Diversification is considered the riskiest strategy out of 4 ways to grow of a firm (Biggadike, 1979). This is characterized by selling new products to new markets and to new customers. This could be adopted when a firm wants to gain access or control supply demand, or to reinvest, earnings or to enhance technological innovation, etc.
As the product market strategy can create the growth by introducing the offerings of a firm to the new market. Such way could be considered as a very effective and advantage for international expansion. This can be accomplished entering new areas or regions about of the country or foreign markets. This proves the driving force behind the company's desire to bring itself to go on the internationalization pattern …show more content…
This model suggested that the development of a firm occurs in small steps with the beginning with least risky way, such as exporting to a country via an agent and later gain experience and knowledge through “learning by doing”. According to this theory, a firm will start its internationalization by choosing a country close to the home country in terms of psychic distance due to the lack of market knowledge. It also stated that during the internationalization process, a firm will develop knowledge through incremental activities in a foreign market, these activities will allow a firm to become more differentiated when selecting new markets. However, since 1977, due to the significant change of business environment in terms of psychic distance, the model was again revisited in 2009. Johanson and Vahlne (2009) argue that business relationships as known as network have big impact on the decision of a firm. Now they emphasize the successful factor for a firm in the internationalization process is a firm’s relationships and network. The focal firm is expected to go abroad based on its relationship with their so-called important partners who are committed to developing the business through internationalization (Johanson and Vahlne, 2009). These partners could be found at home or abroad. The focal firm might need to work or follow their partners to exploit the opportunities, these relations are built on trust and …show more content…
With the LLL approach, the international expansion of multinationals rising from emerging country is driven by linkage, leverage and learning. Emerging country multinationals or latecomer firms (LCFs) are defined to meet four conditions: they are the late entrants to an industry not by choice but by historical necessity; they lack of resources initially, e.g. lacking technology and market access; their goal is focused on catch-up; they have some initial competitive advantages, such as low costs (Mathews, 2002). The LCFs start by acquiring the external resources on the market rather on their own advantages and capabilities. Firms enhance their resources base by securing access to the resources of a wider network, this multiply linkages between firms. Leverage, therefore, refers to the LCFs’ ability to take advantage of these unique capabilities in their international network of activities (Peng 2012). This may also include technology licensing contracts, imitation and reverse engineering (Mathews 2006). Finally, firms apply repeated linkage and leverage processes that lead to the learning
As the product market strategy can create the growth by introducing the offerings of a firm to the new market. Such way could be considered as a very effective and advantage for international expansion. This can be accomplished entering new areas or regions about of the country or foreign markets. This proves the driving force behind the company's desire to bring itself to go on the internationalization pattern …show more content…
This model suggested that the development of a firm occurs in small steps with the beginning with least risky way, such as exporting to a country via an agent and later gain experience and knowledge through “learning by doing”. According to this theory, a firm will start its internationalization by choosing a country close to the home country in terms of psychic distance due to the lack of market knowledge. It also stated that during the internationalization process, a firm will develop knowledge through incremental activities in a foreign market, these activities will allow a firm to become more differentiated when selecting new markets. However, since 1977, due to the significant change of business environment in terms of psychic distance, the model was again revisited in 2009. Johanson and Vahlne (2009) argue that business relationships as known as network have big impact on the decision of a firm. Now they emphasize the successful factor for a firm in the internationalization process is a firm’s relationships and network. The focal firm is expected to go abroad based on its relationship with their so-called important partners who are committed to developing the business through internationalization (Johanson and Vahlne, 2009). These partners could be found at home or abroad. The focal firm might need to work or follow their partners to exploit the opportunities, these relations are built on trust and …show more content…
With the LLL approach, the international expansion of multinationals rising from emerging country is driven by linkage, leverage and learning. Emerging country multinationals or latecomer firms (LCFs) are defined to meet four conditions: they are the late entrants to an industry not by choice but by historical necessity; they lack of resources initially, e.g. lacking technology and market access; their goal is focused on catch-up; they have some initial competitive advantages, such as low costs (Mathews, 2002). The LCFs start by acquiring the external resources on the market rather on their own advantages and capabilities. Firms enhance their resources base by securing access to the resources of a wider network, this multiply linkages between firms. Leverage, therefore, refers to the LCFs’ ability to take advantage of these unique capabilities in their international network of activities (Peng 2012). This may also include technology licensing contracts, imitation and reverse engineering (Mathews 2006). Finally, firms apply repeated linkage and leverage processes that lead to the learning