Strategies of Enter to a New Market
83 The Romanian Economic Journal
Strategies of Entering New Markets
Mihaela Belu Andreea Raluca Cărăgin Entering new foreign markets may be achieved in a variety of ways. Each of these ways places its unique demands on the company in terms of organizational and financial resources. Most of the times, entering international markets is not a matter of choice but of necessity to remain competitive in new or established markets. Our paper is going to analyze the possibilities that a company has when entering a foreign market, decision that is very important and which involves market assessment and analysis. Key words: Uppsala Model, Birkinshaw Model, exporting, franchising, licensing, strategic alliances JEL classification code: F21, F23, M16. The decision to go international represents an important commitment to go into a new line of activity, this being the reason why it should be taken step by step: obtaining information, analyzing them, formulating alternative action plans. (Tookey, 1975) Current literature provides us several approaches regarding the internationalization process. Dunning’s eclectic paradigm (1988, 1998) represents an important point of reference in analyzing the advantages resulting from the process. Dunning identifies three types of advantages: specific advantages (economies of scale, diversification), localisation advantages (market dimension, infrastructure) and internationalisation advantages (maintaining the quality of the products, reducing the operating costs on a Year XI, no. 27 (1) 2008
84
The Romanian Economic Journal
certain market). The developed model is focused on the advantages determined by the internationalisation process and less on the development process of the internationalisation of companies. A model that is focusing on the dynamics of the internationalisation process is The Uppsala Model, also called the „U Model”. The main scope to be obtained by applying the Uppsala Model is predicting the company’s
Strategies of Entering New Markets
Mihaela Belu Andreea Raluca Cărăgin Entering new foreign markets may be achieved in a variety of ways. Each of these ways places its unique demands on the company in terms of organizational and financial resources. Most of the times, entering international markets is not a matter of choice but of necessity to remain competitive in new or established markets. Our paper is going to analyze the possibilities that a company has when entering a foreign market, decision that is very important and which involves market assessment and analysis. Key words: Uppsala Model, Birkinshaw Model, exporting, franchising, licensing, strategic alliances JEL classification code: F21, F23, M16. The decision to go international represents an important commitment to go into a new line of activity, this being the reason why it should be taken step by step: obtaining information, analyzing them, formulating alternative action plans. (Tookey, 1975) Current literature provides us several approaches regarding the internationalization process. Dunning’s eclectic paradigm (1988, 1998) represents an important point of reference in analyzing the advantages resulting from the process. Dunning identifies three types of advantages: specific advantages (economies of scale, diversification), localisation advantages (market dimension, infrastructure) and internationalisation advantages (maintaining the quality of the products, reducing the operating costs on a Year XI, no. 27 (1) 2008
84
The Romanian Economic Journal
certain market). The developed model is focused on the advantages determined by the internationalisation process and less on the development process of the internationalisation of companies. A model that is focusing on the dynamics of the internationalisation process is The Uppsala Model, also called the „U Model”. The main scope to be obtained by applying the Uppsala Model is predicting the company’s
References: Tookey, D.A. (1975), Export Marketing Decision, Harmondsworth: Penguin Johanson; Wiedersheim-Paul, (1975), „The Internationalization of the firm – four Swedish case studies” Journal of Management Studies, vol. 12 Year XI, no. 27 (1) 2008 98 The Romanian Economic Journal Birkinshaw J., Hoods, N. (1998), „Multinational Subsidiary Evolutiona: Capability and charter change in foreign owned subsidiary companies” , The Academy of Management Review, Vol. 23, N. 4, pp. 773 -795 Popa, I. (2006), „Negocierea comercială interna ională”, Editura Economică, Bucharest Welch, L. (1982) „Decision – making in the international context” in Proceedings of the Seminar on Management Decision-Making, Olso: European Institute for Advanced Studies in Management, June Cho KR, Radmanabhan R. (1995), “Acquisition versus new venture: the choice of foreign establishment mode by Japanese firms”, Journal of International Management l (3), pp. 255-285. Gatignon H, Anderson E. (1988), “The multinational corporation 's degree of control over foreign subsidiaries: an empirical test of a transaction cost explanation”, Journal of Law, Economics and Organization 4, pp. 304-336. Bradley, Frank (2002), “International marketing strategy”, Prentice Hall Mihaela BELU, Associate Professor, Ph.D., Departament of International Business and Economics, Bucharest University of Economics. Andreea Raluca CĂRĂGIN, Assistant Lecturer, Ph.D. candidate, Departament of International Business and Economics, Bucharest University of Economics. Year XI, no. 27 (1) 2008