Expansion Strategy Flashcards
What is a born global firm?
a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and sale of outputs in multiple countries
What phenomena have lead to the development of born global firms?
Firms from innovative and globally competitive industries have a high degree of internationalization with or shortly after formation
What is an INV?
International New Venture
What are the 4 types of INVs?
- Geographically focused start-ups
- Global start-up
- Export/import start-up
- Multinational trader
What are 4 necessary and sufficient preconditions of sustainable INVs by Oviatt/McDougall?
- Organizational formation through internalization of transactions 2. Alternative governance structures to access resources
- Exploitation of foreign location advantages
- Control over unique resources
What are 5 factors Johnson (2004) stated influenced the early internationalization of high-technology start-ups?
- International experience of Management
- Limited home market size
- Short product life cycles
- Existence of network and scale effects
- International business concept from start
How do sequential entries into the market work over time?
Starting from home market, company enters foreign markets one after another
How to simultaneous entries into the market work over time?
Company enters numerous foreign markets (nearly) simultaneously
What does a sequential expansion path determine?
- benefits from learning
- adaptation to regional requirements
- exploitation of life cycles of products/technologies
What does a simultaneous expansion path determine?
- establishment of worldwide network standards
- prevention of imitation by competitors
Why do firms often enter foreign markets in tandem?
Maintain competitive position (Knickerbocker, 1979)
Legitimacy (Avoid being the firm that did not enter)
Information spill-over
Network effects
What are first-mover advantages?
- Brand loyalty and technological leadership
- preemption of scarce resources
- exploiting buyer switching costs
- reaping increasing returns advantages
What are first-mover disadvantages?
- high research and development areas
- Underdeveloped supply and distribution channels
- Immature enabling technnologies and complements
- Uncertainty of customer requirements
What are the advantages of a second-mover?
- tap into emerging trend
- learn from leveraged first-mover experience
- recognize gaps in strategy and adapt strategy
