The Global Expansion by Venture Firms in Korea - Term Paper Example

 The Global Expansion by Venture Firms in Korea Introduction The current world of business has become an extremely competitive platform on which the different businesses have to make a lot of efforts to maintain. There are various factors that have resulted in the increased need to compete within the same market industry. This has made the different businesses to strive to improve their activities in order to ensure that they are able to achieve their ultimate goals. The achievement of this target has been done through a number of approaches and strategies. One of the most common strategies that have come in handy to help businesses deal with this challenge is the aspect of globalization. It refers to the advancements of markets in higher areas. With this, various business ventures and firms have been able to expand their businesses and activities into different areas hence helping them to gain a wide range from different areas. It is a great advantage since different regions have different practices in terms of their cultures and politics. This makes it necessary to diversify the goods and services depending on the cultural practices onto which the new good or service is to be offered. It is an indication that the global expansion strategies are an extremely essential element to the business since it not only helps in the attainment of more customers, but also the knowledge about the business practices in different areas hence more trust in the business. Ultimately, the business is able to achieve its goals in a better way since a wider chance is provided to make more profits. Globalization Globalization refers to the global ability of a business or a venture to take its place within a competitive market all over the globe. It has played a very vital role in the world economy in the sense that it has made it possible for various businesses to expand globally through the evaluation of various factors that include travel, cost analysis and the cost and regulations of the businesses in the new countries (Borgatti & Foster, 2003). Therefore, it has led to the corporate global expansion by many businesses. Corporate global expansion by and business venture refers to the formal plan by the corporation to expand the reach of its activities and operations into multiple and many countries throughout the world. In order to be considered as “global”, it is important for the company to extend its activities to all the major countries in the world. For instance, in this case, the venture firms should place their focus on global or accelerated internalization in order to meet the aspect of “born global”. It is an indication that most of the new ventures start to operate in areas that are without their borders soon after the time when they are developed and formed. In doing so, they face the likelihood of experiencing a lot of successes as well as benefits within their ventures (Barkema, & Vermeulen, 1998). On the other hand, owing to their young status within the global and competitive markets they are faced with the challenge of newness. This is the position that is likely to face most of the ventures that are started in Korean because no sooner are they developed or made to be stable in their operations; they are already seeking to venture and to expand into other global markets. They are thus presented with the challenges of the liabilities that are related to foreignness and newness. There are a number of reasons why different business ventures consider expanding their activities and operations in one region and not the other. It is these that determine the specific areas that are to be considered during the expansion. This makes it important to understand the determinants of the entry mode especially within the ventures and firms that are present in the Korean region. It is also associated with the internalization of the performance of the new ventures. In this sense, there are three of the major leading theoretical perspectives, which include the transaction costs, the social networks and the absorption capacity that need to be considered. It is from these factors and considerations that the different hypotheses that place their focus on the role of advantage that is based on technology can be formed. In addition, the social networks of the startup members of the team and the absorbance capacity of the employees in making the prediction of the choice of entry mode are all determining factors of the regarding how decisions are to be made on the issue of global expansion by business ventures. In this context, it is important that the Korean ventures and firms that are making the target of global expansion to gain the knowledge of how to penetrate and survive within the foreign markets. This is because it is a critical element for the internationalization of the new venture (Bell, 1995). Cultural and political differences The aspect of going global means that the different companies have to deal with individuals and corporate from a different area. Usually, these people have very varied cultural and political differences that have to be addresses for the successful operations of the businesses. The values and cultures are different in each culture because the two cultures that are composed of the native and new corporate cultures are different and need to be considered separately. It is therefore possible for the global expansion plans of any corporation to fail due to cultural incompatibility (Burgel & Murray, 2000). These may refer to the incompatibility between the native and the corporate cultures. According to most studies, the failure to succeed in global expansion is a result of culturally related factors. One of the most devastating steps is the fact that staff members from the home office are moved to the new country (Brouthers, 2002). Majorly, corporate refers to the way that the company conducts its businesses while the native culture refers to the combination in the beliefs and philosophies of the people within the company as well as the local people in general. While operating as a young organization, there is a chance that a new venture will face the liability of newness that is not shared by the established firms that have longer established hours of operation and history. By choosing to operate in unfamiliar environments and operate abroad, most of these ventures also face the liability of the foreignness that is not shared by the incumbent firms (Brown, Dev & Zhou, 2003). Going global strategies The kind of approaches and strategies that are likely to be considered by a particular venture depends on a number of factors. These have to be adopted owing to the fact that in the current situation, most of the companies are forced to go global. Majorly, this strategy has been found to reach as many customers as possible from different regions. Through proper customer satisfaction and retention methods, it has helped in the improvement of sales and as such in the ability by the corporate ventured to maintain their competitive position within the market. In this case, there are those varied strategies that are used by companies and firms to gain access into the foreign markets (Lu & Beamish, 2003). In particular, the different corporations use several tactics to enable them achieve their plans of global expansion. Some of these include the export of goods and services, the use of licensing tactics, the formation of strategic partnerships, the acquisition of businesses and building of new facilities in different and multiple countries. All of these are selected and used based on their different advantages and disadvantages in attaining the intended purpose. For instance, the exporting of goods as well as licensing from the home country of a corporation to another different country provides a solid starting point for global expansion. The export of goods allows the companies to make their brands and products known to the foreign countries. The key advantage is that this strategy does not necessarily require a direct form of investment in each of the countries. Nonetheless, this strategy can present a major problem to the service industries and businesses that are mostly advice to perform online businesses. The licensing agreements make it possible for the businesses and foreign companies to represent their brands in their home markets while at the same time being able to achieve the same kind of product introductions that is brought about by exporting. However, it presents a different set of risks. While both exporting and licensing can open doors for the corporations all over the world, these corporations are expected to take further steps to ensure that they truly achieve the goals of global strategy (Ensley, Pearson & Amason, 2002). On the other hand, there are also other issues and factors such as strategic partnerships that make it possible for the business to take advantage of the experiences and the expertise of the corporations that exist within the foreign markets. The concept of having a strategic partnership or an international joint venture involves an investment that is more direct and greater than the exportations. It can thus be considered a more logical step in global expansion than exports. They can lead to leverage brand equity as a way through which foreign goods are introduced with an in built level of credibility. This makes it an advantage to the business in the sense that the company can add a lot of value to the other partners by providing distribution rights that are exclusive for goods that were previously not available within the market. However, this kind of partnership also presents the challenge that comes with the need to split managerial control between two countries. As a consequence, it would be advisable to allow the partners who are located in the sales market a greater degree to control the operations in order to gain full leverage of the experience of its managers. For this reason, the main factor that can influence a certain firm to make a particular decision regarding market entry is the entry mode choice. This is a systematic way in the context of new ventures since they are important in the theoretical implications. It thus helps in the investigation of the validity and the accuracy of the frameworks that are available in any new settings. Performance of the right research in the new setting has relevant managerial implications because it is with the acceptance of the appropriate new entry mode that enables the new ventures, which usually lack the necessary resources to make maximum use of the allocated resources (Davidson & Honig, 2003). One of the important aspects of consideration is the investigation of performance, which is usually one of the results of international expansion. Facing the two challenges of newness and foreignness, most of the new firms and ventures from Korea that expand are also faced with the confrontation of tough competition compared to those firms that are incumbent and are already established within the different regions. With an already high rate of failure for such ventures, there is even a higher chance of failure when the competition is done in environments that are unfamiliar to the firm. This is coupled with the idea that the great deal of attention should be given in the form of recognition and should not only be used as the decision to start a new venture but also as a plan to expand an already started venture. This in a large way enables the venture to face its subsequent survival and great performance. It is with such a higher rate of failure for the new ventures in new environments that there is a great need by the firms to conduct research and minimize the effects of the double edged sword (Bamford, Dean & McDougall, 1998). Suggestions and recommendations A number of suggestions and recommendations can be made in the efforts to enable most of the venture firms in Korean to expand globally. One of the important strategies would be to have a separate and specifically trained team of members. The most successful of deployments have been attained through the accomplishment of the assemblage of a separate and a trained team to lead the entire process. It may mean that the company is required to hire executives from outside who have an experience in this process ort bear the open considerations that will be required. This means that going global should not be taken as a gambling process. Instead, it should be taken as a serious step through which a new business venture can use the available resources to expand its operations and thus attain the goals and objectives of the organization (Luo, 2003). Summary and conclusion The choice of entry mode for any corporation largely depends on the traditional predictions that are made based on the different frameworks that include the cost theory of transaction. This has been widely applied and tested to the extent that the established corporations have been used as the multinational corporations. However, the main element to consider as the determinant of the mode of entry choice is the ultimate performance of the firm and venture in the foreign market. References Bamford, C., Dean, T. & McDougall, P. (1999) 'An examination of the impact of initial founding conditions and decisions upon the performance of new bank start-ups', Journal of Business Venturing, Vol. 15: 253–277. Barkema, H.G., & Vermeulen, F. (1998) 'International expansion through start-up or acquisition: a learning perspective', Academy of Management Journal 41(1): 7–26. Bell, J. (1995) 'The internationalisation of small computer software firms', European Journal of Marketing 29(8): 60–75. Borgatti, S.P. & Foster, P.C. (2003) 'The network paradigm in organisational research: a review and typology', Journal of Management 29(6): 991–1013. Brouthers, K.D. (2002) 'Institutional, cultural and transaction cost influences on entry mode choice and performance', Journal of International Business Studies 33(2): 203–221. 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