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Master Thesis in International Marketing 1. Master Thesis Entry mode decision for Swedish business-to-business firms internationalizing to India Master of Science in International Marketing Supervisor: Svante Andersson Examiner: Klaus Solberg Soilen Student Names: Jesper Mårtensson Joep van den Brink T Submission Date: 25 May, 2.
Question s How do internal and external factors influence the entry mode decision for Swedish business-to-business firms internationalizing to India? How can the entry mode decision process be characterized for Swedish business-to-business firms when internationalizing to India? How does the entry mode, used by Swedish business-to-business firms in India, follows the Transaction Cost Approach to entry modes and the Resource Based Approach to entry modes?
Purpose The purpose of this study is to get a deeper understanding of how internal and external factors influence the entry mode decision for Swedish business-to- business firms that internationalize to India.
Furthermore, the study aims at bringing in a process-based view of the entry mode decision literature. The study also aims to investigate entry modes used in India to see how it follows the recommendations of the transaction cost and the Resource Based explanation to entry mode choice.
Method Qualitative multiple case study consisting of three cases. The data was collected through personal interviews. The cases have been analyzed using a within-case analysis and a cross-case analysis. Conclusion The findings of our study show that firms evaluate just a few internal and external factors when internationalizing to India. As can be derived from our study, the product has an important influence on the entry mode decision for the investigated firms.
The more standardized a product is, the easier it is to penetrate the Indian market using low-control entry modes. The higher the complexity of the product, the more knowledge is required from the firm and thus, the higher the likelihood for a firm to internationalize to the Indian market using high-control entry modes.
It is also shown that firms tend to rely on earlier experiences when internationalizing to India, whereas this could limit the firms for choosing the right entry mode.
Furthermore, the specific market barriers for the Indian market have an influence on the entry mode decision as well. It is also found that firms that have a causational approach to foreign entry mode will not allow for a rapid switch in the level of foreign involvement before they have reliable information as a base for the decision.
The firms with an effectual approach made their entry mode decision based on selecting an entry mode with low resource commitment, seeing their achieved turnovers in India as a bonus. Conducting research in the area of internationalization has given us a great amount of interesting information regarding entry modes.
Especially the interviews with Swedish firms were instructive and interesting. However, we are glad that this time of hard work has finally come to an end. There have been a lot of people involved in the creation of this thesis. Therefore we would like to thank the participating managers, Stefan Axelsson, Harald Castler and Urban Bülow, that we interviewed for this thesis, master thesis on internal marketing.
Our greatest appreciation goes to our supervisor Svante Andersson at the Halmstad University. Halmstad University, 23 May, Jesper Mårtensson Joep van den Brink 4.
Empirical Data Introduction In this chapter an introduction is given to the subject of this master thesis on internal marketing and the current research gap. Furthermore, the importance of further research in this particular subject is further explained.
At first, internationalization of firms is explained in relation to their growth strategy. Secondly, it is explained why entry modes are an important part of the internationalization process of a firm. Later on, the discussion is narrowed down to BRIC- countries.
At last, the problem discussion, and the arising research question are presented. The conception of internationalization as a type of company growth is linked with the strategies defined by Ansoff In his study, he stated that the alternative growth strategy of market development, the company actively seeks growth by entering new markets with its existing products. One of the main reasons for firms to internationalize is that starting with a global strategy can eventually help firm to achieve revenue growth by exploiting new profitable opportunities outside of its domestic market, but also strengthen the long-term competitiveness of a firm by the exchange master thesis on internal marketing knowledge and the enhancement of capabilities Wilson, In their research, Kyläheiko, Jantunen, Puumalainen, Saarenketo master thesis on internal marketing Tuppura state that internationalization brings significant opportunities for firms operating in small open economies with limited domestic market.
In these settings innovative firms typically target narrowly defined niches that might be paralyzingly small domestically, but promising globally. Given the examples before, internationalization can be seen as a significant opportunity for growth and value creation, master thesis on internal marketing. So far, only little research has focused on entry mode decisions to emerging markets.
For most of the past 15 years, emerging markets, led by the BRIC-economies, drove global growth. Emerging markets accounted for more than half of global GDP growth over that period as the BRIC economies notched up economic growth rates in double digits. This yeargrowth rates are expected to be little more than half of the pre-crisis pace. The BRIC countries did create an Association, and since their leaders meet regularly in formal summits.
InSouth Africa joined the association Finardi, Indicators suggest that the BRICs are more relevant than ever. This emerging middle class is likely to have an enormous influence on the rest of the world. Not only will their demand for consumer goods have an impact on export opportunities, but they will also weigh in more and more heavily on global decision-making.
New players may arrive, but the original four BRICs remain the four to watch Ibid. Since the BRIC-countries are very heterogeneous, this study will mainly focus on the Indian market. According to Dillowthe potential lies with India. Its population is still young and growing and therefore millions of Indians are flooding into the workforce.
Since two-third of the population still lives on less than two dollars per day, the country has major challenges as well.
Therefore, we found India the most interesting country to further investigate. Lee and Lieberman state that different entry mode involves different levels of risk, control, ownership and cost that a firm must consider when making the entry mode decision. In addition, the decision also has an impact on certain aspects of marketing activities, such as after-sales services that can damage the reputation of the brand if carried out poorly by a distributor Doole and Lowe, master thesis on internal marketing, For example, external factors are market, production and environmental factors that cannot be affected by management decisions while the internal factors are related to the product characteristics and possession and commitment of resources Root, As mentioned before, entry mode decision is an important strategic decision that has an impact on the control that the firm will have over its international operations as well as the resources and the risk that it must assume to expand internationally Hollensen et al.
The increasing importance of presence in international markets has led to substantial research on the internationalization of firms.
Compared with developed market economies, emerging economies have their own unique social, political, and economic contexts as well as firm characteristics, so an understanding of entry mode choices in emerging economy markets needs to be advanced Zhang et. Furthermore, only a few studies have addressed the question of which market entry strategies are preferred by foreign firms in the BRIC countries and how these entry strategies are related to market success.
Increased knowledge in this area should also help practitioners who are considering entering the BRIC countries. Since the entry mode decision is such an important strategic decision, managers must evaluate the different internal and external factors and master thesis on internal marketing under what circumstances one entry mode might be better than another Ibid.
Furthermore, master thesis on internal marketing, no study has investigated how Swedish firms internationalize into BRIC markets and how various internal and external factors influence their entry mode choice.
In a recent study by Kalinic, Sarasvathi and Forzait is suggested that future research should look at how effectual logic can contribute to the understanding of different entry mode master thesis on internal marketing. The study aims to provide knowledge and understanding of the entry mode decision in BRIC markets, which needs to be advanced.
Furthermore the knowledge can be master thesis on internal marketing for decision makers when selecting entry modes for the Indian market. Furthermore, the study aims at bringing master thesis on internal marketing a process-based view of the entry mode decision literature, with the purpose to get a deeper understanding of effectual and causational logic in the entry mode decision process. We also aim to investigate entry modes used in India to see how it follows the recommendations of the Transaction Cost and the Resource Based explanation to entry mode choice.
This to give understanding of how these theories can be applied to the context of Swedish business-to-business firms in India. Theory In this chapter we present the different existing theories we have used, in order to provide a solid basis for our further research.
Furthermore, it also provides a literature review in the research area. At first, the various entry modes are presented, master thesis on internal marketing.
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