Assignment
Internationalization of Portuguese firms An important recent development has been the strong surge in Portuguese investment abroad. During the 1990s and the early years of the new millennium Portugal's outward foreign direct investment multiplied at an impressive rate. By 2003 Portugal was among the leading 15 countries that invest overseas, with most of the fid taking the form of cross-border acquisitions or partnerships. Internationalization efforts have followed a distinct pattern in terms of their economic geography. Typically the first moves were made into the neighboring economy, Spain. An example of this ‘toe in the water' stage was the acquisition by Camper, the leading Portuguese cement maker, of Corporation Norwest, a Spanish cement maker based in Galicia. The next move was for Portuguese firms as diverse as Censure, Petro gal, Transports Luis Samos and Caxias Gerald de Depositors to penetrate the wider Spanish market.
A survey conducted among Portuguese companies found that the priority markets for internationalization were Spain (69.9%), the former Portuguese African colonies or PALOPs (47.3%), the rest of the EU (38.7%) and Brazil (35.5%). A clear pattern and trajectory is discernible in Portugal's internationalization efforts. Typically the first moves, as indicated above, are made into the neighboring economy. As a result of these rapidly expanding two-way flows, an EU regional bloc based in the Iberian Peninsula came into existence during the 1990s as a buoyant new trading area. Using Spain as a springboard, the next natural step was into North Africa and the countries that were formerly Portugal's African colonies (PALOPs).
The latter were attractive because they were undertaking privatization programmers, while Brazil became a focal point for economic relations with Marcos. The most recent stage has involved investments in the more advanced EU economies. In some cases, a presence has also been established in Eastern Europe, notably Poland, Hungary and Russia. The Portuguese expansion strategy is driven by the need to stay competitive in order to survive by ‘growing' the size of domestic firms via international involvement. The problem of scale is important. Given the country's dimensions, large nationally based groups are inevitably thin on the ground. World-ranking tables, for instance, placed Portugal's largest bank, CGD, in 146th place. In such circumstances, there exists an ever-present danger that Portuguese firms will fall prey to foreign, perhaps Spanish, and transnational's.
Question
1 What does the Portuguese experience suggest about the internationalization process?
2 What policies might be used to encourage further internationalization by Portuguese firms?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.