Essays /

1502074027 Hw 2 Essay

Essay preview

As the advancement in telecommunication, transportation and production, internationalization is an inevitable trend of corporate operation. Although there is no universal definition of “Internationalization”, it is always understood as the tendency of enterprise to operate across boundary lines. It is obvious that the internationalization improve the efficiency of labor and resource allocation. Many famous theories have been published to explain international activities and these theories have been evolving over time. Founded by Swedish researchers, Johanson and Vahlne, Uppsala Model has been one of the most discussed dynamic theories in Nordic and world. It explains the steps of firms intensifying their activities in the foreign markets. This essay will firstly discuss the initial Uppsala Model presented in 1997. Following this, it will describe the revisited model in 2005 and identify the differences. Finally, it will look at the key factors influencing the internationalization speed according to the revisited model.

Initial Uppsala model
Through the empirical observation and research of data of a great deal of Swedish subsidiaries and international companies, Johanson and Vahlne from Uppsala University concluded the patterns of internationalization process. The assumption of the model is that before the internationalization strategy, firms are well established and gain experience in their domestic market.

One is the development stage. The foreign operation is carried out in incremental and small steps. It unfolds through 4 successive stages, namely ad hoc export, export via agent, sales subsidiaries and production. Ad hoc exporting marks the start of the internationalization in the most cases (Carlson, 1975; Forsgren & Kinch, 1970). At this stage, there is no regular export activities. This would then be followed by companies formalizing their export through contracting with intermediaries. These intermediaries are usually agents representing the company in foreign countries. As the business expands and sales volume increases, companies will send their own sales subsidiaries abroad to take the place of the agents. When the sales continue to grow, companies would choose to build manufacture plant in foreign countries to overcome transporting expense and trade barriers.

Another feature of the pattern is that companies usually start their internationalization strategy by stepping into countries with close psychic distance. Psychic distance is the perceived differences between the domestic and foreign country regardless of the time and space factors that differs across cultures. Factors including cultural factors, linguistic differences, economic situation and political system can all affect psychic distance between two countries. Then, they would gradually enter countries with longer psychic distance. The model describes the international operation as the process of company’s experiential learning and incremental commitment. Eventually, this advances the...

Read more


-244 11 1411 1431 1502074027 1970 1970s 1975 1977 1994 1997 2 20 2005 2008 2009 243 29 3 38 4 40 5 537 554 58 5th abroad acceler accord accumul acquir across acta activ actor ad adapt addit advanc advantag affect afraid agent allianc alloc also although alway among analyz anoth anpassn appear argu articl aspect assist assumpt attempt author av b barrier base basic becom begin behaviour better bilater border boundari brazil build busi capit carlson carri case chang characterist china choos circumst close cognit combin come commit communic compani compar competit competitor complex comput concept conclud conclus condit consid consider contemporari continu contract contribut control cooper corpor cost counterpart countri creat creation credibl critic cross cross-bord crucial cultur current custom d data de de-internation deal decid decis decision-mak decreas dedic defin definit degre demand demonstr densiti depart depend depict describ design determin develop differ difficult digit dimens discov discoveri discuss distanc distant domest domin dool dramat dynam e easi econom edit effect effici element eman emerg emot empir en enabl enact encourag enorm enter enterpris entrepreneur entrepreneuri entrepreneurship entri environ environment erik essay essenti establish eventu evolutionari evolv exampl expand expans expect expens experi experienc experienti explain explan explicit exploit export extrem factor fail famous faster feasibl featur figur final firm first five fo focus follow forc foreign form formal forsgren found four franchis frog fundament furthermor gain get go gradual great grow high high-effect hoc hold hunt hw i.e identifi ignor illustr imf immedi impact import improv incent includ increas increment india industri inevit inexpens inflex influenc inform initi instanc instead institut instruct integr intens intensifi intent interact intermediari intern internation internationalis internet interpret intro introduct invent invest involv j jan jan-erik johanson journal key kinch kind knowledg knowledge-bas knowledge-intens labor lack languag larg larger last late later law lead leap learn less let level liabil licens light line linguist long longer look low lubric m made main make manag mani manufactur mark market massa matur may mcdougal mean measur mechan mediat medic medicin meet mention method mode model moder moreov morgan motiv much n name natur ndringar necessarili need negotiorum network never new nordic novel object observ obstacl obtain obvious och oeconomia omgivand one oper opportun origin other outsidership overcom oversimplifi oviatt p pappersindustrin pattern penetr perceiv person personnel perspect place plant play polit popular posit possibl potenti pp practic present prevent prime problem process produc product prove provid psychic psycholog publish purchas qualiti quick r ra rapid reason reciproc recognit reduc reduct refer regard regardless regular relationship repres requir research resourc respons retaget retain return revenu revis revisit risk riski role rule run sale scope second select send servic sever show shown signific sinc situat size small social space speed stage start state step strateg strategi strength strengthen strong studi studia subsidiari substitut subtl success supplier surround swedish system take task technolog telecommun tendenc theoret theori therefor think third three thus till time trade tradit trait transform transport travel trend trust two type unavoid undeni understand understood unfold unilater univers universitati uppsala upsaliensi usag use usual vahln valuabl via view vital volum wait weak well will wireless work world would wto year