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The world of international business is drastically changing today, enormous amount of young entrepreneurs are picking an interest in the global market, and as a result many small and medium sized business are establishing them self's as born global businesses from birth. The traditional approach of internationalization is considered old-fashioned by young entrepreneurs, where a business is being established to target the local market and gradually expand to the global market.
Few years back, more business firms are seen to be either expanding their business to international market or establishing one as a born global firm, as a result of the global economy crunch. The economy crunch stimulates business firms and young entrepreneur that do business locally to look at the big picture (global market). Internalization is no longer the approach to Most business firms instead they kick off international activities from birth, to enter distant market right away, to enter multiple countries at once, to form joint ventures without prior experience, etc. such firms have been labeled international new ventures Oviatt & McDougall(1994), high technology startups jolly et al., (1992).
Quite a number of these born global established forms have been successful internationally, as a result of intervention of digital media (internet). The elements of digital media had facilitated the growth and success of born global business, such as digital marketing trategy, email campaign, social networking etc. Examples of such firms include; opera software, IRTech, colorimetric and Optoflow, even started life as a global organization. Karlsen (2007), however some born global companies never make it to the success line
How successful they are:
Every company regardless of it being a local or a born global firms, starts up with an objective of succeeding at some point, some do succeed and some don't due to their level of global experience, strategic approach, and so many other reasons, but at some point, they will all have to ask themselves, "what types of business is right for our firm or what are we doing right/wrong that puts us in this current position we are in now".
Quite a number of these born global firms are successful, for example Infomedia Ltd. Infomedia Ltd. is one of the largest suppliers electronic parts catalogue for the global automotive industry. The firms headquarter is located at Sydney Australia and comprises of international support centers at Japan, North America, Latin America, Europe and Melbourne
This born-global company first expanded into international markets by venturing with other business and serving them, before distributing more of its product itself through its wholly subsidiary, as a result its customer dragged and spread Infomedia Ltd. information across the global market. "Today, Infomedia's electronic parts catalogues have become the global standard for the automotive industry, shipping to more than 50,000 dealers in over 160 countries and 25 languages." Nsw (2009)
However some face a different faith. According to Mr. Mikitani (2008) "the decision on whether or not to go global should not be based on the types of business that you are in, but in how you execute your global strategy."
He mentioned eBay, which he said did a "bad job in Japan" by offering the same exact product in Japan as in the U.S. Successful global companies in his view often need to be able to give up authority, either by finding local partners or going it alone but allowing the local management to control the decisions. HE views Yahoo! Japan as a success story of global business model, particularly because it is not majority owned by Yahoo in the U.S. As a result, local management was able to use proven U.S. Yahoo technology to tailor its business to Japanese culture. Today, Yahoo! Japan is the biggest website in japan. Mikitani (2008)
Some of the born global firms simply had no choice. Their products are basically designed and manufactured to target multinational markets. So they have look beyond the home markets boundary at the early stage of the company's development. For example cell phone companies such as blackberry, Nokia, Samsung etc. Such products include the options for multiple languages on their phone and user manuals in order to satisfy the end users preference and also made it suitable and easy to work effectively with the foreign networks. Furthermore social networking sites such as twitter and Facebook had been established purposely to target global market, which is now a multi billion dollars firms. "IRTech has developed niche products for the steel industry, a global industry that has no home market. As explained above, all their clients are large international companies" Karlsen (2007) numerous born global firms attain success as a result of the common strategy they situate their companies with. Such approach includes
The company's products are unique, ingenious and innovative.
They company have a way to deliver and satisfy the needs and wants of their target market
The mangers and other key officials of the company have a wide global experience and extensive contact networks from previous work in similar industries or the company has strong relationships with key personnel from large, successful organizations.
The company has good relationships with influential figures in the industry that can provide support and insight in any areas where it lacks expertise (e.g. research institutions).
The company have realize that employees are the heart of the business, (happy employees result to good business)
Factors that influence success in born global business's
The essential factors that influence the success in born global firms include
Implication of managers
Technology boom of the 21st century (e-commerce)
Implication of managers
In terms of involvement of managers in born global firms, the managerial level, the attitudes and mindset of the managers play an important role in determining the extent to which a firm engages in international activities. Behind every successful born global firm there is a highly skilled manager with a high level of global orientation, which is a bundle of dispositions and competencies the sum of which appears to be positively correlated with export-marketing performance. " Firms with managers with geocentric mindsets are more likely to enter international markets quickly" Kobrin (1994).
According to Cavusgil & Knight, (1997), "managers of born global will have more of a geocentric mindsets which is in contrast to mangers of gradual globalization will have of an ethnocentric mindset". Managers of gradual globalization only act when they are able to detect the opportunities and limit there business from the risk of going abroad while managers of born global approach their business with more positive attitudes toward internationalization
Successful born global firms constitute of managers with some essential characteristics, which includes;
Born global firms will have managers with more geocentric mindsets
Managers of born global firms will have more international experience
Born global firms will have managers with higher risk tolerance
Managerial experience abroad has also been shown to positively affect the internationalization process managers with international exposure or most importantly work experience or have schooled abroad would tend to be more familiar with the foreign market conditions and opportunities than managers without such experience.
There have been a number of studies addressing managerial experience that tended to focus on whether or not managers of the firm had lived or worked abroad. Generally, the results of these studies showed that companies are more likely to export when managers have lived or worked abroad Bilkey, (1978)
Risk Tolerance is another important managerial characteristic and is defined as the extent to which managers are willing to make risky decisions. Managers of born global firms are expected to exhibit higher levels of risk tolerance in ambiguous situations such as those involved in internationalization Cavusgil & Knight, (1997).
The E- commerce has played a very vital role in the international success of born global firms, The growth of international business has made a vast effect on the technology boom of the 21st century, it aids born global firms in general to exercise and maximize the opportunity of participating in e-commerce online and as well as integrated e-business capability for activities such as sousing and managing customer relations. E business has facilitated born global firm's globalization struggles in attainment of reaching far geographical regions and concurring time differences. As a result, it created opportunities for young entrepreneurs and inexperience firms to expand abroad
Born global firms are among the most intensive users of the Web for global selling, procurement and customer service. E-business contribute some imperative benefits to born global firms these factors includes
E-business increases productivity and decreases cost in international value-chain activities via online integration and coordination of production, marketing and distribution,
E-business enhances the capability to implement marketing strategy on an international scale and integrate customer service worldwide, and further aids managers to make instantaneous changes to strategies and tactic in firm's international activities.
The Internet allows born global firms to process and access information very quickly, and interacts more effectively with, customers, clients, suppliers and partners. It allows customers to leave comments and feed backs on the website to aid decision making
Born global business is able to make sudden modifications to their international branches at the same time, and will be effectively as soon as they occur. For example firms minimize cost and maximize operational efficiency in the international supply chain, they take advantage of digital media to schedule video conference meetings, to avoid the expenses of traveling abroad, and use emails to maintain contacts with colleagues, employees, customer's suppliers and distributors in other countries.
The internet aids born global mangers to manage product specification, inventory, and purchases orders as well as product life cycle, it also bridges time difference. Customer relationship management is especially critical in foreign markets where buyers often favor local vendors. Internet based system provide real-time information, forecast shifting short and long term market needs, and increase the effectiveness of after-sales service.
In conclusion, implication of managers and E-commerce enhances the means for firms to achieve competitive advantages and perform objective in global market
McDougall, Patricia P., Scott Shane & Benjamin M. Oviatt (1994). Explaining the formation of international new ventures: The limits of theories from international business research. Journal of Business Venturing, 9, 469-487
Jolly, Vijay K., Matti Alahuta & Jean-Pierre Jeannet (1992). Challenging the incumbents: How high technology Start-ups compete globally. Journal of Strategic Change, 1, 71-82
Siv Marina Flø Karlsen conducted the work for her doctoral thesis at the Department of Marketing, BI Norwegian School of Management Born global 16.05.2007
NSW business chmber 2009 Location: Home > International trade > Import Export assistance > Growing exporters
Creating the "Born Global" Company
Panelists Weigh in on Entrepreneurship in a Global Setting
Brian Dutt (OE), Viewpoints Editor
Issue date: 10/20/08 Section: News
Kobrin, S. J. (1994). Is there a relationship between a geocentric mind-set and multinational strategy? Journal of International Business Studies, 25(3), 493-511.
Cavusgil, S. T. & Knight, G. A. (1997). Explaining an emerging phenomenon for international marketing: Global orientation and the born-global firm. Working Paper, Michigan State University CIBER.
Bilkey, W. J. (1978). An attempted integration of the literature on the export behavior of firms. Journal of International Business Studies, 9(1), 33-46