英语论文网

in a company is to start a business with overseas new markets by linking up with the local distributors and dealers. 'In the second stage, the firm takes over these activities on its own. In the third stage, the domestic based company begins to carry out its own manufacturing, marketing and sales in the key foreign markets.'

'In stage four, the company infiltrates in these markets, supported by a complete business system including R & D and engineering. This stage calls on the managers to replicate in a new environment the hardware, systems and operational approaches that have worked so well at home.' It forces them to extend the reach of domestic headquarters, which now has to provide support functions such as personnel and finance, to all overseas activities' (Cherunilam 2008:88).According to Pavithira (2009) In the stage four there is unceasing mental domination of the headquarters and 'different local operations are linked, their relation to each other established by their relation to the centre.' ( Pavithira , 2009 )

The fifth stage takes the company towards a real world wide style of operation. The company strikes a new balance in organisation when it truly addresses the needs of local customers in the market. This has been termed as global localisation and a new orientation by Akio Morita of Sony .that simultaneously (Cherunilam,2008). Therefore Jaffery Sachs , director of the Harward Institute for International Development, says ' The great novelty of the current era is the extent to which the poor nations of the world have been incorporated in the global system of trade, finance and production as partners and market participants rather than colonial dependencies.' ( 1998, p: 101)

Because globalisation leads to a global singular market the competition between the multinational companies is fierce. Consumers are always ready to buy a product that is cheap as well as good quality thus this gave rise to the competition between companies each researching methods and techniques to make their product higher quality while keeping the cost to the minimum. One of the methods they found that proved to be extremely beneficial and effective was to reach the economies of scale.

Economy of scale is factors that cause average unit costs to fall as the scale of the output increases in the long run. One of the factors that causes that average unit to fall is Bulk Buying. As a firm grows larger and larger it will have more and more and possibly bigger orders from its customers so in that situation it will need huge number of raw materials. Because a huge amount of raw material is demanded by the firm from the supplier the supplier becomes more inclined to give the firm discount and charge them less price for the raw materials that it would have usually don't if the firm had ordered a small amount of raw materials. Thus when this discount is offered, it brings the average cost of making an individual product down and the frim can charge a bit lower price for it from the customers then its competitors thus gaining an edge in the global market. For example. Volkswagen have been relentless in demanding larger discounts from their components supplier. This has helped Volkswagen reduce its variable cost per car thus giving it an edge in the global automobile market.

Another technique that can be used to further lower the price of a product is to buy cheaper raw material and