You are required to write an essay in which you assess the usefulness to international marketers of the three theories of internationalization listed below
Born Global Pathway
University of Westminster, UK
Several studies have focused on theories of internationalization since the raid of globalization hit every aspect of our life and organization as much. The advancement of technology, the decline of trading barriers, the rise of students exchanges programs, yet the rise of low-cost airline companies, is driving the economy to become more integrated and homogeneous. This rapid process is getting marketers and business owners to think and making important decisions to whether or not going international, how, where and when to do it. The study has failed to find a general view whether an approach is better then another, however it has presented situations of firms from different size, operating in different industry and assessed the usefulness of each theory to a specific situation. In fact the paper has found that there are many factors that will influence a marketers to perceive the usefulness of each theory especially regarding on the resources and capabilities of each organization. The paper makes use of different journals articles, a small case study, and references from Hollensen book: Global Marketing (2006).
If looking at the size of a business, then for SMEs approaching the Uppsala model is a way to overcome those barriers of internationalization stressed by Hollensen (2006), such lack of resource and knowledge, yet an opportunity to increase market share and competitiveness. By gradually committing to the foreign market, organizations also decrease the level of risk to their investments (Whitelock, 2002).
On the other hand by gradually increasing the production of goods, the organizations will not benefit from a great level of economy of scales. Although, businesses may rethink this approach for one more reason. In fact the model does not take in consideration the competition. If a business enters a new market with a new product following the U-model, smart firms benefiting of higher resources might decide to enter the same market, with a similar product, but with higher commitment, if they see the market responding positively to the new entrant (Crick, 2009).
In this case they might opt to jump from the first, directly to the most profitable of the four different modes of entering an international market suggested in the article by Johanson et all. (2004) and in a situation with high level of international customers and competitors, the less internationalized firm can be “pulled out” (Hollensen, 2006). The only way for the early starter to keep the position is to insure they have the best distributors and to tight the distribution net with a predatory price.
In a world where information is thought to be the new oil, firms need to become extremely quick in processing data, transforming them into information and then create knowledge for their the internationalization process. For this reason the Uppsala model has received many criticisms because the slow process involved into acquiring knowledge by experience (Whitelock, 2002). Gaining knowledge with the shorter span of time gives the firm a competitive advantage, as the case mentioned previously whether to obtain the best distributors or the best place for a point of sales when entering a new market.
Obstacles to gain knowledge have been decreasing with the latest changes of our world, as suggested by Hollensen (2006) citing Nordstrom: physic distances have decreased and the world has become more homogeneous. For instance thanks to the Erasmus student exchange program established by the EU (1994), Europe offers an interchangeable and multilingual human resource, where businesses can hire people with the...
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