Abstract
Internationalization is essential in the modern world that is filled with many uncertainties. Companies internationalize because of many factors that include profit motives, costs minimization, diversification of the markets, search for new opportunities, saturated domestic market etc. the internationalization process of a firm involves many processes that are interlinked and the firm that wants to internationalize should always take these factors into considerations. The factors include the knowledge on the market, the availability of resources, the strategies to be used and the market environment.
Before a company takes on an international assignment it should plan first. Planning will help the organization not to make
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McDougall and Oviatt (2000) introduced a new theory later by explaining internationalization through entrepreneurship in international entrepreneurship theory (IET).
Technology has advanced in the modern world and barriers to trade have reduced enabling the global economy to become more integrated and it is this globalization that is rapid that is enabling many organizations to internationalize in a faster manner that is more effective. Due to advanced technology, some scholars are questioning the validity of the Uppsala model arguing that the model is no longer applicable in the modern world where internationalization of firms has taken a different approach especially in companies that have taken on international new ventures. Researchers have tried to explain the internationalization of firms in a new manner and have come up with new modern network theory and entrepreneurial theory (Schmukler, & Vesperoni, 2006, p. 190).
Researchers have been debating over existing theories in the past few decades and trying to develop new theories that explain the modern trend of why and how firms internationalize. The theories of internationalization explain different processes that take place when companies expand across national borders. The theories discussed are seen as complementary and not parallel. There is a range of internationalization that has been discussed in a number of studies with many failing to explain clearly the behavior of various organizations
Previous research provides insights on some of the factors which influence Born Global internation-alization. We will discuss from the entrepreneurial perspective, organizational perspective, strategic perspective and external environmental perspective (Andersson et al.,2015, p.31) in the following section.
The internationalisation process of the firm has been a subject, which has been motive of study for a number of
The business internationalise means a company’s production and business activity are not only confined to one country, but also integrate the different countries’ raw material and labour and technologies to
Stages of company Internationalization (Uppsala Model) 1. International Marketing – Ethnocentric Orientation 2. Multinational Marketing – Poly centric Orientation 3. Global marketing – Geocentric Orientation 4. Transnational Marketing – Glocal
British grocery and general merchandise retailer Tesco PLC had announced they were to depart from their international operations within Japan and the United States markets, Tesco had stated that they were to end of such operations due it being unprofitable (Reuters, 2013). This paper seeks out to critically analyse and address the factors which had led to Tesco’s failure in the Japanese and United States market. To aid in justifying the influences in Tesco’s departure relevant international business literature will be evaluated for the suggested reasons for the exit. Furthermore, Part (B) of the paper seeks out to discuss the management of transnational businesses , a range of theories concerning the internationalisation of firms will be compared and contrasted, for instance the explanations presented by Vernon, Johnson and Dunning will aid towards the reasons for the internationalisation process of emerging market multinationals.
Many companies today want to expand their business to the international business, which can bring cost down and profits up. Taking a business internationally means knowing the rules and regulations of the countries you are entering. There can be many issues with going global which include cultural barriers, diversity issues, multicultural issues, political issues, and economical issues. It is very important to know how important expansion is to the company and what implications will come from going global.
In the business industry, if businesses want to export their goods and services to other countries, they must become familiar with and adopt international and global strategies. Consequently, there are three types of international and global business strategies. The first type is international, which entails conducting a significant amount of activities outside the home country, yet its focus remains on the home market (Fung, 2014). The second type is multinational, which consists of operating in multiple countries, yet the headquarters is in its home country, not to mention that the competitive advantage will vary by country (Fung, 2014). The third and final type is global, which is when the organization treats the whole world as one market and one source of supply, not to mention, that its competitive advantage is contingent of common brands, standardized products, and global scale production (Fung,
Internationalisation advantages purely relates to the fact that should it be advantageous to internationalise once all things are considered, it should be done. Thus, Sternquist’s (1997) adaptation of Dunning’s (1981) elective paradigm theory only captures the motives behind internationalisation and whether it is the right idea to expand globally; it does not focus on the strategy firms undertake to enter foreign markets and how they behave once there.
Oviatt and Mcdougall in their paper, Toward a Theory of International New Ventures, tried to identify and define International New Ventures in the context of the global marketplace. Their work gained global acclaim in its bid to pose questions about the validity of existing theory on internalization. A decade later, Zahra’s work titled “A theory of international new ventures: A decade of research” attempts to build on prominent aspects of the work of Oviatt and McDougall with the hope of highlighting their important contributions to the field of international new ventures. I will attempt to highlight the areas where Zahra’s work
Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.
In their article, “Toward a Theory of International New Ventures”, published in 1994 Oviatt and McDougall defined the
In 1977 Swedish researchers at Uppsala University came up with a model/theory how businesses should grow their activities in foreign market, this model explains that companies should select an entry mode by taking into consideration their own resources and exploring costs, and risks based on market nature. (Johanson and Vahnle, 2009) Researchers at Uppsala University in their empirical study found that Swedish firms mostly started their process of internationalization by exporting, initially companies had agents that represented them in foreign market, but these firms exported in countries that had little differentiation in culture, language and political systems from their home country, this was labeled in their model as physically close countries. Uppsala Model considers two types of knowledge objective and experience based knowledge, the model describes that after first entrance in foreign market businesses understands how to work in external country, and later they step by step increase level of internationalization to physically distant countries. (Johanson and Vahnle, 2009) But, can Uppsala model be applied to services? This model was mainly reliable for manufacturing industries; a paper with contrary arguments was published in 2008, providing two variables; environment-related and service specific, to question whether Uppsala model can be used for service
The practical studies focus on identifying that internationalization was regular or incremental process .The internationalization process is study focusing on attitudes and behaviors of firms in market that are in the process of internationalization. The practical studies focus on identifying that internationalization was regular or incremental process. Some observations are also made on de-internationalization that point towards the flexibility seen in the duration of the internationalization process.
The first stage of international planning is to decide how to do business globally: whether to export, to enter into licensing agreements or joint ventures, or to operate as a