Piggy Backing as International Entry Mode

2005:112 SHU

BACHELOR 'S THESIS

Piggybacking as International Entry Mode for Small Service Firms
The Case of BossIT

Tobias Simolin Olov Renberg

Luleå University of Technology BSc and MSc Programmes in Business Administration and Economics BSc Department of Business Administration and Social Sciences Division of Industrial marketing and e-commerce
2005:112 SHU - ISSN: 1404-5508 - ISRN: LTU-SHU-EX--05/112--SE

ACKNOWLEDGEMENTS
We would like to thank our supervisor Professor Manucher Farhang, who has with his well known experience of research, guided us in the right direction. We would also like to thank Staffan Livbom, Chief Executive Officer of BossIT Communications, for taking the time to answer our questions and explaining in detail BossIT’s international expansion. Luleå, May 2005 Tobias Simolin Olov Renberg

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ABSTRACT
There is a process ongoing where domestic markets are merging into a large global market, and this clash creates a larger supply of products on the international marketplace. Firms have to be able to adapt to these new settings to stay competitive. Previous research has focused on how manufacturing firms and foremost large firms go international. Since more firms are outsourcing their services and employing small service firms to do a specific part of their work abroad, our research is focusing on small firms. For a small firm, it is important to choose the right mode of entry when entering a foreign market. There exists a large array of different modes to choose from when entering a foreign market. The decision of what method to implement can be critical since they may differ in how successful the international entry becomes. One of these international entry modes that has not been received sufficient attention in previous research and thus we have chosen to address is piggybacking, which is when a company indirectly exports through a larger firms distribution channels. To add into the research of piggybacking we have

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For data collection Documentation Newsletter #1, 2004-08-29 Newsletter #2, 2004-11-25 Newsletter #3, 2005-02-14 BossIT AB Company Information Brochure, April 2005 Website www.bossit.se, April-May 2005 Interview Livbom, Staffan, Chief Executive Officer, BossIT AB, April 2005 35 APPENDIX Interview Guide General Information about BossIT Company facts - Respondents name - Respondents position - Company Name - Size of the company (turnover and employees) - Business idea - Annual turnover - Type of business - Type of industry - Competitive environment Process 1) Why did your firm expand to a foreign market? a) Did your firm actively look for new markets abroad? b) Did your firm search for companies to cooperate with abroad? 2) When did the initial contact with Ericsson start? a) Who was the initiator? b) Did Ericsson decide they wanted your firm as a supplier abroad? c) What key persons were involved in the contacts? 3) Have BossIT delivered services to Ericsson domestically? a) If yes, what type of services? b) To what extent did your firm deliver services? c) Did it lead to a continuous cooperation? 4) Why does Ericsson involve BossIT in their international business? a) Is Ericsson in need of distributing your firms’ services abroad? 5) How does the international distribution chain work? a) Could you explain the process of exporting your services? 6) In the export agreement, what were the general outlines? a) Which market did the agreement cover? b) What services did the agreement consist of? c) How where the legal issues handled? d) Are there any possible future markets that BossIT and Ericsson may want to enter? 7) What brand did the agreement decide to use? a) Have this affected the BossIT brand? b) Have this affected the marketing activities abroad? c) Has any benefits occurred when using this brand name? d) Has any complaints arisen about using this brand name? 8) What do you consider to be the reason that Ericsson buys your firms services, instead of? a) Producing them in-house? b) Buy them from a local establishment? c) Buying them from a competitive supplier? Benefits 9) What did the export generate, in terms of? a) Economically? b) Product development? c) Organisational growth? 10) Did your firm get experience from the international expansion? a) How can that experience be utilised in future expansions? b) Could this international experience be obtained in a different way? c) What value, as a small service business, did this experience lead to? 11) Could you as, a small service firm, been able to internationalise without collaboration with Ericsson? a) What benefits does a multinational partner provide? 12) Have you as a small service firm experienced any promotional benefits from cooperating with a well-established brand? a) Have you been associated with Ericsson? b) If yes, have it been in a positive or negative context? 13) What risks for small service firms, are involved with entering a foreign market? a) Have the cooperation with Ericsson lowered the risk? b) If yes, in what way did Ericsson’s distribution channels lower the risk? c) In what way did Ericsson’s market knowledge lower the risk? Relationship 14) How do you experience the relationship with Ericsson a) What degree of formality is involved in the relationship? b) Are there any barriers in the relationship? c) Is there any mutual dependence in the relationship? 15) Are there any plans to develop the relationship? a) If yes, in what way? b) Do you perceive that Ericsson is interested in a future cooperation? 16) Are there any plans to switch partner or end the relationship? a) Are there any options available? b) Would it benefit your firm to switch partner or end the relationship? Interview guide translated to Swedish Generell information om BossIT Företagsinformation - Respondentens namn - Respondentens position i företaget - Företagets namn - Storlek på företaget (omsättning och anställda) - Affärsidé - Årlig omsättning - Typ av marknad - Konkurrerande miljö Processen 1) Varför expanderade ert företag till en utländsk marknad? a) Sökte ert företag aktivt efter nya marknader utomlands? b) Sökte ert företag efter andra firmor utomlands att samarbeta med? 2) När började den initiala kontakten med Ericsson? a) Vem var initiativtagare? b) Bestämde Ericsson att de ville ha ert företag som leverantör utomlands? c) Vilka nyckelpersoner var involverade I kontakterna? 3) Har BossIT levererat tjänster åt Ericsson nationellt? a) Ifall ja, vilka typer av tjänster? b) I vilken mängd levererade ert företag tjänster? c) Ledde det till ett regelbundet samarbete? 4) Varför inkluderar Ericsson BossIT i sina internationella affärer? a) Har Ericsson ett behov av att distribuera era tjänster utomlands? 5) Hur fungerar den internationella distributionskedjan? a) Berätta om processen när ni exporterar tjänster? 6) Hur ser överenskommelsen ut I exportavtalet? a) Vilken marknad täcker avtalet? b) Vilka tjänster bestod avtalet av? c) Hur behandlades de rättsliga aspekterna? c) Finns det några marknader som BossIT tillsammans med Ericsson vill ge sig in på i framtiden? 7) Vilket varumärkesnamn ska användas enligt avtalet a) Har detta påverkat BossITs varumärke? b) Har detta påverkat marknadsföringsaktiviteterna utomlands? c) Har några fördelar uppkommit då ni använt det här varumärket? d) Har några klagomål uppkommit när Ni använt det här namnet? 8) Vad tror du är anledningen att Ericsson köper Era tjänster, istället för? a) Producera dem själva? b) Köpa dem från en lokal firma? c) Köpa dem från en konkurrent? Fördelar 9) Vad genererade exporten, i form av? a) Ekonomiska fördelar? b) Produkt utveckling? c) Företagets tillväxt? 10) Erhöll ert företag erfarenhet från den internationella expansionen? a) Hur kan Ni dra nytta av den erfarenheten till framtida expansioner? b) Kunde den här internationella erfarenheten blivit uppnådd på något annat sätt? c) Vilket värde gav den här erfarenheten för Er som ett mindre företag? 11) Skulle du som en mindre tjänste firma kunnat internationalisera utan samarbete med Ericsson? a) Vilka fördelar ger ett multinationellt företag? 12) Har Ert samarbete med ett multinationellt företag skapat några fördelar för Er marknadsföring? a) Har Ni blivit associerade med Ericsson? b) Om ja, i sådana fall har det varit positivt eller negativt? 13) Vilka risker finns involverade för små tjänsteföretag då de expanderar internationellt? a) Har Ert samarbete med Ericsson minskat risken? b) Om ja, på vilket sätt minskade Ericssons distributionskanaler risken? c) På vilket sätt minskade Ericssons marknadskunskap risken? Relationen 14) Hur upplever Ni relationen mellan Ert företag och Ericsson? a) Hur formellt är relationen? b) Finns det några hinder för relationen? c) Finns det något ömsesidigt beroende i relationen? 15) Finns det några planer på att utveckla förhållandet? a) Om ja, i vilken riktning? b) Upplever Du att Ericsson är intresserad av ett framtida samarbete? 16) Finns det några planer på att byta samarbetspartner eller avsluta relationen? a) Finns det några alternativa lösningar tillgängliga? b) Skulle det gagna Ert företag att byta partner eller avsluta samarbetet?