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International Business<br />Week Four<br />
Review<br />
CwF<br />
Insourcing<br />
Fukiyama<br />
Indian OutsourcingAdvantages<br />
Y2K<br />
Human Development Index<br />
F1<br />
Netscape Going Public<br />
Islamic Banking<br />
Paris Accord<br />
GAAP<br />
IBM / Linux<br />
British Telcom<br />
Another View<br />
Explaining Internationalization<br />Early contribution of ‘Uppsala model’: Johanson & Wiedersheim-Paul 1975; Johanson & V...
Distinctiveness of Uppsala model<br /> ‘We do not believe that [internationalization] is the result of a strategy for opti...
Empirical basis for model: e.g.<br />PHARMACIA: <br />9 overseas affiliates at the time. <br />In the case of 8, the firm ...
Incremental pattern (1): ‘Establishment chain’<br />No regular export<br />Direct exporting, via independent agent/distrib...
Psychic distance <br />
Why these patterns? A process explanation<br />‘the firm develops knowledge when it operates in the market, <br />this kno...
The Uppsala model<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market (Experiential) <br />Knowledge<br />Commitment<br />...
The Uppsala model<br /><ul><li>Lack of market/operations knowledge =main obstacle to internationalization
Can only be acquired through first-hand experience
Includes i.e. getting to know customers, suppliers, government agencies
Includes firm’s internationalization knowledge: firm’s own resources and ability to develop international operations
Reduces uncertainty associated with foreign market commitment
Provides framework for perceiving and formulating business opportunities</li></ul>Johanson & Vahlne 2003, p. 10<br />STATE...
The Uppsala model<br />STATE ASPECTS<br />CHANGE ASPECTS<br />  Market <br />Knowledge<br />Commitment<br />   Decisions<b...
The Uppsala model<br /><ul><li>Largely consist of ‘everyday contact with customers, intermediaries, suppliers, authorities...
‘current activities evidently have a continuous impact on internationalisation, occasionally being interrupted by disconti...
By interacting with other firms in a market, the firm learns about their needs and situation
Interaction builds trust, which is an important element in commitment building</li></ul>(Johanson and Vahlne 2003:11)<br /...
The Uppsala model<br /><ul><li>Market commitment: i.e. not just investment, but also marketing and sales  e.g., after-sal...
Amount of commitment: i.e. level of investment
Degree of commitment: extent to which commitment cannot easily be withdrawn, and is defended by the firm
Degree of commitment dependent on firm’s resources and capabilities at home</li></ul>Johanson and Vahlne 2003, p. 12<br />...
Culture<br />
Is ice cream affected by culture?  In what way?<br />What cultural effects does unilever face when selling ice cream<br />...
Hall<br />
McDonalds<br />McDonalds Japan<br />McDonalds Russia<br />
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CESA: IB 2011 04

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Review, Uppsala and Culture

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CESA: IB 2011 04

  1. 1. International Business<br />Week Four<br />
  2. 2. Review<br />
  3. 3. CwF<br />
  4. 4. Insourcing<br />
  5. 5. Fukiyama<br />
  6. 6. Indian OutsourcingAdvantages<br />
  7. 7. Y2K<br />
  8. 8. Human Development Index<br />
  9. 9. F1<br />
  10. 10. Netscape Going Public<br />
  11. 11. Islamic Banking<br />
  12. 12. Paris Accord<br />
  13. 13. GAAP<br />
  14. 14. IBM / Linux<br />
  15. 15. British Telcom<br />
  16. 16. Another View<br />
  17. 17. Explaining Internationalization<br />Early contribution of ‘Uppsala model’: Johanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977<br />Key insight: internationalization is an incremental commitment, in terms of (a) geographical sequence and (b) entry mode choice, due to the gradual accumulation of experiential knowledge of foreign markets reducing the uncertainty effect<br />interplay between knowledge and commitment the key driver<br />
  18. 18. Distinctiveness of Uppsala model<br /> ‘We do not believe that [internationalization] is the result of a strategy for optimum allocation of resources to different countries where alternative ways of exploiting foreign markets are compared and evaluated. <br />We see it rather as the consequence of a process of incremental adjustments to changing conditions of the firm and its environment.’ (Johanson and Vahlne 1977, p. 35)<br />
  19. 19. Empirical basis for model: e.g.<br />PHARMACIA: <br />9 overseas affiliates at the time. <br />In the case of 8, the firm had received orders from foreign market, then signed an agency/licensing agreement. <br />After a few years, established sales subsidiary (or made an acquisition in 1 case).<br /> In two countries began manufacturing, but only less complicated production at first. <br />In case 9, started a sales subsidiary almost immediately, but company decision-maker had prior country experience. <br /> (Johanson & Vahlne 1977)<br />
  20. 20. Incremental pattern (1): ‘Establishment chain’<br />No regular export<br />Direct exporting, via independent agent/distributor<br />Establishing foreign sales subsidiary<br />Foreign production/ manufacturing<br />Johanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977; cf Bilkey & Tesar 1977, Cavusgil 1980, Czinkota 1982<br />
  21. 21. Psychic distance <br />
  22. 22. Why these patterns? A process explanation<br />‘the firm develops knowledge when it operates in the market, <br />this knowledge enables the firm to better see and evaluate business opportunities, consequently, to make new market commitments. <br />In their turn, these commitments lead to learning and the ability to identify new market opportunities, and so on.’ (Johanson and Vahlne 2003, p. 9)<br />
  23. 23. The Uppsala model<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market (Experiential) <br />Knowledge<br />Commitment<br /> Decisions<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
  24. 24. The Uppsala model<br /><ul><li>Lack of market/operations knowledge =main obstacle to internationalization
  25. 25. Can only be acquired through first-hand experience
  26. 26. Includes i.e. getting to know customers, suppliers, government agencies
  27. 27. Includes firm’s internationalization knowledge: firm’s own resources and ability to develop international operations
  28. 28. Reduces uncertainty associated with foreign market commitment
  29. 29. Provides framework for perceiving and formulating business opportunities</li></ul>Johanson & Vahlne 2003, p. 10<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market (Experiential) <br />Knowledge<br />Commitment<br /> Decisions<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
  30. 30. The Uppsala model<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market <br />Knowledge<br />Commitment<br /> Decisions<br />Result of the conception of business opportunities, which in turn are a result of market (experiential) knowledge.<br />Johanson and Vahlne 2003, p. 12<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
  31. 31. The Uppsala model<br /><ul><li>Largely consist of ‘everyday contact with customers, intermediaries, suppliers, authorities and other individuals and organisations important to their firm’
  32. 32. ‘current activities evidently have a continuous impact on internationalisation, occasionally being interrupted by discontinuities…’
  33. 33. By interacting with other firms in a market, the firm learns about their needs and situation
  34. 34. Interaction builds trust, which is an important element in commitment building</li></ul>(Johanson and Vahlne 2003:11)<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market <br />Knowledge<br />Commitment<br /> Decisions<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
  35. 35. The Uppsala model<br /><ul><li>Market commitment: i.e. not just investment, but also marketing and sales  e.g., after-sales service commitments
  36. 36. Amount of commitment: i.e. level of investment
  37. 37. Degree of commitment: extent to which commitment cannot easily be withdrawn, and is defended by the firm
  38. 38. Degree of commitment dependent on firm’s resources and capabilities at home</li></ul>Johanson and Vahlne 2003, p. 12<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market (Experiential) <br />Knowledge<br />Commitment<br /> Decisions<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
  39. 39. Culture<br />
  40. 40. Is ice cream affected by culture? In what way?<br />What cultural effects does unilever face when selling ice cream<br />How does is the presentation, flavor and name of a prodct depend on culture? <br />
  41. 41.
  42. 42. Hall<br />
  43. 43. McDonalds<br />McDonalds Japan<br />McDonalds Russia<br />
  44. 44.
  45. 45. Dimensions of National Culture<br />
  46. 46. Multiple of Cultureor ‘interfaces’ (Saner)<br />
  47. 47. The Contexts ofInternational Negotiations<br />
  48. 48.
  49. 49. Influence of Culture on Negotiation: Managerial Perspectives<br />Definitions of negotiation<br />Negotiation opportunity<br />Selection of negotiators<br />Protocol<br />Communication<br />Time sensitivity<br />Risk propensity<br />Groups versus individuals emphasis<br />Nature of agreements<br />Emotionalism<br />
  50. 50.
  51. 51. Cultural Categories<br />
  52. 52. National Communication Patterns<br />Finland <br /> USA<br />Germany<br />
  53. 53. USA<br />Germany<br />Japanese<br />Arabic<br />

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