ULUSLARARASI İŞLETME

In the IP model, there are two types of variables: state and change. The change variables are the crucial ones since these processes change the characteristics of the focal firm and its environment and then trigger further changes. They involve knowledge development processes, including learning, creating and trust-building; and commitment processes, including reconfiguring resources and coordinating. The state variables include both operational (resources, skills, relationships, and organizational culture) and dynamic (integrating, building and reconfiguring competencies) capabilities, commitments (the distribution of resources over the firm’s functions, its product lines, the countries where it is active, and the networks in which it has invested), and the performance of the firm. The IP model portrays internationalization as a cyclical process: state variables affect change variables and vice versa (Vahlne & Johanson, 2017).

The LLL framework has three pillars: linkage, leverage, and learning. Linkage refers to connecting and making business with resource-rich companies or companies already active in the target market. The linkage can be affected through strategic alliances.

-As a result of rapid globalization between the 1990s and the 2010s, we have witnessed the emergence of a new type of small-andmedium-sized enterprise: the born-global firm, a young entrepreneurial company that initiates international business activity very early in its evolution, rushing into foreign markets. 

-The born-global firm refers to a young entrepreneurial company that initiates international business activity very early in its evolution, moving quickly
into international markets.

-There are two types of exporting: direct and indirect exporting. Direct exporting refers to the sale of products made by firms in their home country to customers in other countries. This strategy is attractive because firms can reach foreign customers directly. When domestic markets experience some downturns, sales abroad may compensate for such drops. Indirect exporting involves selling
through domestic-based intermediaries (such as foreign distributors, sales representatives, and local agents).

-Export intermediaries perform an essential middleman function by linking domestic sellers and overseas customers who otherwise would not have been connected (Peng, 2014: 299-300).

-Exporting has many advantages (Çavuşgil et al., 2017: 377-378):
1. It increases overall sales volume, improves market share, and generates profit margins that are often more favorable than in the domestic market.
2. It increases economies of scale, reducing per-unit costs of manufacturing.
3. It diversifies the customer base, reducing dependence on home markets.

-There are some disadvantages of exporting (Hill & Hult, 2019: 439):
1. Especially for bulk products, high transport costs can make exporting expensive.
2. Tariff barriers can make exporting costly. Similarly, the threat of tariff barriers by the host-country government can make it very risky.
3. In indirect exporting, intermediaries often carry the products of competing firms and so have divided loyalties. In such cases, the intermediary may not do as good a job as the firm would if it managed its marketing itself.

There are four significant motivations for firms to enter strategic alliances (Clegg, Kornberger & Pitsis, 2016: 568):
1. Transferring technology across borders more easily,
2. Accessing new markets by using the complementary resources of local firms,
including distribution channels and product range extensions,
3. Leveraging specific capabilities of partners and saving costs of duplication, such as fixed costs,
4. Sharing risks among the alliance partners

Joint marketing is an agreement between two or more partners based in different countries that focuses on international market expansion through access to capabilities and resources in international markets.

A greenfield investment refers to an entry mode through which a firm invests directly in another country by establishing a new wholly-owned subsidiary.

A joint venture is a separate organization formed by two or more firms that have
equity ownership in the new entity.

According to the Eclectic Paradigm, the capacity and desire of firms to go abroad depends on having or being able to acquire assets not
available to another country’s firms. Such assets refer to ownership-specific advantages because they are assumed to be unique to firms of a particular nationality of ownership. Assets include tangible resources, such as natural resources, equipment, and capital; and intangible resources, such as intellectual properties (e.g., patents, copyrights, and trademarks) and managerial or marketing skills. Alternatively, assets might be specific to a particular location (location-specific advantages)
in their origin and use, such as lower costs of production, strict protection of property rights, and broader markets.

Linkage-leverage-learning framework argues that internationalization process includes connecting and making business with resource-rich companies or companies already active in the target market, gaining
access to resources which are outside the firm and which can be incorporated through specific tactics and the repeated application  of the previous two steps. For example, some Chinese firms have entered  strategic alliances with Western companies that have reputable trademarks (linkage). The managers of these firms have frequently visited their partners’ marketing departments to understand their  marketing processes (leverage). The firms have repeatedly connected with new Western companies and consequently they utilize the resources of their partners (learning). In the question, utilizing the resources of foreign partners is about the pillar of learning.

The potential advantages of first movers may be counterbalanced by various disadvantages, which result in late-mover advantages. Specifically, late-mover advantages are revealed in three ways: Firstly, late movers can free-ride on first movers’ pioneering investments. Secondly, first movers face more considerable technological and market
uncertainties. Finally, as incumbents, first movers may be locked into a set of fixed assets or reluctant to cannibalize the existing product lines in favor of the new ones.

A Multinational Enterprise (MNE) is any business that has productive activities in two or more countries.

Global corporations view the world as one marketplace and produce standardized goods and services to serve this market.

The born-global firm refers to a young entrepreneurial company that initiates international business activity very early in its evolution, moving quickly into international markets.

Multidomestic corporations are made up of relatively independent subsidiaries each of which produces customized goods and services for the local market being served.

Transnational corporations integrate a geographically dispersed set of specialized activities into a single production process.

Exporting, an entry mode through which products produced in one country are sold to customers in the other country or countries, is the most common and understandable entry mode in international business. Many firms start to internationalize through exporting then shift to different entry modes.

The success of an alliance is based on three main factors: partner
selection, alliance governance, and alliance management.

Equity alliances are built based on equity ownership. Minority equity alliances and joint ventures are the most common types of equity
alliances in international business. The joint venture is a popular entry mode that occurs when two or more firms form a separate organization and have equity ownership in the new entity. On the other hand, contractual alliances are based on contractual provisions. They include contract manufacturing, licensing, franchising, research and development contracts, joint marketing, consortia, turnkey projects, build-operate-transfer arrangements, and management contracts.

The distinction between a merger and an acquisition is precise. A merger refers to the joining of two independent companies to form a combined entity. An acquisition describes the purchase or takeover of one company by another. Despite the distinction between
mergers and acquisitions, many people use the umbrella term mergers and acquisitions.

Greenfield investment is a type of foreign direct investment (FDI) in which foreign operations of the firm in a given country start from scratch. A wholly-owned subsidiary is an overseas operation that is wholly owned and controlled by an international firm. There are two ways of establishing wholly-owned subsidiaries: merger and acquisitions and greenfield investments. Equity alliances are built based on equity
ownership. Minority equity alliances and joint ventures are the most common types of equity alliances in international business. Contractual alliances are based on contractual provisions. They include contract manufacturing,licensing, franchising, research and development contracts, joint marketing, consortia, turnkey projects, build-operate-transfer arrangements, and management contracts. Joint marketing refers to an arrangement among two or more partners based in different countries that focuses on international market expansion
through access to capabilities and resources in international markets.

Build-operate-transfer agreements are now often used, instead of the
traditional build-transfer type of turnkey projects, in order to obtain a longer-term presence.

The Eclectic Paradigm proposes a general
framework for determining the extent and pattern
of internationalization of the firm. The Paradigm
embraces various explanations of the activities
of firms engaging in cross-border value-adding
activities.

If a firm decides to enter foreign markets,
a new question emerges: How does the firm
internationalize? The internationalization process
(IP) model (Johanson & Vahlne, 1977; Vahlne
& Johanson, 2017) and linkage-leverage-learning
(LLL) framework (Mathews, 2006; 2017) are the
dominant views on this subject