What Is Internationalization?

Internationalization describes the process of designing products to meet the needs of users in many countries or designing them so they can be easily modified, to achieve this goal. Internationalization might mean designing a website so that when it's translated from English to Spanish, the aesthetic layout still works properly. This may be difficult to achieve because many words in Spanish have more characters than their English counterparts. They may thus take up more space on the page in Spanish than in English.

In the context of economics, internationalization can refer to a company that takes steps to increase its footprint or capture greater market share outside of its country of domicile by branching out into international markets. The global corporate trend toward internationalization has helped push the world economy into a state of globalization, in which economies throughout the world are highly interconnected due to cross-border commerce. As such, they are greatly impacted by each others' activities and economic well-being.

Key Takeaways

  • Internationalization is a term used to describe the act of designing a product in a way that it may be readily consumed across multiple countries.
  • This process is used by companies looking to expand their footprints beyond their counties of domicile, by branching out into international markets.
  • Internationalization often requires modifying products to conform to the technical needs of a given country, such as creating plugs suitable for different types of electrical outlets.

How Internationalization Works

There are many incentives that might inspire companies to strive for internalization. For example, in the United States, companies that pay exorbitant overhead costs can shave expenses by selling products in nations with relatively deflated currencies, or countries that have lower costs of living. Such companies may also benefit from internationalization by reducing the cost of business via reduced labor costs.

Economic internationalization can often lead to product internationalization since products sold by multi-national companies are often used in multiple countries. As of 2017, over 50% of the revenue earned by companies in the U.S S&P 500 Index came from sources outside of the United States. This is a clear sign that large U.S. companies are conducting a large amount of their business internationally.

[Important: Companies looking to step up internalization efforts should be cognizant of potential trade barriers that may restrict their prospect for overseas commerce.]

Examples of Internationalization

When a company produces products for a wide range of clients in different countries, the products that are internationalized often must be localized to fit the needs of a given country's consumers.

For example, an internationalized software program must be localized so that it displays the date as "November 14" in the United States, and as "14 November" in England. A company that makes hair dryers or other appliances will need to ensure that their products are compatible with the different wattages used in various countries.

They must also make sure that the plugs they make properly fit into different types of electrical outlets.