Comparison of Uppsala Theory and Location Theory of Internationalization

This essay compares and contrasts the Uppsala Theory of Internationalization and the Location Theory of Internationalization. It discusses the benefits of globalization and the use of internationalization theories for business expansion.

Running head: GLOBAL MARKETING AND SALES
Global Marketing and Sales
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Globalization is generally considered to be the bedrock of the modern day business
world and it is commonly seen that the majority of the business enterprises are taking the help
of this particular process for the expansion of their business (Cavusgil and Knight 2015). The
concept gained popularity in the 19th century with the introduction of the telegraph system
(Kaynak 2014). Another significant factor that has contributed to the growth of this process
and its extensive use is the invention of the steam boats (Kaynak 2014). The cumulative
effect of both of these factors has led to the extensive use of this particular concept in the
recent times. More importantly, the benefits that the use of this particular process provides
are generally seen to be the enticing factor that motivates the various enterprises of the
present times for the widespread use of this process (Dutta, Malhotra and Zhu 2016). In
addition to this, the diverse theories as well as the models of internationalization which has
gained prominence in the recent times are also being increasingly used by the business
enterprises for the process of international expansion (Dutta, Malhotra and Zhu 2016). This
essay will compare and contrast the Uppsala Theory of Internationalization and the Location
Theory of Internationalization.
The Uppsala Theory of Internationalization in the specific context of the 21st
century is one of the most widely used theories or models of internationalization by the
diverse business enterprises for the process of expansion into the business market of the other
nations of world (Wiedersheim-Paul and Johanson 2017). The major focus of this particular
model of internationalization is on the cultural as well as the geographical factors and insists
that the business enterprises should take into effective consideration these factors before
actually undertaking the process of internationalization (Wiedersheim-Paul and Johanson
2017). More importantly, the theory states that for the process of internationalization a
particular business enterprise should select the kind of business market that is not only
culturally identical with the culture of the parent nation in which it is operational but at the

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same time it must be in proximity to the parent nation of the concerned business enterprise in
terms of geographical location as well (Forsgren 2015).
The theory outlines some basic steps or guidelines that the various business
enterprises need to follow for the process of their business expansion into the business market
of the other host nations of the world. Firstly, the various business enterprises need to not
only explore the marketing opportunities provided by the domestic market of the nation in
which they are operational and at the same time to make the most of them (Pinho and Prange
2016). Secondly, the various business enterprises instead of directly expanding into the
business market of the other nations of the world should first try to explore the business
opportunities offered by the business market of the concerned nation by exporting the
products and the services offered by them to the concerned nation (Pinho and Prange 2016).
Thirdly, once they find they that a substantial market for their products and the services
offered by them have been developed then they should try to gain more operational roles and
other kinds of responsibilities like subsidiary sales and others for the products or the services
offered by them to the customers of the host nation (Pinho and Prange 2016). The final step
in this process would be to establish their physical business centers in the concerned nation
(Pinho and Prange 2016).
Many experts are of the viewpoint that the use of this particular for the process of
expansion into the business market of the other nations of the world significantly reduces the
chances of risk that the concerned enterprise might incur if after expansion the concerned
enterprise found out that the business market of the host nation was not suitable for the
products or the services offered by them (Eriksson et al. 2015). It is generally seen that there
are many companies which undertakes the process of expansion without undertaking
thorough research about the market condition of the host nations (Eriksson et al. 2015).
However, the theory at the same time states that the concerned business enterprise should

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ensure that the culture followed by the customers of the business market is in synchronicity
with the culture that the company has in its parent nation. This is very important since it is
generally seen that if there is a difference between the culture that the company is generally
being used to in their host and the culture of the host nation then it could adversely affect the
prospects of the concerned company. A pertinent example of this particular fact is being
presented by the business operations of the company Disney of the United States of America
in the nation of France (Beck 2018). It is significant to note that for the process of their
business in the nation of France the company followed the cultural model and the practices
that had helped it to gain success in the business market of USA and it is generally
considered to be one of the main reasons why the concerned company failed to effectively
utilize the marketing opportunities provided by the business market of France (Beck 2018).
The Location Theory of Internationalization is another important theory of
internationalization that is being widely used by the majority of the business enterprises of
the present times for the process of their expansion into the business market of the other host
nations. This particular theory of internationalization states that the various business
enterprises should try to expand into the kind of business markets whose physical location
provides a significant amount of advantage to the business operations of the concerned
business enterprise in a significant manner (Crane and Matten 2016). In addition to this, the
location that the company has selected for the process of expansion should also provide
various kinds of social, economic, political and other kinds of advantages to the concerned
enterprise (Crane and Matten 2016). Another significant factor that the concerned enterprise
needs to take into effective consideration for the process of expansion into the other nations
of the world is the fact whether the location that the concerned enterprise has selected is
likely to help it to further expand into the adjoining business market of the area or not (Hay
and Marsh 2016). An important example of the use of this particular theory for the process of

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expansion into the other nations of the world is seen in the expansion of the American
company Starbuck into the business market of the nation of India (Hay and Marsh 2016). It is
significant to note that the concerned nation not only provides various kinds of political,
social, economic and other kinds of advantages to the concerned company but at the same
time it provides the opportunity to the concerned to expand into the business market of the
adjoining nations as well (Hay and Marsh 2016).
The Uppsala Theory of Internationalization and the Location Theory of
Internationalization although concerned with the same process, that is, internationalization
provides different means to attain the same purpose. For example, the Uppsala Theory of
Internationalization focuses on the similarity of cultural and the geographical factors between
the culture and the geographic locations of parent company of the business enterprise that is
undertaking the process of expansion and the cultural and the geographical factors of the
business market of the host nation (Cavusgil and Knight 2015). The Location Theory of
Internationalization, on the other hand, focuses on the importance or the benefits that the
selection of an adequate business location is likely to provide to the concerned business
enterprise (Forsgren 2015). Thus, the various business enterprises are required to select the
kind of location for the process of expansion which not only provides economic, social and
other kinds of benefits to the concerned business enterprise but at the same time is likely to
help the concerned enterprise to expand into the other potential business markets of the area
as well.
To conclude, the effective use of the concept of globalization provides various kinds
of benefits to the business enterprises like the opportunity to earn extra amount of profit, a
suitable business market for the sale of the surplus goods manufactured by them and others. It
is a reflection of this particular fact that the concept of globalization has gained a significant
amount of prominence in the present times and also the various theories of

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internationalization are increasingly being used by the various business enterprises. At the
same time it needs to be said that the success earned by a particular business enterprise during
the process of internationalization depends to a large extent on the internationalization theory
of expansion which is being used by the concerned business enterprise and also the context in
which it is being used. Thus, it would be apt to say that the success or the failure achieved by
a particular business enterprise during the process of internationalization depends to a large
extent on the manner in which the internationalization theory is being used by the concerned
enterprise.

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