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Uppsala Model & 'Born-Global' Phenomenon

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Catherine Fei

on 13 August 2015

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Transcript of Uppsala Model & 'Born-Global' Phenomenon

Uppsala Model & 'Born-Global' Phenomenon
Catherine Fei, Jie Shen, Eliza. L. P
Describes the internationalization process of a firm
experiential learning
incremental commitments
(Pandian & Sim 2002, p. 3)
Uppsala Model
What is it?
What are its characteristics?
'Born-Global' Phenomenon
High activity in international markets
Financial resources are limited
Technology plays a dominant role
Pays much attention on differentiation strategy
(Bell, Young, & McNaughton 2001, p. 173)
Characteristics of the 'Born-Global' phenomenon
No regular export activities
Export via independent representatives (agents)
Overseas sales subsidiary
Overseas production/manufacturing
Why would a company want to follow this process/these steps as they internationalize?
This process allows companies to slowly gain knowledge - particularly experiential knowledge - of foreign markets before they make commitments to enter that market. As they learn more, they can make larger commitments (Pandian and Sim 2002, p. 4). Additionally, determining psychic distance to various markets can help a firm choose the new market to which they should expand.
Hill, Cronk, and Wickramasekera 2014, p. 103
Psychic Distance
Firms target markets that are psychically close meaning they have similar:
language
culture
economic/political systems
Hill, Cronk, Wickremasekera 2014, p. 104
Can you think of any two countries that are psychically close? How about psychically far?
Examples? Logitech, Yahoo, etc.
Uppsala Model vs. 'Born-Global' Phenomenon
Does the model explain the phenomenon well?
Example of a company whose growth followed the Uppsala model:
Volvo
Benefits
Relying on network can develop broader market
Small firms have quicker response time, flexibility, and adaptability
Limitations
The risk of investment also increases
Small firms lack experience
Different culture may affect development of firms
References
Bell, J , Young, S, & McNaughton, R, 2001, Born-global
firms: An extension to the born global phenomenon. Journal of International Management,vol. 7. no. 3. pp. 173-189
Hill, C., Cronk,T., & Wickramasekera, R. 2014. Global
Business Today: Asia-Pacific Edition. 3rd Edition. McGraw-Hill.
Pandian, R. & Sim, A. (2002). Internationalisation
Process: Revisiting the Uppsala Model in the Asian Context. In T. Chan & G. Lui (Eds.), WTO and Global Competition: A new Era for International Business Hong Kong: Lingnan University.
Volvo. 2005. Volvo's Car Exports To The USA Over 50 Years.
Volvo. 2001. 1950 - 1959: A Historical Review.
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