Question

Explain the four categories of proactive internationalization motives by John Dunning (1993),

Answer 1

The Four Categories of pro-active internationalization motives by John dunning in year 1993 are :

1.Market seeking motives: In this category of motives, company mainly focus on different markets of different place or country or simply say, company looks for opportunities in the markets across international borders. The companies that invest in a particular country or region with an intention to provide goods and service and attain profit are called as market seekers.

Company many adopt this motive to expand its market and to gain more profit.Sometimes it happens that company not being able to make revenue with the local home country market due to more competitors or due to saturated market and looks for an Opportunity in other country to attain more profits.

2.Resource seeking Motives: This is same as market seeking approach, but here company looks for the cheap and easy available resources across many countries. the resources like oil , copper, agricultural products etc are imported to home country from other Countries where the price is very less and thus attain more profit margins and which also helps in staying competitive.

This same thing applies to cheap Skilled and non skilled labors , which are recruited from other countries to home Countries and they agree to work in less wages which helps in minimizing the cost and maximizing the profit.

3.Efficiency seeking motives: This motives involves seeking advantage of cheap resources and its availability in other countries rather than home country, and performing the manufacturing activities which results in lower production cost and greater profit margin.

For example: For an organization , the value adding activities that are capital, technological and informational intensive are usually placed at developed countries and value adding activities that are labour and resource intensive are often placed in developing countries due to easy and cheap availability of resources and labors.

4.Strategic resource seeking Motives :Strategic resources are intangible resources dealing with technology and core competence of the company. this includes Patents, knowledge , skills of the employees and other strategic resources. in these motives the company tries to acquire the other foreign company to uses its technologies, employee skills and thus which help the company to stay competitive in the market. This motives can both be fulfilled by Acquisition or by joint alliance.