For the purpose of internationalization, businesses tend to open their subsidiaries in the new market. These subsidiaries play a crucial role for the functioning of two main factors that are competences and location. The factor of location should be in relation with three sub- factors namely, utilization of local technology based resource, proximity to market platform, and cost for inputs of production. The facto of competences should be in association with the limit to which there was performance of technical activities at the site or in simple words, up till the competences being built by the subsidiary. The benefits of these competences are carried forward to the parent company as a result of the internationalization.
There is establishment of core competences out of intangible assets, an easy imitation of which cannot be done by competitors, are the key source for the ability of the company for delivering unique value to the customers and allowing flexibility to the organization with respect to products and markets. Notwithstanding, each and every organization should be continuously upgrading and renewing its combination of competences by managing the systematic process with innovation and learning of organization. Under this claim, every organization must gain the ability of strategically managing five main competences that are human resource management, financial management, development of service or product, marketing and production.
A number of business organizations consider engaging in international marketing perceiving the opportunity to save cost substantially. There are several countries with the potential of low cost savings as the cost of labour and real estate can be cheap, as in the case of China. In addition, setting up a cheap facility of production could enable the testing of product prior to its sale in the initiation of a global strategy being considered by a business. As a significant example, t-zones portal service was launched in the year 2003 indicating the strategy of T-Mobile to focus on the activities of mobile data.
It signals the determination of T-Mobile for positioning itself as a main international provider of services of mass market mobile data across the entire market platforms. Also, T-Mobile conducted a program of saving cost, also referred to as “Save for Growth”. Within this particular program, it has been successful in integrating its international operations as a single organization, further developing a seamless international portfolio of product on the basis of a unified platform of technology. In this context, it can be stated that businesses having bigger network should consider the utilization of economies of scale to construct networks and manage traffic, further realizing the enhanced power of buyer.