MNE Topic 8

Question 1

entry modes

Answer 1

non equity based modes = small scale
1. exporting
2. licensing
3. franchising

equity based modes = large scale
1. joint ventures
2. wholly owned subsidiary

increasing control & risk

Question 2

Uppsala model of internationalisation

Answer 2

• develop in domestic/ home mkt first
• largest obstacle = lack knowledge & resources
• overcome = incremental decision making and learning
• start small commitment then increase
• non equity modes at start & graduate to equity modes over time
• likely to enter physically close foreign mkt first

license, agent export, own export, local packaging, FDI

Question 3

Uppsala model

Answer 3

internationalising increasing = increasing geographic diversification & increasing market commitment

Question 4

examples of internationalisation/ international expansion

Answer 4

1. J & J - Montreal 1919 33 years after founding
2. Sony - 11 years for first export to US
3. Gap - founded 1969 first overseas London store 1987
4. Marcopolo
   1949 - established
   1961 first export
   1964 - own export dpt
   1990 - first FDI, 92 = JV, 97 - acquisition
   2000 - enter through licensing and FDI

Question 5

3 criticisms of Uppsala model

Answer 5

1. not all follow sequential model
   - commitment lvl, geographic distance
2. engage several modes simultaneously
3. some follow lead firms

Question 6

successful internationalisation

Answer 6

1. scale and internalised resources
   not necessities for successful internationalisation

Question 7

Born Global Firm

Answer 7

-near founding seek superior international business perf

• apply of knowledge-based resources -> sales globally
• shorter average age for first export = 2 years
• larger % of sales from overseas mkts = 76% 14yrs

emergence facilitated by changes in PESTLE and globalisation

Question 8

International New Ventures

Answer 8

-from inception seeks to derive sig comp adv from use of resources and sale of outputs in multiple countries

-distinguishing feature -> international origins

Question 9

5 examples of Born Global firms

Answer 9

1. skype
2. whatsapp
3. Facebook
4. logitech
5. cochlear

Question 10

types of born global firms

Answer 10

1. export/import start up
2. multinational trader
   NEW INTERNATIONAL MARKET MAKERS = 1/2
3. geographically focused start up e.g. tech/productivity
4. global start up -> best - long lasting success

Question 11

5 drivers of BG firms

Answer 11

1. globalisation
2. small home markets -> survival
3. market knowledge
4. innovation
5. ease of forming
   networks and alliance -> leveraging foreign distributorship

Question 12

globalisation as driver of BG firms

Answer 12

• deregulation and economic liberalisation
• homogeneity in tastes and preferences (universal needs)

Question 13

market knowledge as driver of BG firms

Answer 13

• international mkting orientation
• growth and proliferation of niche markets

Question 14

innovations as a driver of BG firms
4 elements

Answer 14

• technological competence
• intangible knowledge based capabilities
• international entrepreneurial orientation (unique and quality)
• modern communications and transport infrastructure

Question 15

4 Roles of founders of BGs

Answer 15

1. acquire requisite resources from earlier experience of founders
2. personal relationships and social capital = rapid internationalisation
3. conceive, recognise, exploit opps in international markets -> prior international exp (work/education)
4. less risk averse/proactive/ tolerate ambiguity

Question 16

6 ways governments promote emergence of BG firms

Answer 16

1. free trade agreements (easy exports)
2. FDI policies - export oriented - subsidies and special eco zones
3. IP protection - patent/copyright
4. innovation hubs/incubators - resource linkages
5. capital mkt strengthening
6. shaping entrepreneurial culture - award schemes

Question 17

2 ways governments promote BG firms through capital market strengthening

Answer 17

1. financing and guarantor schemes
2. venture capital provision

Question 18

country institutions and BGs

Answer 18

1. regulatory = regs, policies = support new business
2. cognition - knowledge/skills from people (education)
3. normative - celebrate entrepreneurial activity & innovative thinking

Question 19

4 developmental trends of BGs

Answer 19

1. start in small countries (home mkt need to expand)
2. begin - scarce financial, human, tangible resources
3. newness/smaller - flexibility = key benefits for succeeding in foreign mkts
4. internationalising by exporting/non equity (being with)

Question 20

3 BG strategies

Answer 20

1. differentiation = charge premium
2. cost leadership = charge lower overall
3. focus = use differentiation or cost leadership

Question 21

differentiation

Answer 21

relatively unique products
generally differentiating offering from rivals

Question 22

cost leadership

Answer 22

compete on low production, mkting, admin costs

Question 23

focus

Answer 23

concentrate on particular buyer group
segment of product line or geographical market

Question 24

5 distinctive features of BG strategy

Answer 24

1. intangible knowledge based capabilities = establish export mkts
2. asset parsimony
3. distinctive product/offering (strong diff)
4. proactive pursue global mkt nicer = FMA
5. networks created through licensing, independent, franchise, own sales, mkting (alternative governance structures)

Question 25

export markets

Answer 25

tech, processes, business models knowledge = unique asset -> innovation -> competitive advantage

Question 26

asset parsimony

Answer 26

use of minimum amount of assets to deliver org outputs

Question 27

3 challenges BGs face

Answer 27

1. expropriation and opportunism 2. de-globalisation -> rising nationalism and potential trade war restrictions 3. disruptive innovation -> product obsolescence

Question 28

expropriation and opportunism

Answer 28

- use of alternative governance structures - minimal use of internalisation -> limited ownership of foreign assets

Question 29

acquisition of BG firms

Answer 29

eventually acquired 1. Microsoft acquired Skype 2011 $8.5 billion 2. Facebook acquired WhatsApp 2014 $19 billion 3. Apple acquired Beats audio 2014 $3 billion

Question 30

4 reasons to sell a BG?

Answer 30

1. cash out - focus on next, serial BG entrepreneur 2. Resource for upscaling - next lvl, complementary capabilities 3. protection - security for unwanted sharks, defend against disruptors 4. avoid comp - dodge elephants

Question 31

Born Again Global firms

Answer 31

old firms = show sudden internationalised rapid, previous no enthusiasm -> dont conform to stage models or conceptualisations internationalise rapid 2-5 years of first international involvement dramatic change in strategic focus = critical incidents

Question 32

3 reasons for the emergence of born again global firm

Answer 32

1. change ownership -mngment buyout -takeover -change strategic priorities 2. acquisitions -foreign firms/international connected firms -inward tech transfer -distribution rights 3. client followership -domestic client internationalises

Question 33

Canpro Global

Answer 33

born again global firm founded 1970s internationalise services in Us and Middle East corporate restructuring and branding and acquisition = growth period = increase international sales 25% previous 2012 = services in 14 countries sales 300% in previous 3 years