2. Agenda
2
1. Definitions
2. Development and growth stages
3. Comparison Born Global v/s Traditional Business
4. Examples & Case study
5. Challenges
6. Conclusion
3. 3 Key Principles
• Companies that start selling products in their home markets and then they
sequentially look at new countries.
• Also known as, The Uppsala Internationalization Model or Stage Model.
• Born globals are defined as organizations that within a few years from
being founded enter several international markets and have a global
mindset from day one.
• Also Known as, Early internationalizers, international New Ventures, High
Technology Start-ups, Global Start-ups or International Entrepreneurs
What is Traditional & Born Global Firm?
Traditional Born Global
• “Business organization that, from inception, seeks to derive significant
competitive advantage from the use of resources and the sale of outputs in
multiple countries (Oviatt & McDougall, 1994)
• Traditional business is a process in which enterprise gradually increase
their international involvement (Johanson and Vahlne, 1977, p. 23)
New Market
Conditions
Learning from
Overseas
Technological
Advances
4. Agenda
1. Definitions
2. Development and growth stages
3. Comparison Born Global v/s Traditional Business
4. Examples & Case study
5. Challenges
6. Conclusion
1.
5. Cross Sectional Analysis (Benchmark) Time Series
Cross-sectional analysis involves the comparison of different firms’
financial ratios at the same point in time.
• Competitor Comparison
• Industry Average Comparison
Years
Sales
Born Global Stages Characteristics
1. Research Development No sales, global vision
2. Domestic Stage Domestic revenues,global vision
3. Entry age < 25% of international revenues,global vision
4. Starting Stage 25% of international revenues and < 25% of revenues from other
continents, global vision
5. Development Stage > 50% of international revenues, global vision
6. Growth Stage > 25% of revenue from other continents, global vision
7. Mature Stage > 50% of revenue from other continents
Source: Development Phases of Born Globals (Gabrielsson et al.,(2008)
Seven stages of development based on operations, revenues , and the origin of those revenues
Development Stages
6. Characteristic
Born Global
Introductory
Phase
• Developing a commercially acceptable product
• Secure financing
• Develop the market
Commercialization
& foreign entries
• Enter to foreign markets
• Increase revenue volumes
Rapid growth &
foreign expansion
• Penetrate existing markets
• Expand to new continents
Rationalization &
foreign maturity
• Align operations and marketing to reach global
synergies.
Globalexpansionofthefirm
Growth of firm Size
Growth Phase 1:
Introductory
InternationalizationdegreeGlobalizationdegree
25%50%25%50%`
Micro Small Medium Large
Growth Phase 2:
Comercialization
and foreign
entries
Growth Phase 3:
Rapid growth and
Foreign Expansion
Growth Phase 4:
Rationalization
and Foreign
Maturity
Growth Phases of International New Ventures
Growth Phase
Source: Gabrielsson & Gabrielsson, 2009
7. Revenues
Origin of Revenues
R & D Stage
Domestic Stage
Entry Stage
Starting Stage
Development Stage
Growth Stage
Mature Stage
Revenues from home
country
Revenues from home
continent
Revenues from other
continents
Growth
Phase 4
Growth
Phase 3
Growth
Phase 2
Growth
Phase 1
Development & Growth stage – Diagramatic
representation
Source: Luostarinenen & Gabrielsson (2006) and Grabrielsson & Gabrielsson(2009)
8. Agenda
1. Definitions
2. Development and growth stages
3. Comparison Born Global v/s Traditional Business
4. Examples & Case study
5. Challenges
6. Conclusion
1.
8
9. Comparison Born Global v/s Traditional Business
Born Globals Traditional Firms
-Proactive and structured
-Global niche markets
Internationalization
approach
-Reactive and oppurtunistic
-Adverse home markets
-Competitive
-Compete with high competitors
Objective
-Survive
-Increasing sales volume
-Focuses on geographically spread lead markets
-Psychic Distance irrelevant
-Extreme Flexibility to adapt
Internationalization
Strategy
-International markets developed serially
-In order of psychic distance
-Limited Flexibility to change
-Simulationeous domestic and international
expansion
-Lead markets focused
-High conncectiviy network
Expansion Patterns
-Domestic expansion first
-Low-market targets
- Limited networks
-Strong knowledge-base and technology
competence
Market advantage -Several years of operations expereince
- Domestic market largely irrelevant Home market -Domestic market developed first
-Rapid penetration of global niche
-Internationalization within few years of inception
Pace
-Single Market at a time
-Gradually Expanding
--Integrated with client´s channel or Big MNC‘s
Supply chain.
-Multiple entry modes like stategic alliance, Joint
ventures or subsidaries.
Networks
-Faciliate Internatinolization
-Coorporation with Agents/distributors
10. Agenda
1. Definitions
2. Development and growth stages
3. Comparison Born Global v/s Traditional Business
4. Examples & Case study
5. Challenges
6. Conclusion
1.
10
11. Born Global v/s Traditional Model :
AA
Inception: Inception: Inception:
1994 2003 1974
Internationalization: Internationalization: Internationalization:
From inception From inception 1988
Performance: Performance: Performance:
Employees: 268,900 Employees: 500 2169 stores
Worldwide
Worldwide, 700 million
registered users by 2011
Operates in 88 countries
Group Turnover Group Turnover Group Turnover
US $107 billion (2015) US $2 billion (2013) US $15.9 billion (2016)
Examples
12. Amazon.com was founded in 1994 by Jeff Bezos
Went online in the year 1995
As an online Book Store but soon diversified into wide range of products
In its first week, received nearly $12,500 of orders.
Within its first month, books were sold to customer in all fifty United States and forty-five other countries.
End of 1996, Amazon boosted $ 15.7 million in sales.
Today its one of the worlds largest online retailer
12
Case Study - Amazon
14. “If you make customers unhappy on the internet, they can each tell 6000 friends”.- Jeff Bezos,1996
Cost structure Revenue streams
Key resources Channels
Key activitiesKey partners
Value
proposition
Costumer
relationships
Costumer
segments
Price:cost effectively
Customer Experience
& Convenience
Wide selection
More distribution channel
Suppliers &
Manufacturers
Network of
Sellers
Publishers
Merchandising
Production & Design
Physical Warehouses
Human Web &
application development
Intellectual:
Kindle Platform
Self-Service
Automated
Services
Parternership Alliances
Mass Market
Global market
Sellers ( companies and
individual)
DevelopersAmazon.com
Mobile apps
Logistic Networks
Other retailers
Cost Driven
Marketing Technology and content fulfilment
Economies of Sale
Retail sales
E-books & Contents
Commision on reseller sales
Prime monthly subscriptions
Business Model
14
15. Cross Sectional Analysis (Benchmark) Time Series
Years
Sales
15
Summary of Comaprison
Born Globals Traditional Firms
Internationalization From inception Gradual process
Vision Vision from the begining No vision, logical step
Commitment Made by the enterpreneuer
Driven by activities, knowledge and
investments
Industry High-tech industry Manufacturing industry
Market Entry Without any pattern Throughout the establishment chain
Networks
Networks created abroad. Weak ties and
cooperative networks.
Networks established in the home
market – market relationships
16. Agenda
1. Definitions
2. Development and growth stages
3. Comparison Born Global v/s Traditional Business
4. Examples & Case study
5. Challenges
6. Conclusion
1.
16
17. 17
Born global firms face the following kinds of Challenges:
Enterpreneurial Challenges
Managerial.
R&D.
Financial and sales.
Marketing challenges.
Lack of home market position.
Governmental Challenges
Lack of knowledge on government’s policies.
Difference in languages and business practices.
Educational Challenges
Lack of international market knowledge.
Size
Time • Credibility
• Finance
• R&D
• Export know-how & skills
• Foreign representation
• Market information
• Innovation...
the next
product
Evolution of a Born Global Exporter
& Challenges It Overcomes
Product or
process
development
Small
domestic
sales only
Begin exporting
early (2 years)
Create
International
position
Manage
transition
issues early
Niche
limits
Some will exceed
$100 million
Challenges
Source: Luostarinen and Gabrielsson (2002)
18. Agenda
1. Definition & Characteristics
2. Development and growth stages
3.Comparison Born Global v/s Traditional Business
4. Examples & Case study
5. Evolution of Born Global & Challenges
6. Conclusion
1.
18
19. • International Origins
• The tech sector dominates born global companies
• Unlike multinational firms, most born global firms tend to be small and self-
financed
• Early & rapid in internationalization, still have to face challenges.
19
Conclusion