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Becoming international and born digital company, social -- well-trained…
Becoming international and born digital company
Identify potential international market
CAGE (Ghemawat)
Administrative and political distance
Geographic distance
Cultural distance
Economic and wealth distance
Institution
formal institution (regulatory pillar)
informal institution (cognitive normative pillar)
limitation
top-down view of world
consider timing enough?
too focus on institutional ideal & known institutional form
Neo-institutionalism
PESTEL
Swedish environment is highly conductive, but market size too small --> global expansion
economic--small and sturated market
social--well trained labour but aging population
Enter foreign market
overview analysis
when-first mover
:check:pre-empt rival, strong brand name
:red_cross:pioneering cost - when new market so different, need time efoort expense to learn the rules of the game
cost of business failure - ignore foreign environment, major mistake
cost of promotion- educating customers
:check:build up sales volume and experience
:check:create switching cost
scale of market entry
big scale -- strategic commitment, has long term impact, difficult to reverse
small scale -- firm can learn foreign market and limit firm's exposure to that market
which
:smiley:politically stable/ free market system/ relatively low inflaiton rate/ low private sector debt -- when product not widely available in that market
six entry methods
Wholly owned subsidiary
set up new operation and acquire an established firm
:check:required to realize location and experience curve economies
:check:tight operation control in different countries--global strategic coordination
:red_cross:full cost and risk set up oversea operation
:check:reduce risk of loosing control over core competenance
Franchising
one form of licensing, sell IP and franchisee have to abide strict rule to do business
:check:avoid risk of opening up a foreign market
:check:quickly build global presence
:red_cross:geographic distance from franchisees --hard to detect poor quality
:red_cross:inhibit firm's ability to take profit from one country to support competitive attacks in another
Joint venture
join by 2 or more local independent firms
:red_cross:risk of giving control of tech to partner
:check:satisfy political consideration
:check:share cost and risk of opening a foreign market
:red_cross:not have tight control
:check:benefit from local partner's knwoledge (culture, language)
:red_cross:conflict for control if goal differs and change over time
Licensing
licensor grant IP right to licensee for specific time and get royalty fee
:red_cross:proprietary asset could be lost--use cross-licensing agreement
:red_cross:limit ability to coordinate strategic move across countries
:red_cross:not have tight control
:check:can capitalize on market opp without develop by itself
:check:avoid barrier to investment
:check:avoid development cost and risk relate to openging a new market
Turnkey project
contractor handles everything for foreign client
:red_cross:no long-term interest in foreign country
:red_cross:may create a competitor
:check:less risky than conventional FDI
:red_cross:if process tech is advantage, sell it is like to potential competitor
:check:earn economic return from know-how (assemble and tech complex process)
exporting
:check:avoid cost of establishing local manufacturing operation
:red_cross:high transport cost and tariff
:check:help achieve experience curve and location economies
:red_cross:ther may be lower cost manufacturing location
:red_cross:agent not act in exporter's best interest
Multinational (MNE)
strategies
Localization
multidomestic strategy -extend home replication
global standardization
opposite of multidomestic
International
home replication -international replication of home countrey competencies
transnational strategy
"best of both world"-both cost efficient and locally responsive
organizational structure
4 structures
geographical area (alternative path of development)
global product division (alternative path of development)
international division (when foreign sales % low
global matrix (high foreign sales % of total sales
what is os
structure
formal division into subunit (centralized or decentralized)
establishment of integrating mechanism to coordinate cross division activities
control and incentive
control - metric to measure performance of subunit
incentive-device to reward
process
manner in which decisions are made
culture
norms and value system shared in org
people
employee, strategy to recruit, type of people in terms of skills
profitable MNEs
elements of OS internally consistent
Org structure fir the strategy
strategy and architecture consistent with each other and competitive condition
align strategy with distinctive Org capabilities
capabilities are build on integration of infrastructure (business process, strategic vision, IT infrastructure, HRM)
Learning organization
Fifth discipline (Senge 2006)
definition
facilitate people continue learn and transform
when people continue expand capacity to create outcome
when new patterns of thinking is encouraged
commitment to continuous improvement at multiple levels
composition
personal mastery
continual learning mode
org learn through individual learn
strive to deepen personal vision
aware growth area and tension between vision and reality
mental model
honest and critical scrutiny of entrenched mental model
transcend mental model for change to take place
system thinking
focus on whole not individual,
long-term goal vs. short-term benefit
interdependency and change
build shared vision
a vision leads to people wanting to excel and learn
leader translate personal vision into shared vision
unearth shared vision --foster geniune commitment rather than compliance
shared vision: shared picture of future we seek to create
team learning
allow group to discover insight not attainable individually
recognize interaction pattern that undermine learning
start wtih capacity of members of a team to suspend assumptions and enter geniune thinking together
double loop learning (Argyris &Schon 1974)
used when it's necessary to change the mental model
key structure and practice
single and double loop learning
distributed leadership
diagnostic practice
learning through practice and practicing learning
feedback structure
Situational analysis
SWOT
composition
internal weakness
external opportunities (social change, tech)
internal strength (finance, marketing)
external threat (competition, lack of energy)
strategies
SO--maxi-maxi--use strength to maximize opp
WO--Mini-Max--minimize weakness by taking advantage of oppor
ST--Maxi-Mini--use strength to minimize threat
WT--Mini-Mini--minimize weakness and avoid threat
AAA (deal with difference)
composition
adaption (local responsiveness)
offer different product and tailor policies, positioning
reduce cost of variation throguh focus, externalization, design
country by country
aggregation (economies of scale)
regional based on geography (regional hub)
can aggregate along CAGE distance
intragroup coordination to create greater economies of scale
non-country bases of aggregation (global account)
arbitrage (absolute economies)
absolute economies not scale economy
arbitrage opp: labor cost, administrative
exploit difference between regional market by locating different parts of supply chain in different places
integrate strategies
choose one A to emphasis, impossible to beat all ocmpetitor
useful for single country with huge internal difference (BRIC countries)
choose mode --trade off depend on industry characteristic
high advertising intensity industry --adpation
high labor intensity industry--arbitrage
Born Global
contrast with conventional MNEs
MNES --gradual incremental pattern of internationalization
resource-constrained start-up internationalizing from
create stock of skills and knowledge
enable international knowledge transfer
foster attractive location for trade and investment
contribute to national economic development
promote high-value-added activities
development of new global industries
Co-opetition (Brandenburger Nalebuff 1997)
Born global and NIV focus on (customer, supplier, competitor, compelmentor)
cooperation between competitors can grwo a market for the benefit of all
international new venture (INV) (Oviatt McDougal 1994)
from inception, seek to derive competitive advantage from use of resource and sale of output in multiple countries
venture launch by established MNEs
various entry strategies -- foreign direct investment
rise of born global (Cavusgil Knight 2015)
first used in early internationalization
start-up from or ear, seek to derive revenue from sale in international market
nowadys abundance
usually export - expected in economies in small domestic market , but began emerging in large internal markets
limit develop global footprint, just in few geographies
1/5 of new enterprise in EU are born global (Eurofound 2012)
social -- well-trained labour but raging population