency in the financial and banking sector. It was clear that this system which neglects most of the prudential norms as well as encourages the non-transparent bond between the business, the financial institutions, and government are prone to crisis. (Goldstein pp. 65-67) If the financial system tends to be strong then it is the economy which makes gradual progress towards the open market. Policy makers have understood that if liberalization of capital is to be done then they should first take proper step which should be properly synchronized while making the domestic system of the financial area strong. (Goldstein pp. 65-67) References: 1. Dicken, Peter. Global Shift: Mapping the Changing Contours of the World Economy, 6th Edition, London: Sage. 2007. 2. GLE Group. Clippy London. 2010. Retrieved from http://www.gle.co.uk/services/casestudy.php?id=122 on 20th May, 2011. 3. Cavusgil, S. Tamer, Knight, Gary and Riesenberger, John R. . International Business: Strategy, Management, and the New Realities, Prentice Hall. 2008. 4. Goldstein, Morris. The Asian financial crisis: causes, cures, and systemic implications. Peterson Institute, 1998 Read More