Piggy Backing as International Entry Mode

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2005:112 SHU

BACHELOR'S THESIS

Piggybacking as International Entry Mode for Small Service Firms The Case of BossIT

Tobias Simolin Olov Renberg

Luleå University of Technology BSc and MSc Programmes in Business Administration and Economics BSc Department of Business Administration and Social Sciences Division of Industrial marketing and e-commerce 2005:112 SHU - ISSN: 1404-5508 - ISRN: LTU-SHU-EX--05/112--SE

ACKNOWLEDGEMENTS
We would like to thank our supervisor Professor Manucher Farhang, who has with his well known experience of research, guided us in the right direction. We would also like to thank Staffan Livbom, Chief Executive Officer of BossIT Communications, for taking the time to answer our questions and explaining in detail BossIT’s international expansion. Luleå, May 2005 Tobias Simolin Olov Renberg

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ABSTRACT
There is a process ongoing where domestic markets are merging into a large global market, and this clash creates a larger supply of products on the international marketplace. Firms have to be able to adapt to these new settings to stay competitive. Previous research has focused on how manufacturing firms and foremost large firms go international. Since more firms are outsourcing their services and employing small service firms to do a specific part of their work abroad, our research is focusing on small firms. For a small firm, it is important to choose the right mode of entry when entering a foreign market. There exists a large array of different modes to choose from when entering a foreign market. The decision of what method to implement can be critical since they may differ in how successful the international entry becomes. One of these international entry modes that has not been received sufficient attention in previous research and thus we have chosen to address is piggybacking, which is when a company indirectly exports through a larger firms distribution channels. To add into the research of piggybacking we have focused on a small firm that is working with telecom in the service sector. This research has provided an understanding that small service firms can use piggybacking as an international entry mode. The findings in this thesis show that small service firms can use piggybacking to reduce the risk of a foreign expansion, and that the relationship can develop to a mutual dependence between the firms.

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TABLE OF CONTENTS
1 INTRODUCTION…………………………………………………………………………...1 1.1 1.2 1.3 1.4 1.5 Background………………………………………………………………………………………………...1 Problem Discussion………………………………………………………………………………………..3 Purpose…………………………………………………………………………………………………….5 Research Questions………………………………………………………………………………………..6 Delimitations………………………………………………………………………………………………6

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2.1 2.2 2.3 2.4

LITERATURE REVIEW……………………………………………………………..7 Process of piggybacking…………………………………………………………………………………...8 Benefits with piggybacking………………………………………………………………………………10 Relationship between rider and carrier……...……………………………………………………………11 Conceptual framework……………………………………………………………………………………12 2.4.1 2.4.2 2.4.3 Piggybacking process………………………………………………………………………...…12 Benefits of piggybacking………………………………………………………………………..12 Relationship between rider and carrier…………………………………………………….…..13

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3.1 3.2 3.3 3.4 3.5 3.6 3.7

METHODOLOGY…………………………………………...………………………15 Research purpose………………………………………………………….……………………….……..15 Research approach………………………………………………………………………………………..15 Research strategy……………………………………………………………………………………..…..15 Data collection method…………………………………………………………………………………...16 Sample selection………………………………………………………………………………..…….…..17 Analysis of data…………………………………………………………………………………………..17 Validity & Reliability……………………………………………………………………………….…....17

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4.1

EMPIRICAL DATA………………………………………….…………………...….19 The Case of BossIT………………………………………………………………………………….…...19

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5.1 5.2 5.3

DATA ANALYSIS…………………………………………………………...…….…25 The Process of Piggybacking…………………………………………………………………………….25 Benefits of...
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