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In previous blog post we have analyzed the processes of internationalization of companies responding to how, where and why of internationalization from the Uppsala model and the eclectic paradigm.

Based on the analysis carried out by Juan José Renau Piqueras to finalize the different perspectives of the reasons for companies to internationalize, we enter the paradigm of Porter.

Porter’s paradigm mainly analyzes where internationalization processes should be developed.

Where internationalization should be developped?

Renau Piqueras collects in his article two main lines of this paradigm on where to carry out processes to internationalize.

On the one hand, Porter’s paradigm analyzes competition in two sectors: multi-household and global.

In order to establish where, Porter uses the value chain of companies and specifies what activities it integrates, from an initial stage where the company takes care of all the activities and performs only exports to different final scenarios among which is the global company .

On the other hand, it analyzes the sources of competitive advantage linked to the countries. This analysis comes from the reasons why certain countries concentrate companies of the same sector and the reason for the evolution of the sectors.

Porter determines that countries increase their competitiveness “by increasing their national productivity and that international trade allows a country to increase its productivity by eliminating the need to produce all its goods and services in that country.” For this model, no country can be competitive in everything, that is why the company must relate to the sectors in which competitiveness is concentrated, which results in the specialization of the countries.

The competitive advantage of the Porter paradigm is determined by:

  • The conditions of the factors necessary to compete in a sector (human resources, infrastructures, etc).
  • The conditions of the demand, or nature of the internal demand for products or services.
  • The existence or absence in the country of support sectors and related sectors.
  • Strategy, structure and rivalry of the company.

As it has been seen in this series of entries on the why, the how and where of the internationalization this process is more than a different company with additional requirements; Many variables and actions must be considered in order to achieve the desired objectives, which should be analyzed by specialists in the field.

If you want more informations about the design and implementation of Internationalization Strategies, please contact us.

Juan José Renau Piqueras was Professor of Business Economics and Dean of the Faculty of Economic and Business Sciences of the University of Valencia.