Internationalization Models Essay, Research Paper

A- STAGES (UPPSALA) INTERNATIONALIZATION MODEL

The Model Characteristics: 1- the export development process has a sequential nature -successive stages represent higher degrees of international involvement/commitment;

2- the process is a gradual acquisition, integration and use of knowledge about foreign markets and operations; 3- the process is also one of organizational learning; 4- the model is experience/knowledge-based – the more experience the firm gains in time, the more it is prepared to commit itself to this market and to launch new activities; 5- from this higher commitment the firm will gain experience/market knowledge; 6- internationalization is a slow process, beginning with local representatives in culturally close markets; 7- firms would enter new markets with successfully greater psychic distance; 8- the concept of psychic distance -factors preventing or disturbing the flow of information between firm and market, including factors such as differences in – languages- cultures- political systems- educational levels- levels of industrial development- tastes among consumers- values, behaviors, attitudes.

9- the main structure of the stages model: a) state/static aspects of internationalization variables the market commitment and knowledge about foreign markets; b) change aspects of internationalization variables decisions to commit resources and current business performance. 10- the concept of market commitment is composed of two factors: a) the amount of resources committed- the size of investment in marketing, organization, personal, etc.; b) the degree of commitment ? difficulty in finding an alternative resources and transferring them to alternative uses. 11- international activities require both a) general knowledge -can be transferred from one country to another; b) market specific knowledge -gained mainly through experience in the market. 12- there is a direct relationship between market knowledge and market commitment – the better the knowledge about the market, the more valuable the resources and the stronger the commitment to the market (especially true for experiential knowledge). 13- additional market commitment as a rule will be made in small incremental steps. 14- However the exceptions are; – firms with large resources experience small consequences of their commitments, and can take larger internationalization steps; – when market conditions are stable and homogenous, relevant market knowledge ca