SMALL FIRM INTERNATIONALISATION

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SMALL FIRM INTERNATIONALISATION
GARRETH SLOAN EAMON FITZPATRICK AIDEEN
LAVERY JOHN BANN-LAVERY SARAH KENNEDY AISLING
MCCONAGHY
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SMALL FIRM INTERNATIONALISATION
ACCORDING TO BEAMISH (1990)
INTERNATIONALISATION IS A process by which
firms both increase their awareness of the direct
and indirect influence of international
transactions on their future and establish and
conduct transactions with other countries
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SMALL FIRM INTERNATIONALISATION
WHY INTERNATIONALISE?
LEGITIMATE REASONS
HOME MARKET NOT BIG ENOUGH
URO
INCREASED DOMESTIC COMPETITION
DECLINING DOMESTIC SALES
ILLEGITIMATE REASONS
MARKET SATURATION
EASE OF COMMUNICATION
INCREASE IN MEDIA POTENTIAL
REDUCED TRANSPORT COSTS
TO MAKE PROFIT
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SMALL FIRM INTERNATIONALISATION
PROACTIVE MOTIVATIONS TO INTERNATIONALISE
Proactive factors include recognition of better
opportunities abroad. A organisation pushes
towards internationalisation.
REACTIVE MOTIVATIONS TO INTERNATIONALISE
Reactive factors include responding to stimuli
such as unsolicited orders from foreign
customers, market saturation or declining
domestic sales. A organisation is pulled
towards internationalisation.
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SMALL FIRM INTERNATIONALISATION
OBSTACLES TO SMALL FIRM INTERNATIONALISATION
MOSTLY FINANCED RELATED (Bilkey 1978, Kolter
1994, Bell 1995)
FINANCIAL RESOURCES (30) EXCHANGE RATES
(20) LOCATION (20) CONTRACT DOCUMENTATION
(20) LANGUAGE/CULTURE (10) (MILLS 1995)
NAIVETY, IGNORANCE, LACK OF CONFIDENCE OF SMALL
FIRMS (Bradley 1991)
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SMALL FIRM INTERNATIONALISATION
ADVANTAGES OF SMALL FIRM INTERNATIONALISATION

• FUNDING
• FLEXIBILITY
• COORDINATION EASIER

IN N. IRELAND.

• GOVERNMENT SUPPORT
• LOCATION

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SMALL FIRM INTERNATIONALISATION
METHODS OF INTERNATIONALISATION
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EXPORTING
(A) INDIRECT EXPORTING
(B) DIRECT EXPORTING
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SMALL FIRM INTERNATIONALISATION
METHODS OF INTERNATIONALISATION
INDIRECT EXPORTING
(i) EXPORT HOUSES
(ii) JOINT MARKETING
DIGITAL ENGINEER IS AN EXAMPLE OF A SUCCESSFUL N.
IRISH EXPORTER
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SMALL FIRM INTERNATIONALISATION
METHODS OF INTERNATIONALISATION
2
LICENSING
CUTS OUT ADDITIONAL PRODUCTION, PROMOTION
AND DISTRIBUTION COSTS.
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SMALL FIRM INTERNATIONALISATION
METHODS OF INTERNATIONALISATION
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FRANCHISING
QUICK PENETRATION OF FOREIGN MARKETS WITH MINIMUM
CAPITAL CAPACITY.
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SMALL FIRM INTERNATIONALISATION
MODELS OF INTERNATIONALISATION
TRADITIONAL APPROACHES
NETWORK APPROACHES
RESOURCE APPROACHES
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SMALL FIRM INTERNATIONALISATION
MODELS FOR SMALL FIRMS
LEARNING INNOVATION
THE UPPSALA MODEL
LUOSTARINEN HELLMANN (1993)
BAMBERGER EVERS(1993)
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SMALL FIRM INTERNATIONALISATION
MODELS OF INTERNATIONALISATION
THE UPSALLA MODEL
STAGE BASED, INCREMENTAL APPROACH
STAGE 1 No Export Activities
STAGE 2 Occasional Export Sales
STAGE 3 Systematic Export
STAGE 4 Overseas Sales Subsidiary Est.
STAGE 5 Production/Manufacturing Plant Est.
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SMALL FIRM INTERNATIONALISATION
UPPSALA MODEL FOR INTERNATIONALISATION (JOHANSON
VALHNE 1997)
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SMALL FIRM INTERNATIONALISATION
PATHS OF INTERNATIONALISATION (LUOSTARINEN
HELLMANN 1993)
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SMALL FIRM INTERNATIONALISATION
MODELS OF INTERNATIONALISATION
BAMBERGER EVERS 5-STAGE MODEL(1993)
STAGE 1 No International activities-No
Interest
STAGE 2 Still No involvement-Interest due to
stimuli
STAGE 3 Reactive stage
STAGE 4 Active Involvement
STAGE 5 Committed Involvement
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SMALL FIRM INTERNATIONALISATION
BAMBERGER EVERS 5-STAGE MODEL(1993)
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SMALL FIRM INTERNATIONALISATION
MC CAW ALLAN CO. LTD.
WHY THEY INTERNATIONALISED
Market shrunk due to importation of cheaper
finished products
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SMALL FIRM INTERNATIONALISATION
MC CAW ALLAN CO. LTD.
HOW THEY SOUGHT INTERNATIONALISATION
PARTICIPATION IN INTERNATIONAL EXHIBITIONS
Introduction to clients Introduction to suppliers
and distributors
VISITS TO COUNTRIES
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SMALL FIRM INTERNATIONALISATION
MC CAW ALLAN CO. LTD.
PROBLEMS
LANGUAGE COST CURRENCY
RESULTS
VERY SUCCESSFUL
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SMALL FIRM INTERNATIONALISATION
FM ENVIRONMENTAL LTD.
WHY THEY INTERNATIONALISED
EARLY 1990S, DIFFICULT TIME IN HOME MARKET
STARTEGIC REVIEW
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SMALL FIRM INTERNATIONALISATION
FM ENVIRONMENTAL LTD.
HOW THEY SOUGHT INTERNATIONALISATION

• IDENTIFYING MARKETS
• IDENTIFYING WAYS TO BREAK INTO MARKETS
• DIRECT SALES
• LICENCE AGREEMENT
• PIGGY BACKING
• JOINT VENTURE

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SMALL FIRM INTERNATIONALISATION
FM ENVIRONMENTAL LTD.
PROBLEMS
LANGUAGE LOGISTICS GO TO WHERE THE CUSTOMER IS
AND DONT EXPECT HIM TO COME TO YOU
RESULTS
VERY SUCCESSFUL
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SMALL FIRM INTERNATIONALISATION
JOINT EUROPEAN VENTURE
OBJECTIVES
TO PROVIDE FINANCIAL ASSISTANCE TO AID THE
SETTING UP OF TRANSNATIONAL JOINT VENTURES ACROSS
THE EU
APPROVED IN 1997
EXCLUSIVELY FOR SMALL AND MEDIUM SIZED FIRMS
PROVIDES A GRANT OF UP TO 100,000
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SMALL FIRM INTERNATIONALISATION
TRADE INTERNATIONAL NORTHERN IRELAND
PART OF TRADE PARTNERS UK
LARGELY NON -FINANCIAL SUPPORT AGENCY
OFFERS

• EXPORT MARKETING RESEARCH SCHEME
• EXPORT PROMOTERS
• MARKET INFORMATION REPORTS

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SMALL FIRM INTERNATIONALISATION
TRADE INTERNATIONAL NORTHERN IRELAND
ALSO...

• TENDER OPPORTUNITIES MATCHING SERVICE
• INTERNATIONAL TENDERING FUND
• INTERNATIONAL TRADE DEVELOPMENT PROGRAMME
• MADINI

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SMALL FIRM INTERNATIONALISATION
WHAT HAPPENS WHEN THE COMPANY GOES ABROAD?
FRANCE
DATAR

• FRENCH GOVERNMENT AGENCY THAT OVERSEES FOREIGN
  INVESTMENT IN FRANCE

• PROVIDES GRANTS OF UP TO 25 OF INVESTMENT COST

• PROVIDES INFORMATION AND SUPPORT

ALSACE DEVELOPMENT AGENCY

• REGIONAL

• LARGELY INFORMATION AND SUPPORT BASED

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SMALL FIRM INTERNATIONALISATION
THE ROLE OF SUPPORT AGENCIES IN NORTHERN IRELAND
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SMALL FIRM INTERNATIONALISATION
LEDU
Established 1971
HQ Belfast
5 other regional offices
Government funded
1971-600,000
2001-30 million
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SMALL FIRM INTERNATIONALISATION
EXPORT PROGRAMMES

• MAP
• Aim- gt marketing awareness
• Workshops
• Company Mentoring
• Business Networking
• Eg. Classic Mineral Ltd (Lurgan)

• EDP
• Aim- gt export sales
• Workshops
• Consultancy
• Market visits
• Implementation
• Eg. Seinex Electronics

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SMALL FIRM INTERNATIONALISATION
THE FUTURE OF SUPPORT AGENCIES

• April 2002-Invest Northern Ireland
• LEDU, IDB IRTU

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SMALL FIRM INTERNATIONALISATION
ANY QUESTIONS?