...The Uppsala model is the most accepted paradigm regarding internationalization process of the firms. This model is based on the behavioural theory of the firm (Cyert and March, 1963); inspired by Cyert and March (1963) and Penrose (1959), the model describes the internationalisation process as slow, sequential and gradual, since it represents the firm’s gradual establishment in, integration of, and knowledge about foreign market. Zara and the Inditex group have made use of certain steps to make sure that their firm maintained a competitive advantage in the business environment. When a firm starts entering into foreign market, the first step or the stage chosen by the firm is to start export with the that country, as the firm has no knowedge, information of the resources in that country. In this stage the firm will gain no market experience. Initially, Zara followed the Uppsala Internationalization Model by first entering geographically close markets before advancing to more distant markets. For instance, Zara established a flagship store in a strategic location to build recognition and with the objective of obtaining market information and accumulating experience. The knowledge obtained would then guide Zara to open more stores in that nation (Lopez and Ying 2009). After obtain the experience that useful for operating locally, Zara added the number of its own stores in adjoining areas. This pattern of market expansion is called as “oil stain” by Inditex. The main reason that...
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...Lund University Centre for East and South-East Asian Studies Master’s Program in Asian Studies Master’ East and South-East Asia Track Spring semester, 2011 The Development of the Uppsala Model A Study of Samsung Electronics Author: Li Zhou Supervisor: Magnus Andersson Abstract: Based on an explorative case study approach, this thesis investigated whether the Uppsala model functioned in Samsung Electronics Corp. (SEC) case. The purpose of this study was to upgrade the Uppsala model by using a representative case of SEC. This thesis found that there are two dimensions derived from the Uppsala model. The first dimension is the sequential nature of the internationalization process in terms of psychic distance (from the market with close psychic distance to the market with remote psychic distance). The second dimension is a “market commitment” dimension, which means the form of market operation established from low-level commitment to high-level commitment. Two hypotheses derived from the two dimensions of the Uppsala model will be applied in SEC case. The first hypothesis is that the shorter the psychic distance between SEC’s home environment and target markets, the earlier will SEC establish foreign activities in those markets and vice versa. This hypothesis will be tested on a the macro-level with regards to the geographical distribution of Korean1 outward FDI and will be tested again during the internationalization process of SEC in two target markets-China and the US, to...
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...THE INTERNATIONALIZATION PROCESS OF THE FIRM-A MODEL OF KNOWLEDGE DEVELOPMENT AND INCREASING FOREIGN MARKET COMMITMENTS JAN JOHANSON' Center of International Business Studies University of Uppsala JAN-ERIK VAHLNE' Institute of International Business Stockholm School of Economics Abstract. O n the basis of empirical research, a model of the internationalization process of the firm is developed. The model fccuses on the gradual acquisition, integration and use of knowledge about foreign markets and operations, and on the incrementally increasing commitments to foreign markets. In particular, attention is concentrated on the increasing involvement in the individual foreign country. ' , .?.. . ' 1 .ti-. ;,..,, ,--.7p.p. . & , Several studies of international business have indicated that internationalization of the firms is a process in which the firms gradually increase their international involvement. It seems reasonable to assume that, within the frame of economic and business factors, the characteristics of this process influence the pattern and pace of internationalization of firms. In this paper we develop a model of the internationalization process of the firm that focuses on the development of the individual firm, and particularly on its gradual acquisltion, integration, and use of knowledge about foreign markets and operations, and on its successively increasing commitment to foreign markets. The basic assumptions of the model are that...
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...STP template Instructions: What’s it for? To prepare for tutorial 2.When is it due? Bring it along to the tutorial 2.By whom? Do it as a group. If you do not get a chance to sit as a group, do it individually before the tutorial.Is it compulsory? No, the “Memo” was compulsory. However, having this completed will be a great help in preparing for your coursework and the time spent during the tutorial will be much more productive!Tips: fill in as much as you can. When filling up the template always think of the arguments you have to support your decisions (you will need to demonstrate your argumentative and critical skills in the coursework). | Segmentation Identify key segmentation variables and segment the market into three segments.Key segmentation variables (think through as many as possible):‘Umbrella’ variable (e.g, benefits sought, lifestyle, age, income etc.):Your identified three distinct segments (they shouldn’t overlap): * Segment 1: People with chronic back pain. - Segment 2:People over the age of 55 * Segment 3:People who are of mid-level income , they don’t want to perform surgery since expensive and want a substitute with is of same quality but at a more acceptable cost. | Targeting Evaluate market segments and choose the target segment.Market attractiveness criteria (segment size, segment growth, segment profitability etc.):Business strength criteria (resources, skills and competencies etc.):How would you rank the segments based on the...
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...The Uppsala Model Internationalisation can be described as “the process of increasing involvement in international operations” (Welch & Luostarinen, 1988, p. 36). At any rate, why a company should internationalize, and how? The fundamental reason for exporting, in most firms, is to make money. However, as in most business activities, one factor alone rarely accounts for any given action. Usually a mixture of factors results in firms taking steps in a given direction. The table below provides an overview of the major internationalization motives. They are differentiated into proactive and reactive motives. Proactive motives represent stimuli to attempt strategy change, based on the firm’s interest in exploiting unique competences (e.g. a special technological knowledge) or market possibilities. Reactive motives indicate that the firm reacts to pressures or threats in its home market or in foreign markets and adjusts passively to them by changing its activities over time. Proactive motives | Reactive motives | * Profit and growth goals * Managerial urge * Technology competence/unique product * Foreign market opportunities/market information * Economies of scale * Tax benefits | * Competitive pressures * Domestic market: small and saturated * Overproduction/excess capacity * Unsolicited foreign orders * Extend sales of seasonal products * Proximity to internationalcustomers/psychological distance | (Adapted from Albaum et al., 1994, p. 31)...
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...D-uppsats Serietitel och serienummer Title of series, numbering ISSN Övrig rapport ____ URL för elektronisk version http://www.ep.liu.se/exjobb/eki/2004/iep/026/ Titel Title Företagets internationaliseringsprocess - en fallstudie The internationalisation process of the firm - a case study Författare Author Tomas Sylverberg Sammanfattning Abstract Background: The Uppsala model is the most accepted paradigm regarding the internationalisation process of the firm. This thesis tries to complement the Uppsala model with Porter's theories regarding internationalisation. Purpose: The purpose of this thesis is to study to what extent the Uppsala model is applicable to a small manufacturing firm, and to see if the theory, combined with the Porterian framework, can provide a more solid framework for the description of the internationalisation process of the firm. Method: The master thesis is based on one personal interview with the CEO of the study object, Bukowski design. Results: The internationalisation process of the firm can to some extent be explained using the Uppsala model. It is, however, valuable to complete the picture with, for example, Porter’s theories, that permit a deeper understanding. - Nyckelord Keyword Internationalisation, competitive advantage, international strategy, establishment chain, risk, Bukowski design, Peter Gustavsson - Avdelning, Institution Division, Department Ekonomiska institutionen 581 83 LINKÖPING Datum...
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...乌普萨拉模型 The Uppsala model[1] is a theory that explains how firms gradually intensify their activities in foreign markets. It is similar to the POM model.[2] The key features of both models are the following: firms first gain experience from the domestic market before they move to foreign markets; firms start their foreign operations from culturally and/or geographically close countries and move gradually to culturally and geographically more distant countries; firms start their foreign operations by using traditional exports and gradually move to using more intensive and demanding operation modes (sales subsidiaries etc.) both at the company and target country level.[3] The Uppsala model also proposes that foreign sales begin with occasional export orders that are followed by regular exports; and the POM model states that the first sales object is physical product – services, knowledge, and systems are possibly, but not necessarily later added to the sales objective.[3] Additionally, the POM model assumes that the first expansion in the sales object/product, operation and market strategy concerns expansion to new foreign markets.[3] Finally, the firm will not commit higher levels of resources to the market until it has acquired increasing levels of experiential knowledge and therefore the internationalization evolves stepwise at a relatively slow pace because of local market regulations and/or organisational learning.[4] Uppsala model specifies that level of commitment may also...
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...Journal of International Business Studies (2009) 40, 1411–1431 & 2009 Academy of International Business All rights reserved 0047-2506 www.jibs.net The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership Jan Johanson1 and Jan-Erik Vahlne2 1 2 Uppsala University, Uppsala, Sweden; Gothenburg University, Gothenburg, Sweden Correspondence: J Johanson, Uppsala University, PO Box 513, SE-751 20, Uppsala, Sweden. Tel: þ 46 859255215; E-mail: jan.johanson@fek.uu.se Abstract The Uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977. Now the business environment is viewed as a web of relationships, a network, rather than as a neoclassical market with many independent suppliers and customers. Outsidership, in relation to the relevant network, more than psychic distance, is the root of uncertainty. The change mechanisms in the revised model are essentially the same as those in the original version, although we add trust-building and knowledge creation, the latter to recognize the fact that new knowledge is developed in relationships. Journal of International Business Studies (2009), 40, 1411–1431. doi:10.1057/jibs.2009.24 Keywords: internationalization theories and foreign market entry; network relations theory; experiential knowledge; commitment; trust; opportunity Received: 10 July 2007 Revised: 15 October...
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...Norges Handelshøyskole Bergen, Spring 2011 Master Thesis within the main profile of International Business Thesis Advisor: Professor Svein Ulset Title: International Modes of Entry Subtitle: The Case of Disney By, Carlos Gonzalez Hernandez This thesis was written as a part of the master program at NHH. Neither the institution, the supervisor, nor the censors are -through the approval of this thesis- responsible for neither the theories and methods used, nor results and conclusions drawn in this work. International Modes of Entry: The Case of Disney 1 Abstract The case of Disney’s theme parks represents an opportunity to test major internationalisation theories in a setting of large investments with little chance for reversal of commitments. The purpose of the research is to study the benefit of different entry modes dependent on Disney’s Theme Parks value-generating resources and capabilities while conditioned to certain local industrial and institutional conditions in foreign markets. Five major theories and frameworks were used to analyze all four Disney’s ventures abroad. This resulted in 20 individual hypotheses analyzed. Results indicate that Disney followed a predictable internationalisation process in the cases of Tokyo, Hong Kong and Shanghai, but that it went off-path in the Paris one. In successful cases Disney followed a cautious approach, involving local partners to transfer and adapt the “Disney Experience”. In the case of Paris the company decided to enter...
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...Case study analysis on 23 Elyas Genno elyasgenno@cityuniversaty.edu mba 546: European Union Matthias Suthe 16.11.2014 Introduction The Maromekko is one of the biggest Finished textile company inthe European as well as Intenatanal market of clothing and interior decoration. With the over 500 millions clinets, whereas most is based in Europe clintes and grouping more than 20 million companies around the gloub. Under the operation of the company are production, desing and manufactures of: clothing of premium class brand bags accesories interrionr decoration Company is well known in Finland, primary location, and across the borders in EU states, as well as in the regions of US and Japan. Within the time Marimekko has become secong after China largest expoerte of textile goods. Moreover the states of EU is consedering in top of preferetable textile clouthing and good in the world economy. However, in earrly 2005 within an increase of the import from Far East has affected the this particular sector of the Europe and international economy. Heance cluser to second half of 2008 this affect become more notable for this sector and sloweded down the whole international economy growth in 2010. For the Finland region this affect has reached it top faster, in 2008. The significant damage were felt alredy in 2009, regarding the the droped of the profitability and amount of the deminish orders. Hence it has broed as well new increase of competition by entrering...
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...Question no. 1 - Discuss the challenges facing Starbucks in 2010 Motives of Starbucks’ internationalization Exploring internationalization motives of Starbucks represented by a number of factors, including proactive and reactive factors, provides a better understanding of the reasons for the company’s decision to expand to foreign markets. Proactive motives are related to the firm’s motivation to take advantage of new market opportunities. While reactive motives represent that the firm responds to environmental changes and pressures in its domestic market or in foreign markets and adjusts the activities over time. (Hollensen 2011; Czinkota et al. 2009) Seeking growth and exploring new market opportunities are major proactive motives of Starbucks’ internationalization. Moreover, decision-makers are likely to explore first those overseas market opportunities perceived as having some similarity with the opportunities in their home market. At a later stage of internationalization Starbucks strived to make use of economies of scale which enabled the company to rise more rapidly on the learning curve and reduce production costs. (ibid) Major reactive motive for initial stage of Starbucks’ internationalization is represented by physical and psychological closeness to Canada that was the first foreign market for the company. Another reactive motive of Starbucks’ international expansion is saturation of the domestic market. The case study mentions...
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...Issues in Management Essay Introduction With the rapid development of knowledge, economy and communication technologies, the world economic integration and international division of labor is increasingly deepening. Enterprises, as one of the most important elements in global value chain are facing both opportunities and challenges. Traditionally speaking, medium sized enterprises (SME) are primarily facing towards their home-market (Lindmark, 1998). However, due to the trend of globalization, more small and medium-sized enterprises have already started international expansion (Knight and Cavusgil, 1996). In the process of economic globalization, the competitive advantage depends largely on the enterprise innovation and the ability to enter into the market quickly. This essay will discuss the globalization process of a manufacturing company located in a G7 economy making high quality agricultural equipment and both the positive and negative features of globalization. The globalization process of the company Although internationalization is a common sense in today’s marketing, however, to discuss the internationalization process of enterprise, it is important to define enterprise internationalization itself clearly. Beamish(1990) defined enterprise internationalization as "the process by which firms both increase their awareness of the direct and indirect influence of international transactions on their future, and establish and conduct transactions with other countries...
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...The evolution of internationalization There have been a variety of different approaches to explain the internationalization of business activities. They normally concentrate on distinct aspects of the reasons for and results of, enterprises operating in more than one environment and have changed dramatically throughout the last decade. Whereas traditional theories have focused their attention on the internationalization of production and foreign direct investment (FDI) where the multinational enterprise (MNE) played a central role, recent theories have approached internationalization as a process in which firms increase their involvement in international operations adapting their strategies, resources and structure to new investments. The focus of recent theories has centered on small and medium-sized firms (SMEs). In the late 1960s, scholars started to study international business in a historical perspective. Historians established a very fruitful dialogue with applied and development economists who helped to explain quite convincingly why American and British firms went international and how they influenced their home and host economies (Jones, 1986, 2002; Wilkins, 1970, 1991). As pointed out by Geoffrey Jones (2005), internationalization is a rather cumulative process, two powerful explicative factors being technology and networking. A major factor in the history of internationalization is the family firm. So far, however, little attention has been paid to the advantages...
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...Task 1 (not more than 1200 words, maximum) Sub-section 1: Learning and willingness to learn from new market’s culture. How is the new market? How are the new customers? You’re learning from the experience and introduce it into your products. 1. Willingness to learn: what different things did they (Natura) learn in the new market? Did they introduce new products? Did they hire local employees? Did they provide some sort of different systems for the customers to buy their products? So what is the different system that they have changed? If they changed, give examples. 2. High level of energy and commitment: You remember we have talked about some markets that need more work to be done because they are not developed yet, they’re under developed. So what do you do? You provide more resources in there, you look after the market in order to mature the market. So give example, something like, when they (Natura) enter Russia market, how they commit to that market? Are they trying to provide extra credits to the manufacturers, or wholesalers in the market? Are they try to give extra offers to the customers? That’s commitment. 3. Control and effective monitoring: Have they decentralized their control in new markets? Or they centralize their control? Sort of control: how much they centralize/decentralized their control? What sort of activities they centralize or decentralize? First part of Task 1 can be breakdown into...
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...International Trade & Academic Research Conference (ITARC ), 7 – 8th November, 2012, London.UK. Network-based theories and internationalization of firms: applications to empirical studies Mojtaba Hosseini and Hosseini Dadfar Linkoping University, Sweden Key Words Network based theories, Internationalization, Revised Uppsala Model, ARA-Model, and Network Embeddedness. Abstract By using a topology of the most frequently used network-based theories on the firms’ internationalization; this paper is going to present some recommendations to correctly apply those theories in future internationalization studies. We have identified eight network-based theories that are broadly used in internationalization studies. These theories are Relationship Approach, Social Network Analysis and Network Mapping in American schools, and Industrial Marketing and Purchasing Group (IMP) Interaction Approach, ARA-Model, Network Embeddedness, Revised Uppsala Model and Network-based Internationalization Theory, which are developed by European universities. This paper, will explain these theories, their applications to internationalization and then making some recommendations for the future empirical studies. Figures and tables are used to clarify and summarize the theories and their empirical applications. Introduction Researchers have been using of different basic theories to explain the internationalization of companies. For example, transaction cost approach (TCA) (Anderson 1986; Lee,...
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