1. Entry Modes For International Markets
Nensi Skala
Christos D. Sotiropoulos
U. Kentucky
Global Business Management - MGT610
Prof: Dr. Alina Hyz & Dr. Dimitris Stavroulakis
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2. Why bother to listen?
• What is Huawei and what made this
company international?
• How achieved it?
• What we gain from this?
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3. Who/What is Huawei?
a. The Dream island with the fancy beaches and the surf?
(Hawaii)
b. A Chinese company which focuses on Telecommunication
industry?
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4. Huawei Technologies Co. Ltd
Multinational and one of the top world wide leaders in:
Networking / telecommunications equipment & services
Government Solutions
Manufacturing (electronic communications devices)
• 華為 Huawei means ”flower of China”
• 1987 founded by Ren Zhengfei (Privately owned company)
• 2013 invested $5 billion 21 R&D institutes
• Financial Growth 20.6% with 39.463 milions revenues
• Foreign leader partners (HP, IBM, Oracle etc.)
• Competitors (Cicso Systems, INC. ZTE Co. Alcatel Lucent)
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5. Factors of Huawei’s Succession in
International Market
The products’ and Industry’s features,
structures and characteristics
Offered products met the demands of
the market
Low cost product and competitive
prices
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6. Factors of Huawei’s Succession in
International Market
Innovative due to investing on R&D
The appropriate market entry mode
choice
Political/economic and socio-
cultural conditions
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7. Factors of Huawei’s Succession in
International Market
The chosen strategy
Find the right people
China’s technology reputation
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8. Huawei’s International Strategy
“A strategy is a solution to move from where you are
now (A) to where you want to be (B)”
Looking for Countries
Developing and NO developed
Understanding of host’s market
social and cultural and local
market conditions
Countries friendly with China
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9. Huawei’s International Strategy
“A strategy is a solution to move from where you are
now (A) to where you want to be (B)”
Make partnership and join ventures
Make partnership with government
Setup branches and service centers
Take advantage of technological R&D
from partnerships
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10. Huawei’s International Strategy
“A strategy is a solution to move from where you are
now (A) to where you want to be (B)”
Apply different market entry mode in different
markets and for different products
Customized products & services
Lower prices than competitors
Search for new opportunities
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11. • 1996 Russian Market
Joint venture of Beto-Huawei with Russian
Beto Konzern and Russia Telecom
Invested on R&D
Take advantage of social and cultural
condition of host market (information
security)
Huawei’s International Process
“A process is a defined way of doing a task”
Different entry modes for different markets
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12. • 2000 South America, Asia
and Africa
Use export method to enter the market
Set up Branches and Services centers
Based on high flexibility, low resources
commitment and low dissemination risk
Huawei’s International Process
“A process is a defined way of doing a task”
Different entry modes for different markets
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13. • 2001 North America, West
Europe and other countries
Contractual modes by franchising, co-
research, co-production and Co-sales
Cooperation
Joint Venture
Huawei’s International Process
“A process is a defined way of doing a task”
Different entry modes for different markets
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14. Different modes for different products
Huawei’s International Process
Type of Product Type of Mode
Traditional advantage product Join venture & Export method
Products with no advantage Corporation
Technological advantage & no
market recourse
Join venture, Franchising or Co-
Resource
“A process is a defined way of doing a task”
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15. Process models of internalization
Uppsala model (Johanson & Wiedersheim-Paul 1975)
4 modes in sequence
No Regular Export
Activities
Export via independent
representatives
Establishment of overseas
sales subsidiary
Overseas production or
manufactory unit
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16. • High technology enterprise and not a
traditional one
• Different Modes in different host market at
the same stage of internalization
• Host’s market environment not necessarily
similar with home environment
• Not investing only in neighbor countries
Huawei vs. Uppsala
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17. Driscoll’s entry mode choice (Driscoll 1995)
3 modes with 5 characteristics each one and 3 factors categorize
Process models of internalization
Desired Characteristics
Control
Dissemination Risk
Recourse Commitment
Flexibility
Ownership
Firm Factors
Environmental
Factors
Moderators
Export
Contractual
Investments
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18. Huawei vs. Driscoll
Emphasizes:
• Industry
information and
communication
• Product
• Use combination of
modes
Emphasizes:
• Firm advantages
• Experience
• Strategy
• Use only 1 mode
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19. Evaluation
• 1987, was a small
company in China with
annual revenue of
$5,680
• Domestic market (NO
in big city centers)
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20. Evaluation
• Today a Global company with
sales volume over $39 billion
• Profit $3,4 billion
• One of the 3 biggest
Telecommunication
Companies
• Annual rate increase in
revenues approximately 20%
per year
• Capital increase and profit
distribution
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21. Evaluation
• Presence in over 170 countries
and regions
• Serving 45 of the world’s 50
telecom operators and 1/3
world’s population
• More than 70.000 products and
services
• Invest over 10% of revenues in
R&D
• 170.000 Employees (more of
45% is in R&D)
• 16 R&D Center in USA, Europe,
Russia, India and China
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22. Learn, no imitate!
Use theory appropriately
DO research
Evaluate the market and the opportunities
Chose the right place
Be patient
Take risks & Invest
Cooperate with the right “people”
Aim for customer’s satisfaction
The strongest asset is your employees
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