Internationalization Process in Emerging Markets - Coursework Example

?Internationalization Process in Emerging Markets Introduction: Development of Emerging National & International Markets Internationalization has been considered as an important process, which deals with the development of national and international markets. The internationalization theory explains the gradual process which will lay emphasis on industry types and also solve the complexity of their problems (Arnold, 2003). Internationalization is relatively a short-time marketing process which helps in expansion of the organization on a large scale and exploration of the markets on a wide scale. The internationalization process helps in development and applicability of the internationalization process theory to the several marketing operations (Conconi, Sapir, and Zanardi, 2013). For example, the gradual internationalization process inspires the organization to enter markets, which have an impact of the economic, social and cultural similarities with the growing domestic and international markets. The study will deal with the various dimensional aspects of internationalization and its effect on the business activities (Birnik and Bowman, 2007). The author of the study will also highlight the various facets of strategies that help in the development of emerging markets. Finally, the study will conclude the impact of emerging markets on the developed and developing economy for the success of the organization and the economy itself. Emerging Markets of Developed & Developing Economy The gradual internationalization process requires exploration of the market with several opportunities and more or less with equitable similarities. This process also helps in addressing the risks associated with innovative capability and also the perceived risks associated with foreign market entry. There are usually various dimensions to the market entry which increases with the foreign entry modes, and the dimensions include resource commitment and order of market entry. Gradual internationalization requires less resource commitment such as exporting right from the beginning of the market entry and then transfer into other entry modes. Resource commitment requires emphasis on the perceived risk associated with each of the market entry modes (Cai, 2000). The second dimension is the order of market entry modes, which lays emphasis on an organization trying to enter into domestic markets and then expanding into international markets. This order of entry is also known as psychic distance on the internationalization theory. Emerging markets have been regarded as the attractive source and target market for further operation and expansion of the base activities. These emerging markets have been regarded as the base of manufacturing activities due to their easy availability, high quality and cheap labor and easy-to-assemble raw materials. The multinational corporation has expanded by opening several units worldwide. It has been observed that Internet organizations expand on a global scale for reduction in deviation methods and errors in their distribution system (Gustafson, 2011). The Internet organization has expanded a larger scale for wider operations and also increases in their outcome for various purposes. Internationalization Process Theory The concept of internationalization process was formulated by Johanson and Wiedersheim-Paul and was modified gradually by other authors. The internationalization process differs marginally between policy formulations and status quo. This process also helps in conceptualizing the international marketing theory in a different way, which is often termed as an entrepreneurial fact (Shirani, 2009). The major objectives of the internationalization process is access to low cost production, proximity to suppliers, availability of technical and non-technical skills, reducing competition, energy, etc. (Kim, 2003). The internationalization process also helps in understanding the entry mode strategies and developing a market entry mode for the company accordingly. Internationalization process theories are time-dependent and are usually generalized on the laws of succession (Massingham and Lancaster, 2000). It also lays emphasis on the market entry modes in a specific timeframe. The different market entry mode factors are dependent on time, firm, country and market specific factors. The various market entry modes are licensing, franchising, joint venture and wholly owned subsidiaries (Santamaria and Ni, 2008). Franchising and licensing modes are almost similar to each other, which involve an agreement where the franchiser/licensor sells its know-how to the franchisee/licensee in return of a royalty fee. The know-how refers to the tangible properties and helps in expansion of the company in a smooth and positive way (Santamaria and Ni, 2008). Under the licensing market entry mode, the licensor will sell its technical know-how to the licensee for a stipulated time frame (Narotama, n.d.). The know-how refers to the intangible properties such as patents, copyrights, trademarks, design, formulas, and processes. This refers to the primary stage of entering into a foreign market due to the uncertainty in the political and economic arenas. Uncertainty can decrease the expansion costs of the company and also give a technological control, and the major disadvantage would be to give the entire ownership to the licensee. There is a potentiality of conflict between the licensor and the licensee because selling of know-how leads to difficulties in coordination among them and can hamper the productivity of the company (Pangarkar and Yuan, 2008). Strategies & Patterns for Entering into Markets The emerging markets offer opportunities, and various other factors emphasize the market-based advantages and shift to focus on intra-transfer of organization employees, skills, technology, direct investment and resources. The emerging markets are considered economic powerhouses with a large amount of population, large markets and resource bases. The economic success of countries helps in spurring growth for the neighbouring countries. The success of the emerging markets helps in creation of sustainable development and also leads to sustainable growth opportunities (Santamaria and Ni, 2008). The emerging markets have changed their way of expansion from the traditional methods of entering into the markets to innovative methods. The multinational corporation has sought innovative capabilities of entering into the markets, such as entering into a wide number of markets and not restricting itself to a limited market area. Penetration into developed national economies would require the breaking of traditional patterns and assistance from the manager (Shirani, 2009). Pervasiveness is important for the multinational corporation, which requires breaking of traditional barriers and marketing activities. The resource-based view forms an important part because it helps in utilizing greater assets to increase the organizational outcome. The enraging markets in these cases would provide better investment opportunities in fixed, equity or currency spaces. The growth in the global economy and the investment opportunity would change significantly and help in allocation to emerging markets for a core investment strategy. The emerging markets have converged and grown into developed counterparts (Small Biz Connect, 2013). An effective marketing strategy would be required to penetrate into the markets for crafting an effective investment opportunity into the areas of development. Presently, emerging markets have a different definition for investment proposition and have established themselves as leading players in the global economy. Compared to the developed markets, the developing economies are adequately resourced and have a strong balance to assist the developing economies (Wedel and Kamakura, 2000). Growth in the developed economies such as Japan, Unites States and Europe is one of the major factors that have facilitated the global growth and become important drivers for the economy. They have helped the emerging economies such as China and India to see growth with 9 and 7 percent respectively in 2012. The multinationals have helped in developing their own capabilities by setting up a large amount of research and development laboratories, sales and marketing offices and factories. The major objective of this organization would be to create and manage the networks and inclusion of local and global partners for delivering service offerings. The multinational company helps in engagement with key stakeholders, shareholders, and the management. The demographic factors in the emerging markets help in driving the economic growth of the world economy because factors such as cheap labor, access to raw materials, etc. are pervasive in the economy. A distinctive marketing strategy helps in the delivery of products and services, which are unique in nature and are a threat to several entrants and increase the barrier to entry. These kinds of competitive strategic planning would require the dependence on the market environment and effective positioning of the product portfolio ranges. The entire process of penetration into the markets would require a different organization to formulate strategies for expansion of business, extension of product lines and source of incremental revenues. Different marketing strategies would require the alignment between the expectations of the customers in developing economies and the ability to fulfill the requirements of the customers. Creation of this process would require inclusion of certain elements such as objectives of market entry, implications, choice of market entry modes, market entry strategies and a framework. It would also require the development of a framework which defines the overall evolution of marketing strategy. The management of the multinational framework and co-location of strategic marketing, as well as the distribution function would require assistance from the management of leading organizations. When a company enters into the market, it would require participation from the customers and the management in unification for the preparation of strategies. One of the unique characteristics of entering into these markets would be the formulation of distribution channels, which would require the development of several business units, a wholly-owned subsidiary and other forms of traditional marketing. Distribution marketing requires the implementation of marketing strategies and would also require the management of growth strategy judgment on organizational criteria, desired risk, supportability and certain control issues. The marketing strategies grow with the increase and smoothening of communication platforms and selection of target markets. The process of market development would require the identification of commonalities and describe the process of internationalization eventually from the management perspective. There are major costs involved in the internationalization process, which includes the cost benefit and advantage analysis. Internationalization in Developing Countries Internationalization in Developed Countries Costs & Challenges The liability of newness, institutional immaturity and consequent additional costs. The liability of foreignness and the contribution of higher factor costs are regarded as competitive disadvantages. Benefits The developed economies would require a greater volume and high factors which would be highly influenced by high growth rates of the economy. Learning of new and advanced technologies from the competitor would require customers who have understanding of advanced technology and economies of scale due to a large volume production. Overall Prediction Cost > Benefit Benefits > Cost Apart from dealing with customers, the marketers have to deal with the supply chain and logistics system that require different techniques such as localization of manufacturing, purchasing, research and developmental activities, which are of paramount importance for companies to be able to prosper and remain competitive. The importance of localization varies and requires the organization to spread uniformly and rapidly with the help of different strategies. Localization would also differ from company to company and depends upon the fact that single manufacturing companies produce different types of products in different batches. It is sometimes referred as the physical movement and transfer of goods and facilities by optimum utilization of resources. The process also depends upon internal and external factors such segmentation process, revenue and capabilities, etc (WHORC, 2005). Internationalization requires the emergence of intellectual capital and development of entrepreneurship strategies which lead to globalization of several small- and large-sized organizations. Apart from capturing a major share in the market, the organization also believes in researching on their existing manufacturing process, which can lead to the development of several strategies. It also leads to the opening of several opportunities and the coming together of business, economics and other necessary activities. Conclusion Market entry modes, barriers to the entry of organization, and technology are considered important for entry into the market, and factors responsible for globalization. These market entry modes would refer to different types of methods that would be deployed and considered important for the organization to form strategic alliances and several other collaborative methods. Thus, it is observed that internationalization is a process that would also encompass outward internationalization activities, which would be helpful in laying emphasis on the formulation of different types of marketing and investment strategies. Reference List Arnold, D., 2003. Strategies for entering and developing international markets [online] Available at: < http://www.ftpress.com/articles/article.aspx?p=101588&seqNum=3 > [Accessed 29 August 2013]. Birnik, A. and Bowman, C., 2007. Standardization marketing mix standardization in multinational corporations: a review of the evidence. [online] Available at: < http://academia.edu/176849/Marketing_Mix_Standardization_in_Multinational_Corporations_A_Review_of_the_Evidence > [Accessed 29 August 2013]. Cai, Y., 2000. Country-of-origin effects on consumers' willingness to buy foreign products: an experiment in consumer decision making. [pdf] Available at: < http://athenaeum.libs.uga.edu/bitstream/handle/10724/6141/cai_yi_200208_ms.pdf?sequence=1 > [Accessed 03 July 2013]. Conconi, P., Sapir, A. and Zanardi, M., 2013. The internationalization process of firms: from exports to FDI. [online] Available at: < http://www.ecares.org/ecare/personal/conconi$/web/internationalization.pdf > [Accessed 29 August 2013]. Gustafson, T., 2011. Food companies use latest technologies to market directly to children. Huffington Post, [online] 14 September. Available at: < http://www.huffingtonpost.com/timi-gustafson/advertising-to-kids_b_1907728.html > [Accessed 29 August 2013]. Kim, D., 2003. The internationalization of US Internet portals. Marketing Intelligence &Planning, 21(1), pp. 23–26. Massingham, L. and Lancaster, G., 2000. Essentials of marketing management. London: Routledge. Narotama, n.d. Strategies for entering and developing international markets. [online] Available at: < http://ebooks.narotama.ac.id/files/Global%20Marketing%20Management%20(5th%20Edition)/Chapter%209%20GlobalMarketEntryStrategies.pdf > [Accessed 29 August 2013] Pangarkar, N. and Yuan, L., 2008. Location in internationalization strategy: determinants and consequences. The Multinational Business Review, 17(2), pp. 37–45. Santamaria, B. and Ni, S., 2008. Entry modes of Starbucks. [pdf] Available at: < http://mdh.diva-portal.org/smash/get/diva2:121498/FULLTEXT01> [Accessed 29 August 2013]. Shirani, M., 2009. Internationalization process model. [online] Available at: < http://epubl.ltu.se/1653-0187/2009/048/LTU-PB-EX-09048-SE.pdf > [Accessed 03 July 2013]. Small Biz Connect, 2013. What is marketing? [online] Available at: < http://toolkit.smallbiz.nsw.gov.au/part/1/1/3 > [Accessed 29 August 2013]. Wedel, M. A. and Kamakura, W.A., 2000. Market segmentation: conceptual and methodological foundations. Massachusetts: Springer. WHORC, 2005. China: health, poverty and economic development. [online] Available at: [Accessed 29 August 2013]. Read More