...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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...Managing the internationalization process Learning outcomes After reading this chapter, you should be able to: ➤ Understand the motives for internationalization. ➤ Apply the theories underpinning the internationalization process. ➤ Explain the Psychic Distance and Born Global concepts. 5 ➤ Advise a multinational firm on choosing an appropriate entry mode for internationalization. ➤ Advise a multinational firm on de-internationalization. 148 Global strategic development Opening case study Internationalization of a French retailer—Carrefour In 1960, Carrefour opened its first supermarket in France. In 1963, Carrefour invented a new store concept—the hypermarket. The hypermarket concept was novel, and revolutionized the way French people did their shopping. It moved daily shopping from small stores to enormous stores where customers find everything they want under one roof, in addition to selfservice, discount price, and free parking space. The first Carrefour hypermarket store was established at the intersection of five roads—hence the name, Carrefour, which means ‘crossroads’. Carrefour is the leading retailer in Europe and the second largest worldwide, with Exhibit A International development of Carrefour Year Country and mode of entry No. of stores (2009) 1969 1973 1975 1982 1989 1991 1993 1993 1994 1995 1996 1997 1997 1998 1998 2000 Belgium—Carrefour’s first hypermarket outside France Spain Brazil—Carrefour’s first hypermarket in the Americas Argentina Taiwan—Carrefour’s...
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...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." (Beamish, 1990, p. 77) It can be concluded that there are two most important elements in enterprise internationalization — internal organization and external investment. Welch and Luostarinen(1999) pointed out that “internationalization is the process of increasing involvement in international operations.” Both definitions are process-based which shows the nature of enterprise...
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...(definitional) 1.1 Historically, the primary motive for U.S. multinationals to produce abroad has been to a) lower costs b) respond more quickly to the marketplace c) avoid trade barriers d) gain tax benefits Ans: b Section: evolution of multinational Level: Easy 1.2 The primary objective of the multinational corporation is to a.) maximize shareholder wealth b) maximize world production c) minimize debt d) minimize the cost of doing business globally Ans: a Section: Multinational Financial Management: Theory and Practice Level: Easy 3. ____________ is defined as the purchase of assets or commodities on one market for immediate resale on another in order to profit form a price discrepancy. a) internationalization b) arbitrage c) financing d) total risk Ans: b Section: evolution of multinational Level: Easy 4. The value of good financial management is ___________ in the global markets because of the much greater probability of market imperfections and multiple tax rates. a) minimized b) neutralized c) enhanced d) arbitraged away Ans: c Section: role of the financial executive Level: Easy 5. When a firm operates globally it offers advantages such as a) greater political power at home b) bless taxes on its profits c) greater negotiating power with foreign minority groups d) greater negotiating power with labor unions Ans: d Section: The rise of the MNC Level: Easy 6. The prime transmitter of...
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...7. What are the benefits and problems that MNCs face? 11 8. What are the Russian companies that achieve the multinational status? 13 Conclusion 14 Bibliography 14 Appendix 15 Preface We would like to consider the most interesting topic concerning the multinational corporations. If we called it like that, it means that company made a great success in the market, it operate in several foreign countries. In this mini-course work we will investigate more detailed the structure and strategies of MNCs. In the first part we will look through the history of MNCs. The history, in general, is to be considered as an essential part of every project in order everyone may compare the development of the particular sphere. Next part will show us the statistical data of MNCs, where we will recognize all the most reputable companies from the different industries, such as BMW, Nike, Lego, etc. We cannot leave a side the point of entry into the new market. There it will be explained the strategies of MNCs, such as mergering, joint venture and sequential market entries. Also we will consider investing into the particular companies, weather it is risky or not and the motives of foreign direct investment. Another important point is the comparison of the Transnational Corporations and Multinational Corporations. Of course if we live in Russian, it would be great to present the native companies that achieved status of MNC. The following data will be presented in the convenient tables. ...
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...[pic] PRACTICAL SESIONS 1. Introduction We are going to work on the process of internationalization of a specific company and adapt its determinants to major theories of business internationalization at the same time, we will work the attraction of international investment of two country-specific factors. First of all, you must choose that undertaking, which may not be that choosing another schoolmate. You then select two countries where the company is present, if possible, one developed and other non-developed. 1. Tasks The tasks that you must perform will be a word document and a PowerPoint to present it in class. It is a single work consisting of choose a multinational company and based on information in primary and secondary schools about the company, to analyze the following issues as a case study: 1.- Explain briefly the origin and growth of the company. What is the current situation in terms of number of brands, institutions, countries and modalities of expansion? 2.- What specific factors are those who have influenced the internationalization of the tourist company in question? a) What are the competitive advantages of the company that will ensure an international success?-Hymer applied to the company. b) Does kind of industrial organization sector which belongs to the company? (competes under conditions of perfect competition, oligopoly...) What are your main competitors? Is the industry formed by SMEs or multinational...
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...competitive advantages. Through internationalization US firms can often reap benefits from emerging industries and evolutionary technologies developed...
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...Student's name Instructor's name Course name Date Human Resource Management in Multinational Organizations A Preliminary Research on Self-Initiated Expatriation as Compared to Assigned Expatriation Human resource management in multinational organizations is complex due to the cross-cultural and international aspects related to its nature. This article examines the phenomenon of 'expatriation': choosing to leave one's own country in order to live or work in another, usually for a long period of time. Multinational organizations require a certain level of staff relocation in order to improve their knowledge of emerging markets as well as maximizing their talent resources. In addition to assigned expatriates, meaning those moving to another country following an assignment from their workplace, the article refers to "self-initiated expatriates, meaning people who choose to move to another country on their own. Human resource needs for both kinds of expatriates are unique, and may differ from each other. Self-initiated expatriates may exhibit more motivation to live in a different country and uproot their family for a long period of time, and this motivation may facilitate an easier transition, therefore being less demanding for the human resource management (Mo and Jian-Ming 170-172) Workplace flexibility and the changing nature of work: an introduction This paper examines articles referring to how the changes in the work environment require flexibility on behalf...
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...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, Koh, and Heo 2011), resource-based...
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...INDEX 1. INTRODUCTION 1.1. 1.2. BACKGROUND ENVIRONMENT OF ENTREPRENEURIAL 2. THE IMPORTANCE OF SMEs 3. ROLE OF ENTREPRENEUR 4. ENTREPRENEURSHIP. International 5. INTERNATIONALIZATION PROCESSES. Theories. 5.1. 5.2. UPSALA MODEL. HECKSCHER-OHLIN MODEL 6. THE PROCESS OF INTERNATIONALIZATION 7. ENTREPRENEURIAL MARKETING 7.1. 7.2. 7.3. SWOT ANALYSIS MARKET ENTRY STRATEGY COOPERATION STRATEGY 8. TARGET COUNTRY 9. GEM 10. GOVERNMENT SUPPORT 11. CONCLUSION 12. RECOMMENDATIONS 13. REFERENCES 1. INTRODUCTION: For this work I decided to open in France Cocoon clothing company, located in Granada, retailing, I have chosen these two countries because they are within the top 5 countries of the European Union in the textiles sector and are two major countries with major fashion catwalks. I chose this company because it is a small company, and is a women's clothing store that has clothes very hard to find in other stores. I chose the fashion industry especially because according to my previous studies I think it's an everchanging industry in terms of fashion and is an area in which the image is very important in Spain. Cocoon is a shop that sold clothing especially at night but you can also find jeans, skirts, blouses, accessories, handbags and more clothing at prices that will chord with our product quality. Cocoon is a very experienced workers and always try to help the customer find what you want, is a company with more than 16 years of experience in this sector. 1.1...
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...ENTERPRISE (MNE): is a business –profit or non-profit – that operates in the global arena (across national borders), with no regard to the dimension of the firm The main peculiarity of an MNE is the fact that manage actively and coordinately a set of operations located in different countries. To be true MNE a company must: * have substantial, direct investment in foreign countries (not just the trading relationships of an import-export business) * and actively manage those operations as affecting their strategy and organization The MNE is a recent phenomenon, mostly developed in the post-WW II years. The United Nations has changed (1984) the definition of MNE as these companies have grown in size and importance: “the MNE is an enterprise comprising entities in 2 or more countries, regardless of the legal form and fields of activity of those entities, which operates under a system of decision making permitting coherent policies and common strategies through one or more decision-making centers and in which the...
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...United Kingdom where 165 stores are now available and more than 250 stores around Europe (Wood 2014). Earlier this year, Primark’s parent company announced its intention to enter the US market with a first store opening in Boston MA in 2015, the opening will be shortly followed by another ten new stores across the country (smith 2014). This can be a risky strategy as the shift towards a more globalised market means companies who have been successful in their home market (such as Primark) will find themselves competing with foreign businesses which are much bigger and more successful. However, International expansion offers businesses the opportunity to become recognised on a global scale, for example, companies such as Coco Cola, McDonalds and Microsoft could not have achieved global leadership within their industry without expanding abroad, therefore International expansion offers international reputation which is necessary when wanting to become a leader. Internationalization Theory The Uppsala model (a.k.a the Stage Model) is an important theory that explains how firms expand abroad, under this model, internationalization is seen as an incremental process whereby firms increase their international involvement in a stepwise manner (Bhardwaj et al 2011). The Uppsala model is based on two assumptions: (i) the resource-based theory and (ii) the incremental process (Forsgren 2002). Under the resource-based theory, Anderson and Kheam (1996) explain that for some firms, their lack...
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...Malaysia, Shah Alam, 15-17 June 2009, Volume 2, pp. 128-137 Entry Mode Strategies of Malaysian Service Firms: A Resource-Based Approach Mohammadreza Asgari*, Mohd Nazari Ismail**, Syed Zamberi Ahmad*** Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur ABSTRACT The rapid progress in services has attracted scholars to study the behaviour and decisions of service firms. Firms from Malaysia, as a developing country, with a fast growing economy that increasingly relies on services have shown a remarkable expansion into foreign markets, which has resulted in high foreign direct investment (FDI) outward inflows and increasing exports of services. This paper utilizes the resource-based theory, in which the main determinants of the choice of entry mode are organizational variables compared to environmental factors, to explain the choice of entry strategies made by Malaysian service firms and the motives for it. This study aims to develop a framework for the choice of entry mode strategies that has fewer shortages than others, analyze the determinants of entry mode strategy in order to find the similarities and differences existing between firms in the decision-making process for the choice of entry mode, and consider the role of psychic distance in adopting an appropriate strategy in different markets. Suggestions for future research are also presented. Keywords: Entry mode strategy, developing country, Malaysia, service industries, multinational corporations...
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...Project Scenario: You are a member of the ‘Global Strategy Team’ in a Firm planning for growth through global expansion. Your team has been asked to consider expanding into “new” international markets. You must prepare a report explaining the motives of internationalisation, the current strategies and how the expansion would fit into the firm’s global expansion plan. The second stage would be to choose a potential market and assess its prospects. You must then make suggestions as to the best means of entering that market and the appropriate organisation structure to manage the global expansion. Requirements: You are required to prepare a report of 2,000 words that addresses the theoretical and practical problems associated with the Board’s decision to expand overseas. Suggestions: 1. Choose a local company with which you are familiar, looking up its basic details on the company website, as well as other sources like the The EDGE, Malaysian Business, Wall Street Journal, financial Times and Fortune websites. You may also want to look at the industry by searching the Library’s statistics collection. 2. Choose a market to-date that has NOT been exploited by your company. a. What is the theory that best explain the motives of internationalisation? b. What is the justification of entering that particular market? c. What strategy (international, localisation, global or transnational) is most appropriate? d. What are the recommendations: i. The appropriate entry mode including...
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...In the article form the executive’s extend there are two hypothesis that describes an interest for a multinational company, first that there is a long term viability of a multinational company, and second is that these MNC contribute positively on a region’s growth in terms of the constructive impact. Basically there are three mind set in the executive’s mind while building the MNC, the first is ethnocentric (E ) (where they believe that the executives should be from home country), the another is polycentric (P) (where the company appoints local foreigners as the company believes that they can understand the market better as they are locals), and the third is geocentric (G) (world-oriented where the executive seek the best talent and treats everyone equally). Mostly, R&D turns out to be ethnocentric, Marketing is polycentric, and the company adopts the EPG mix as per the requirement. Now a days, most of the firms senior executive practice the geocentric as they want to promote the best deserving person irrespective of their nationality or any other factor. One of the obstacle in this is from political and economic issues from the local country. Ethnocentric payoff are for the short term as there is faster communication, transparency and local knowledge. But when Ethnocentric is practiced for the global market, there can be a gap to understand the foreign market. While the geocentric accounts most of its cost for communications and travel expenses. The IBM World Trade...
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