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    Globalization Theories

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    Subhani Khan
    The document discusses several theories of internationalization including the Uppsala model, transaction cost analysis model, and network model. It also covers characteristics of born global firms and factors supporting rapid internationalization.

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    Globalization Theories

    Uploaded by

    Subhani Khan
    177 views20 pages
    The document discusses several theories of internationalization including the Uppsala model, transaction cost analysis model, and network model. It also covers characteristics of born global firms and factors supporting rapid internationalization.

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    Globalization theory

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    The document discusses several theories of internationalization including the Uppsala model, transaction cost analysis model, and network model. It also covers characteristics of born global firms and factors supporting rapid internationalization.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    177 views20 pages

    Globalization Theories

    Uploaded by

    Subhani Khan
    The document discusses several theories of internationalization including the Uppsala model, transaction cost analysis model, and network model. It also covers characteristics of born global firms and factors supporting rapid internationalization.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 20
    At a glance
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    The key takeaways are the three main theories for a firm's internationalization process - the Uppsala model, transaction cost analysis, and the network model. The Uppsala model outlines four stages of internationalization from no regular exports to foreign production. Born global firms are small firms that rapidly globalize from birth without a long internationalization period.

    The three main theories discussed for a firm's internationalization process are the Uppsala internationalization model, transaction cost analysis/transaction cost approach, and the network approach.

    The four stages of the Uppsala internationalization model are: 1) no regular export activities, 2) export via independent representatives, 3) establishment of a foreign sales subsidiary, and 4) foreign production/manufacturing units.

    Svend Hollensen

    GLOBAL MARKETING
    4th Edition

    3 Global marketing Theories

    Internationalization theories
    Learning objectives
    Analyse and compare the three theories
    explaining a firms internationalization
    process
    Explain the most important determinants
    for the internationalization process of
    SMEs

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-2

    Historic development of
    internationalization
    Traditional marketing Internationalization/
    approach
    transaction cost
    approach
    Life cycle concept for
    Dunnings eclectic
    international trade
    approach
    The Uppsala
    The network approach
    Internationalization
    model

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-3

    The Uppsala
    internationalization model
    Stage 1: no regular export activities
    (sporadic export)
    Stage 2: Export via independent
    representatives (export modes)
    Stage 3: Establishment of a foreign sales
    subsidiary
    Stage 4: Foreign production/manufacturing
    units
    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-4

    Figure 3.1 An incremental


    approach to internationalization

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-5

    Exceptions to the
    use of incremental steps
    towards market commitment
    Firms with large resources can take larger
    internationalization steps
    When market conditions are stable and
    homogeneous, relevant market knowledge can be
    gained in ways other than experience
    When the firm has considerable experience
    from markets with similar conditions, it may be
    able to generalize this experience to any market

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-6

    Figure 3.2 Dimensions of


    internationalization
    Foreign operation
    methods

    Sales objects

    Markets

    Organizational
    capacity
    Organizational
    structure

    Personnel
    Finance

    Source: Welch and Loustarinen, 1988. Reproduced with permission from The Braybrooke Press Ltd.

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-7

    Transaction cost analysis (TCA) model


    Firm will tend to expand until the cost of
    organizing an extra transaction within the
    firm will become equal to the cost of
    carrying out the same transaction by
    means of an exchange on the open market

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-8

    Figure 3.4
    Principles of the TCA Model

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-9

    Limitations of the
    TCA framework
    Narrow assumptions of human nature
    Excluding internal transaction costs
    Relevance of intermediate forms for
    SMEs
    Importance of production cost is
    understated

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-10

    The network model


    The relationships of a firm in a domestic
    network can be used as bridges to other
    networks in other countries

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-11

    Figure 3.5 An example of


    an international network

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-12

    Figure 3.6 Four cases of


    internationalization of a firm
    Degree of internationalization of the market
    Low

    High

    Low

    The early starter

    The late starter

    High

    The lonely
    international

    The international
    among others

    Degree of
    internationalization
    of the firm

    Source: Johanson and Mattson, 1988 p. 298. Reprinted by permission of Thomson Publishing Services.

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-13

    Personal factors in
    Internationalization
    Positive perceptions of global environment
    Entrepreneurial orientation
    Innovativeness

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-14

    Internationalization
    preparation
    Conducting international market research
    Committing resources to support venture
    Adapting products to target foreign markets

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-15

    What is this?
    What term refers to a firm that from
    its birth globalizes rapidly without
    any preceding long term
    internationalization period?

    Born global

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-16

    Characteristics of
    born globals
    SMEs with less than 500 employees
    Annual sales under $100million
    Reliance on cutting-edge technology
    Managed by entrepreneurial visionaries

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-17

    Figure 3.7
    Organic versus born global
    External environment

    Managers
    mindset

    Internal environment

    Decision to internationalize
    Organic
    pathway

    Home market

    Born global
    pathway

    Home market
    Export market A

    Export market A
    Export market N

    Export market N
    Source: Adapted from ij et al. (2005), p. 6.

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-18

    Factors supporting
    born globals
    Role of niche markets
    Advances in process/technology
    production
    Flexibility of SMEs/born globals
    Global networks
    Advances and speed in information
    technology
    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-19

    Figure 3.8 Models of


    economic efficiency

    Hollensen, Global Marketing 4e, Pearson Education 2008

    3-20

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