Application in Practice
In dependence of the categories of advantage there can be chosen the form of the international activity. If a company has ownership advantages like having knowledge about the target market abroad, for example staff with language skills, information about import permissions, appropriate products, contacts and so on, it can do a licensing. The licensing is less cost-intensive than the other forms of internalization.
If there are internalization advantages, the company can invest more capital abroad. This can be achieved by export in form of an export subsidiary.
The FDI is the most capital intensive activity that a company can choose. According to Dunning, it is considered that locational advantages are necessary for FDI. This can be realized by factories which are either bought or completely constructed abroad. FDI is the most capital intensive form of internalization activity.
Read more about this topic: Eclectic Paradigm
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