BS2158 International Business

BS2158 International Business
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Today’s Learning Outcomes
By the end of this session you should be able to
Recall the different patterns of internationalisation
Distinguish between radical and gradual approaches to internationalisation 
Understand the concept of de-internationalisation
 
Internationalisation Patterns 
By Internationalisation patterns we mean the way the internationalisation process of companies evolve, over time, in 
terms of location, timings, and commitment (entry modes). 
Previously we looked at firms’ international decision making in terms of Location choice, timing and ownership (at one point of time).
 
Uppsala Model 
• Developed by researchers in the Uppsala University (Sweden) in mid 1970s. 
• Internationalisation is a chain of incremental decisions where the firm begins with its local market and gradually increase its commitment to international markets accordingly with its foreign experience and knowledge. 
• Uppsala model posits that risk averse firms go to countries they perceive to be ‘close’
• A firm would start with markets that are close in terms of psychic distance and then gradually enter other markets that were further away
• Decisions and implementations concerning foreign operations are made incrementally due to market uncertainty Two types of knowledge:     Objective (can be taught) vs. Experiential (through experience)
The Uppsala model focus mainly on learning through experiential knowledge
Knowledge is about business practices in the targeted foreign country (market-specific).
Knowledge originates from the current foreign business activities (learning-by-doing process).
Knowledge is embedded in individuals (personal experience) and hence difficult to disseminate in the organisation.
Knowledge increases commitment, and commitment increases knowledge.

Determinants of Psychic Distance
Psychic distance (perception) could be affected by:
Cultural distance
Common language
Common history
Political system 
Economic development
Governance quality (Political stability, absence of violence, corruption…) 
Geographical distance