MNE Topic 8 Flashcards
entry modes
non equity based modes = small scale
1. exporting
2. licensing
3. franchising
equity based modes = large scale
1. joint ventures
2. wholly owned subsidiary
increasing control & risk
Uppsala model of internationalisation
- develop in domestic/ home mkt first
- largest obstacle = lack knowledge & resources
- overcome = incremental decision making and learning
- start small commitment then increase
- non equity modes at start & graduate to equity modes over time
- likely to enter physically close foreign mkt first
license, agent export, own export, local packaging, FDI
Uppsala model
internationalising increasing = increasing geographic diversification & increasing market commitment
examples of internationalisation/ international expansion
- J & J - Montreal 1919 33 years after founding
- Sony - 11 years for first export to US
- Gap - founded 1969 first overseas London store 1987
- Marcopolo
1949 - established
1961 first export
1964 - own export dpt
1990 - first FDI, 92 = JV, 97 - acquisition
2000 - enter through licensing and FDI
3 criticisms of Uppsala model
- not all follow sequential model
- commitment lvl, geographic distance - engage several modes simultaneously
- some follow lead firms
successful internationalisation
- scale and internalised resources
not necessities for successful internationalisation
Born Global Firm
-near founding seek superior international business perf
- apply of knowledge-based resources -> sales globally
- shorter average age for first export = 2 years
- larger % of sales from overseas mkts = 76% 14yrs
emergence facilitated by changes in PESTLE and globalisation
International New Ventures
-from inception seeks to derive sig comp adv from use of resources and sale of outputs in multiple countries
-distinguishing feature -> international origins
5 examples of Born Global firms
- skype
- logitech
- cochlear
types of born global firms
- export/import start up
- multinational trader
NEW INTERNATIONAL MARKET MAKERS = 1/2 - geographically focused start up e.g. tech/productivity
- global start up -> best - long lasting success
5 drivers of BG firms
- globalisation
- small home markets -> survival
- market knowledge
- innovation
- ease of forming
networks and alliance -> leveraging foreign distributorship
globalisation as driver of BG firms
- deregulation and economic liberalisation
- homogeneity in tastes and preferences (universal needs)
market knowledge as driver of BG firms
- international mkting orientation
- growth and proliferation of niche markets
innovations as a driver of BG firms
4 elements
- technological competence
- intangible knowledge based capabilities
- international entrepreneurial orientation (unique and quality)
- modern communications and transport infrastructure
4 Roles of founders of BGs
- acquire requisite resources from earlier experience of founders
- personal relationships and social capital = rapid internationalisation
- conceive, recognise, exploit opps in international markets -> prior international exp (work/education)
- less risk averse/proactive/ tolerate ambiguity
6 ways governments promote emergence of BG firms
- free trade agreements (easy exports)
- FDI policies - export oriented - subsidies and special eco zones
- IP protection - patent/copyright
- innovation hubs/incubators - resource linkages
- capital mkt strengthening
- shaping entrepreneurial culture - award schemes
2 ways governments promote BG firms through capital market strengthening
- financing and guarantor schemes
- venture capital provision
country institutions and BGs
- regulatory = regs, policies = support new business
- cognition - knowledge/skills from people (education)
- normative - celebrate entrepreneurial activity & innovative thinking
4 developmental trends of BGs
- start in small countries (home mkt need to expand)
- begin - scarce financial, human, tangible resources
- newness/smaller - flexibility = key benefits for succeeding in foreign mkts
- internationalising by exporting/non equity (being with)
3 BG strategies
- differentiation = charge premium
- cost leadership = charge lower overall
- focus = use differentiation or cost leadership
differentiation
relatively unique products
generally differentiating offering from rivals
cost leadership
compete on low production, mkting, admin costs
focus
concentrate on particular buyer group
segment of product line or geographical market
5 distinctive features of BG strategy
- intangible knowledge based capabilities = establish export mkts
- asset parsimony
- distinctive product/offering (strong diff)
- proactive pursue global mkt nicer = FMA
- networks created through licensing, independent, franchise, own sales, mkting (alternative governance structures)
export markets
tech, processes, business models
knowledge = unique asset -> innovation -> competitive advantage
asset parsimony
use of minimum amount of assets to deliver org outputs
3 challenges BGs face
- expropriation and opportunism
- de-globalisation -> rising nationalism and potential trade war restrictions
- disruptive innovation -> product obsolescence
expropriation and opportunism
- use of alternative governance structures
- minimal use of internalisation -> limited ownership of foreign assets
acquisition of BG firms
eventually acquired
- Microsoft acquired Skype 2011 $8.5 billion
- Facebook acquired WhatsApp 2014 $19 billion
- Apple acquired Beats audio 2014 $3 billion
4 reasons to sell a BG?
- cash out - focus on next, serial BG entrepreneur
- Resource for upscaling - next lvl, complementary capabilities
- protection - security for unwanted sharks, defend against disruptors
- avoid comp - dodge elephants
Born Again Global firms
old firms = show sudden internationalised rapid, previous no enthusiasm -> dont conform to stage models or conceptualisations
internationalise rapid 2-5 years of first international involvement
dramatic change in strategic focus = critical incidents
3 reasons for the emergence of born again global firm
- change ownership
-mngment buyout
-takeover
-change strategic priorities - acquisitions
-foreign firms/international connected firms
-inward tech transfer
-distribution rights - client followership
-domestic client internationalises
Canpro Global
born again global firm
founded 1970s
internationalise services in Us and Middle East
corporate restructuring and branding and acquisition = growth period = increase international sales 25% previous
2012 = services in 14 countries sales 300% in previous 3 years
