Internationalisation in Marketing - Essay Example

Internationalization in Marketing Inserts His/her Inserts Grade Inserts (30, October, Introduction Internationalization simply means going aboard. Technology has made it possible today for firms to go international today easily. Globalization has allowed companies to extend their operations to the foreign markets. Many firms now in search of profitable returns continue to move abroad. This process involves many important steps that are taken by the firms who wish to start or expand their businesses in foreign markets. There are different theories regarding the process of internalization and each explains how to go about in the process of internationalization. The three well known theories of internationalization, the Uppsala model, Network model and Born Global Pathway model will be discussed in this paper. The usefulness of these models to international marketers will also be discussed. Uppsala Model The Uppsala model is one of the most well known models of internationalization. The Uppsala model is a four staged model that argues that firms pass through four stages in order to go international. From absence of regular exports to overseas production firms go through all these stages according to the Uppsala model. The model is based on how firms learn and how they incorporate what they learn in their investment decisions in foreign markets (Johanson & Vahlne, 1977). Through the stages of model the firm gains more and more knowledge about the foreign markets and their market commitment, all assets of a firm in a particular geographical market, increase gradually as their experience increases. Knowledge and learning is the main component of the Uppsala model. Model also suggests that initially firms invest in countries that are culturally close to the firm’s native country. The model is of great importance to the marketers as it provides a great framework for them to initiate operations in foreign markets. The emphasis of the model is on learning and knowledge and this is a very objective approach. The importance of foreign knowledge and culture is very important for marketers in order to prosper in the foreign markets. Uppsala model also identifies the differences that exist between and local and foreign environment. These differences are important for marketers as one strategy in a local setting may bear great benefit but the same strategy can lead to a disaster. So the difference between environments is very important and the model identifies this difference. In this regard the model is greatly effective. The stages that are suggested in the model are also very helpful for international marketers. As the stages increase the investment in the foreign country also increases. This provides the marketers a proper framework to go by marketing their products in a stage wise fashion. First limited marketing is required and as the firm gains knowledge and increases its capital excessive marketing should be done. Uppsala model also holds that one kind of knowledge can be used in specific markets. This is not right for international marketers as different countries have different cultures and although the culture might be ‘close’ it may not be the same. So different markets have different dynamics and marketers cannot generalize their strategies. This point discussed in the model is not of any use to the marketers. Also firms do not always look for culturally close markets but they look for lucrative markets and marketers have to think from the perspective of the new market. Overall Uppsala model provides great framework for international marketers to help them develop a marketing strategy. There are some things in the model which do not apply to marketers so they are not useful to marketers. Network Model Network model emphasizes on the relationships a firm develops and maintains in order to function smoothly in a foreign market. This model suggests that firms can tap into the international markets by developing networks which can help them eventually in starting up business in the international market. This model is greatly useful for international marketers because it involves building relationships. Marketers can built relationship with similar firms and can witness what kind of approach they are using to target the clientele in the foreign country. This will help them a lot in learning about the new country and its culture. All this is very important to marketers. International marketers cannot only operate by knowing their buyers but they will have to extract knowledge from other networks and organizations as well (Evers & Night, 2008). There are independent agencies which can help marketers in designing their strategies in the new business environment. This model is extremely effective for small firms as they have limited resources. Their marketing managers cannot conduct country wide researches or they cannot hire marketers of the country in which they wish to operate. So these small firms have to rely on networking in order to gain insight and knowledge about the foreign environment. The network model is also beneficial for marketers because it is also a step wise model that suggests different stages a firm goes through in the process of internationalization. A step wise model provides a framework for marketers to work with. They can start by improving the relationships they have abroad and when these relationships and strengthened, they should start to move physically in the international markets. It is important for international marketers to analyze how the trends in the foreign markets evolve and for this reason they also have to go step by step in developing a marketing strategy. They cannot just rely on limited knowledge when designing their marketing plans. A step by step approach is therefore very useful for international marketers and in this regard network model is very useful for marketers. But firms and marketers cannot rely only on networks. They have to gain firsthand knowledge as well regarding the new market. If they will rely too much on the networks then they might end up following someone other’s word and will not develop themselves into a well established firm. So the networking process is important but it is not the only important part. The network over emphasizes on relationships. For a marketer relationship is important but other things like firsthand insight and research is also important. Born Global Pathway Born global firms are firms who start their international operations immediately after they are founded. These firms go international in no time and they do not wait in order to gain experience rather they just take the initiative and start their international business straight away. With the passage of time this model has gain popularity as it provides great benefit from small enterprises and it also provides an opportunity of rapid growth. This model focuses on internationalization as a vision of the organization as a whole. Firms, from their birth, aim at going international. They develop their strategies from scratch aiming to establish a worldwide business. Internationalization is very rapid in firms which follow birth global pathway model. This theory gives international marketers a chance to work in different countries at a same time. This model talks about rapid internationalization therefore marketers have to adopt themselves immediately to the environment. The focus, in this model, is going international as quickly as possible. Born global firms actually seek competitive advantage that is knowledge based. These firms either ignore the local markets or operate simultaneously in domestic and foreign markets (Bell, J. 1995). This makes marketer’s life very complex. They have to work on many projects simultaneously. Firms are not able to focus on one strategy and this creates a lot of problem. One advantage of born global pathway model is that it does not require marketers to go through the tedious process of going from one stage to another. Born global strategy asks for going global quickly so the firm is established keeping in mind its international market. When firms work in a domestic environment for a long time, they find it difficult to adjust to any other environment. So when they go international they again need time to adjust. Global pathway model identifies the need of going international immediately and asks for immediate action. This prevents firms from getting used to an environment. Rather they train themselves to adjust to different environments easily. This model talks about working in many markets at the same time and this is not very easy. Marketers may find it very complicated to target many markets at the same time. They might end up making no value in the process because it is very difficult to develop and work on many strategies at the same time. In this regard this theory is not very helpful for the international marketers. The benefits of going abroad might be less than the losses incurred in the process so it is a risky approach. Conclusion All the above mentioned models have their weaknesses and strengths. They are in some aspect good for the international marketers and in other aspects not very useful. It is important to note however that no model in perfect for international marketers and in specific situations different models will be better than others. It is important to note however that all these models provide diverse opinion on the subject of internationalization. Bibliography Bell, J., 1995. The internationalization of small computer software firms – a further challenge to stage theories. European Journal of Marketing, 29(8), pp. 60-75. Evers, N. & Knight, J., 2008. Role of International Trade Shows in Small Firm Internationalization: a Network Perspective. International Marketing Review, 25(5), pp. 544-562. Johanson, J., & Vahlne, J., 1977. The Internationalization Process of the Firm – A Model of Knowledge Development and Increasing Foreign Market Commitments. Journal of International Business Studies, 8, 23-32. Read More