International Marketing: Internalization Process Theories Analysis

This report delves into the realm of international marketing, focusing on the application of internalization process theories. It explores various models, including the Uppsala model, transaction cost theory, born global strategy, and the electronic paradigm theory, providing a comprehensive ana...Read More

International Marketing

Table of Contents
INTRODUCTION...........................................................................................................................2
PART 2............................................................................................................................................2
2. Internalisation process theories...............................................................................................2
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
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INTRODUCTION
International marketing is considered to be as modern concept which can be applied to
the principles of marketing at international level. Global marketing is also defined as a procedure
which include formulation as well as implementation of plans in order to accomplishment
desired marking objectives. It also involves pricing, promotion and distribution of goods as well
as services at international level. In international market , marketers conducts marketing or
promotional activities outside the national boundaries.
The purpose of the report is to identify the standardisation as well as adaption of
marketing mix. It will also include the discussion on the Internationalization Process Theory
PART 2
2. Internalisation process theories
Internalisation is defined as a method of adapting business operations such as resources,
structure as well as strategy to promote product or services in international market. This
procedure consists of the amount as well as geographic distance of the overseas market that is
move into; the various activities that are performed in the different countries and the intensity of
integration of these activities. Organisation such as Apple adopts the strategy of internalisation
with the intention of reducing competition and for expansion of the business operations. The
another objective of utilising this strategy is to increase sales , market share , profitability and
customer base. By analysing the several complexities in the procedure some theorist has
designed few models of Internationalization. These concepts will support marketing manager in
determining the appropriate market for positioning products .Some of models are:
Uppsala model:This concept of internationalisation is based on the learning and the evolutionary
viewpoint. Behavioural theory is the main source of Internationalization theory. Uppsala model
have focus on explaining the nature of the organisation through behavioural activity of its
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customers and the country of its emergence. Uppsala model have focus on supporting marketing
manager in determining the way business operation or promotional activities should be
conducted in international market.
The apple company has adopted this theory in order to increase its competitiveness as
well as potential to enter into global market. It has helped marketing manager in developing the
understanding about the market situation in various countries. It has assisted marketing manager
in making suitable decision regarding selection of market for positioning of product or services.
Uppsala model has aided marketing manager in formulation of strategies which has been used by
them for eliminating the several barriers such as education , language , business practices etc. As
these factors can create various hurdles in flow of information or data about the market. It has
been identified that cultural as well as social factors have significant impact on business
performance when it is planning to enter into new or global market. As every country has
different culture , norms etc. These factor can also have impact on firm growth as well as
success. The model anticipate that the internationalization procedure, when it has started, will
tend to proceed regardless of whether strategic decisions in that direction are made or not.
The theory has highlighted basically two types of knowledge these are knowledge which
can be taught as well as the experimental knowledge The experimental knowledge can only be
gained by conducting the activities or through personal experience. In context of internal
marketing practical knowledge as well as market specific knowledge are essential (Chen and
et.al., 2015)
Some advantages of this theory is that it helps marketing manager in developing the
understanding about market situation which could be consider by them when creating a plan.
Uppsala model support marketing manager in elimination of barrier which can occur in gathering
information about specific market.
The disadvantage of Uppsala model is that it is based on the determination. As the wrong
prediction or analysis can have adverse effect on the planning procedure as well as outcome.
Another disadvantage of this model is that it does not consider the interdependencies between
different countries's markets of which an organisation operates. This model can only be adopted
by the companies offering physical products (Homburg,Jozić and Kuehnl, 2015)
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Transaction Cost theory- This model have focus on evaluating the cost which has been incurred
by business entity for entering into a global market. It includes calculation of various
expenditures such as transportation , trading cost , etc. This is the summation of all the expenses
involved in establishing a new market outside the national boundaries. These types such explicit
as well as implicit cost have impact as well as influence on organisation and consumer in the
market. The organisation should have focus on increasing the external transaction costs over the
internal transaction costs. As this will help firm in ensuring success and fostering growth.
Advantages of the Transaction Cost theory is that it emphasizes on cost of entering into
the market , which can be used by manager a tool for determining the price of product or
services. It overview business structure as a single essential preparation for establishing as well
as safeguarding transactions and minimising transaction costs between participants and across
organisational boundaries. It also support manager in making suitable decision on the basis of
calculation (Jaramillo and Spector, 2015 )
Disadvantage of this theory is that it is based on various assumptions which might have
negative effect on financial performance of the company.
This approach can be adopted by Apple company .But it has been suggested to firm that
should select such market where the transaction cost is low. A company should expand its
business operations until their cost of making an extra transaction within an enterprise is equal to
the cost of making similar or more transaction at another location.
Born global strategy- This type of model or approach is adopted by the small business entities or
newly established business venture. Born global approach offers an attractive alternative to the
conventional staged approach to internationalization. This approach is used by those
organisations which are entering the international market for the first time. Such organisation
enter into international market at initial stage of start up. Born global approach is adopted by
those business entities that, from inception,seeks to derive significant competitive advantage
from the use of resources and the sale of outputs in multiple countries (McDaniel and Gates,
2012)
The born global model supports new establish venture in entering into global market. It
allows small medium enterprise to marks internal presence at initial phase which will further
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support company in fostering growth. By utilising this approach newly established companies
can enter into global market with limited resources.
The born global is fairly new concept of international marketing in which the newly
established business venture enter into new market without information. As this factor can have
negative effect on business growth as well as financial performance of such firm. It leads to high
risk for the small medium enterprise. As due to insufficient knowledge or practical experience ,
firm have to face difficulties as well as unknown challenges which might have direct impact on
the sustainability of organisation. The born global does not have focus on risk which might arise
due to lack of financial resources.
Electronic paradigm theory- It is considered to be as holistic approach which is dependent on the
relationship between several components. Electronic paradigm theory is also recognised a tool
that can be used by the multinational corporations such as Apple company for entering into the
market. Electronic paradigm theory supports marketing manager in formulation of strategies that
can be used by organisation during the expansion of business operations. It encourages business
entity for making foreign direct investment. This model or concept is based on assumption that
an enterprise will avoid transaction in open market when internal transactions carry less cost. In
order to make the foreign direct investment , it is required by the organisation to become
financial sound as well as effective.
This approach or model can be adopted by Apple company for entering into a global
market. As the cited business venture has high potential to invest in foreign market. An
enterprise also have effective marketing as well as investment strategies which will support
organisation in accomplishment of desired objectives.
But it has been suggested marketing manager in apple company should conduct internal
analysis before selecting any of the above internationalisation marketing approach. As this will
assist manager in getting the information about the company internal strength as well as
weakness. It will also assist manager in making suitable decision for expanding business. The
eclectic paradigm thus identified all the interdependent factors in international operations in
systematic way (Lamb, Hair and McDaniel, 2011)
The advantages of Electronic paradigm theory is that it emphasizes on determining
whether it will be beneficial for company to produce the specific item or to outsource. It may be
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more cost effective for an organization to work out of a different market location but keep the
performance of the work internal. The another benefit of this approach is that it helps marketing
manager in determining the most appropriate as well as effective mode or method of entry into
new market. The advantages of Electronic paradigm theory is that it provides the techniques ,
strategies or method that can be adopted by organisation in a situation of market failure in which
opportunities emerge to convert these failures into competitive advantages.
In context of apple company , the firm can form joint venture with the global companies
which is dealing in same industry. As this will help firm in exploring as well as capturing several
markets and business opportunities. It will also support firm in gaining competitive advantage in
global business environment. Another strategies that can be adopted by apple organisation in
order to enter into international market and establish good position is partnership, merger etc.
For the eclectic paradigm to give a rounded view of the internationalizing firm, it needs
to acknowledge the critical importance of firm‐specific ownership advantages, such as the role of
the entrepreneur.
The major disadvantages of eclectic paradigm is that it is based on assumption that that
countries factor endowments and economic and political institutions differ . It may lead to
market failure. Further these market failures can have adverse effect on the sales as well as
profitability of organisation. Market failures can have structural or transactional causes that
influence the nature of the advantages enjoyed by multinational corporations. The paradigm is
narrow in term that it emphasizes only one particular form of internationalization that is
international production in the form of foreign direct investment.
This theory also states that the companies such as Apple who are planning to make
investment in international market , it is essential for such firm to posses ownership advantage
(Lovelock, 2011 )
CONCLUSION
It has been concluded from the report that sevens Ps such as price , place , promotion ,
people , physical evidence etc. are the important elements that are required to be included in the
market plan. As this will help organisation in achieving the market objectives. This activity will
also support firm in fostering market growth. It has been identified from the report that apple
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company has adopted the effective marketing plan which has supported business entity in
achieving success. It has been analysed from the study that many of big companies adopt the
internationalisation strategy for reducing the competition and increasing the market share.
Project has highlighted several approaches that can be used by the cited business venture
for identifying the suitable mode for entering into the new or international market. It has been
analysed that among several approaches born global is the unique approach which provides
benefits to small medium enterprise planning to enter into market at initial phase of
development. Report has suggested some appropriate modes which can be used by apple
company for entering into new market.
REFERENCES
Books and Journal:
Homburg, C., Jozić,D. and Kuehnl, C., 2015. Customer experience management: toward
implementing an evolving marketing concept. Journal of the Academy of Marketing
Science. pp.1-25.
Bahadir, S. C., Bharadwaj, S. G. and Srivastava, R. K., 2015. Marketing mix and brand sales in
global markets: Examining the contingent role of country-market characteristics. Journal
of International Business Studies. 46(5). pp.596-619.
Chen, Y. and et.al., 2015. Linking market orientation and environmental performance: The
influence of environmental strategy, employee’s environmental involvement, and
environmental product quality. Journal of Business Ethics. 127(2). pp.479-500.
Jaramillo, F. and Spector, P.E., 2015. Sunk Cost Effect, Escalation of Commitment and the
Principle of Fungibility: Consumers’ Reactions to Membership Cards. In Creating and
Delivering Value in Marketing. Springer International Publishing.
McDaniel, C. and Gates, R., 2012. Marketing research essentials. Wiley Global Education
Lamb, C.W., Hair J.F. and McDaniel, C., 2011. Essentials of marketing. Cengage Learning.
Lovelock, C., 2011 Services Marketing, 7/e. Pearson Education India.
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