Internationalization Strategy

Internationalization Strategy for Sumitomo Corporation

Executive Summary

Sumitomo Corporation plans to set a research and development department related to it's agriculture chemicals business in Europe. The aim of this strategic goal is to develop R&D and product development capabilities and become the technological leaders in the agriculture chemicals industry. The following report recommends Netherlands as the proposed European state where the department should be set up. Why Netherlands? One section also states various facts as to why Netherlands was chosen. Then further Leiden is the city chosen to establish the research and development department. Also mentioned in the report are various cultural and institutional differences like communication, hierarchy relationships, decision making and work attitudes that the Dutch and Japanese employee may face in their work environment and various measures are given to deal with these differences to minimize their impact on productivity and working environment. After that, the mode of entry in the European market is also stated which is through a joint venture. Through arguments, functional organizational structure is chosen, and a few control strategies have also been listed. The report has been concluded with few recommendations in the end.

Table of Contents

Executive Summaryi

Introduction1

Background1

Selection of European Country2

Institutional and Cultural Differences4

Work Attitude5

Communication5

Hierarchical Relationship6

Decision Making6

How to Deal with these Issues7

Entry Mode8

Why Joint Venture?8

Why not Wholly Owned Subsidiary?9

Organizational Structures and Control Strategies10

Bureaucratic control11

Decision making control11

Output control11

Technology Transfer in International Joint Ventures12

Problems Associated with International Joint Ventures12

Recommendations12

Conclusion13

References14

Appendices16

Internationalization Strategy for Sumitomo Corporation

Introduction

Background

Internationalization of companies and firms is taking place at ever increasing pace. Past few years, a large number of firms have expanded their operations from domestic to international markets. This emergence of operating business internationally and globally has been caused by several factors. First, there has been a swift integration and growth of Asia Pacific countries. Second, it lead to formation of regional and international trading blocs around the world. Third, creation of market economies in the world. Fourth, large amount of advances in communication and production technologies is also taking place.

For simplicity purpose internationalization is defined as rising tendency of organizations to work across state boundaries (www.businessdictionary.com/definition/internationalization.html- access on 9/2/13). Sumitomo Corporation plans to take it's agricultural chemicals business research and development department to Netherlands. Sumitomo Corporation is a trading company which operates in a range of business fields. Sumitomo is continuously making an effort to support and expand it's operations through a unique and exceptional approach. Company's vision of contributing to a stable supply of food and environment friendly agriculture is especially applied to this business unit.

United Nations has warned the world of looming food crisis in the present year as worldwide grain reserves are at dangerously low levels (Vidal, 2012, in www.guardian.co.uk-accessed on 10/2/13). World population in 2013 is approximately 7 billion and by 2050 it would cross 9 billion figures. This population explosion is leading the world to food shortage. In addition to that good land for agricultural purposes is also becoming scarce. So to boost the productivity from that limited piece of land agricultural chemicals play a vital ...