Internationalization Theories: Assignment On
Internationalization Theories: Assignment On
Internationalization Theories: Assignment On
Internationalization Theories
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may be readily consumed across multiple countries. This process is used by companies looking
to expand their footprints beyond their counties of domicile, by branching out into international
functioning of a firm as well as its future perspectives. In order for a company to be competitive
at a local level, it is crucial to be such on the international level. ... Helps to improve a general
company's image. There are mainly four theories of internationalization and they are the Uppsala
model of internationalization; the eclectic paradigm and transaction cost analysis; the interactive
network approach of the International Marketing and Purchasing Group; and what may be
Swedish researchers (Johanson and Wiedersheim-Paul, 1975; Johanson and Vahlne, 1977) from
Uppsala University had vast criticisms of the theories at the time, which explained international
involvement. They believed most existing theorises at that time toned down the problems of
cultural differences and ignored the internal foundations needed so that companies could handle
geographic markets with small psychic distances, combined with choosing entry modes with few
additional risks. There, they have enhanced knowledge of the market and more control of
resources, thereafter gradually when the companies have become more experienced and acquired
better resources, they expand to the more distance market. The core explanation of the model is
that increased market knowledge will lead to increased market commitment, and vice versa.
Even though the Uppsala Model has contributed greatly to broader understanding of
internationalization process of companies but the model itself suffer in some fundamental bases
to describe the Total Internationalization Process as it meant to be its original unit of analysis,
even before we consider the changes in business environmental during the last 20 years and its
The model does not take into account interdependencies between different country
markets
This model is not valid for service industries because the cumulative reinforcement of
more deficit in the original model which needs to be looked over and evolved in order to
that world has become much more homogeneous and that consequently psychic distance
has decreased
This model is not valid in cases of highly internationalized firms and industries as
The ‘friction’ between buyer and seller, which is explained by opportunistic behavior is termed
as transaction cost. Transaction cost analysis concludes that if the ‘friction’ between buyer and
seller is higher than through an internal hierarchical system then the firm should internalize. The
transaction cost analysis (TCA) framework argues that cost minimization explains structural
decisions. Firms internalize, that is, integrate vertically, to reduce transaction costs. Transaction
costs can be divided into different forms of costs related to the transactional relationship between
buyer and seller. The underlying condition for the following description of the cost elements is
this equation: transaction cost = ex ante costs + ex post costs = (search costs + contracting costs)
The process of how this model works is in mainly 3 steps which are:
maintaining long term interactions with entities from the foreign government.
The internationalization of a company results from its intention to strengthen its position by
extending its business network beyond the borders of its home country. Depending on the
• international extension
• international penetration
• international integration.
The first variant of network relationships in the process of company internationalization and
international extension, involves relationships with partners from the foreign network in the
country targeted for expansion. The second option involves relationships with foreign network
partners from non-target countries. The final possibility involves relations with partners in a local
When considering the network model of internationalization, both the individual company (its
own assets) and the network which it belongs to (market assets) must be taken into account.
According to the network model of internationalization, entering a new foreign market requires
the development of a network of relations on this market (the establishment, maintenance and
extension of relations). From the network-based point of view, the process of entering foreign
markets itself may also be perceived as an effect of the mutual interaction between entities from
within the company (internal actors) and external entities from the network (external actors).
internationalization process is neither linear nor sequential, as it is in the case of the stage-based
models (especially the Uppsala model). On the contrary, here the process is rather a combination
of a set of multilateral relations and links, in which the moves companies make depend on their
situation within the business network. The network model of internationalization may be
The model which suits the internationalization of Zumba is the network model.
This is because, among many market players, it talks about managing interdependencies.
The key aspect of the model is that the organization itself can not operate on its own, it relies hea
vily on other-managed capital and resources.
We benefit from their classes, academies, classes 'lessons, monthly payments from students
in their network and their brand products, similar to the Zumba case study. A total of 82,500 site
s offer Zumba classes performed by Zumba-certified instructors (known as ZINs).
Such teachers serve as business actors and help Zumba develop.
The actors are linked by exchange relationships with each other. This is important for the
company to maintain a good relationship with its teachers to ensure development and
competitiveness, as they are all interdependent. Then it is more complex and versatile.
In the case the instructors are known as autonomous businessmen.
They will join as members, take the course to obtain license, and then they will be able to operate
to either freelance or start theire own workout class. This allows for a network that is more open,
flexible and inclusive. Nonetheless, all of them depend on each other for support.
Since the teachers of the Zumba are the ones who communicate directly with the customers, they
are the ones that represent Zumba to the group. The instructors therefore need to be updated
regularly, as it is very essential for Zumba branding. Zumba has since reached out globally,
breached into global markets through informal advertising. The network model also seems to
address this approach. So from the discussions it can be concluded that Zumba and network
Zumba's growth has been very visible, and can be considered a born global in such a short period
of time. Rather than the approach that they embraced, it was the medium that they used to
The popularity of Zumba is due to the involvement of many celebrities which spark interest in
many people. This information can be easily accessed and updated via social media, for example,
Zumba fitness also benefitted immensely from internet advertising and social media. The
simplicity and accessibility of internet ads quash certain sources of publicity. There has been a
increase in the number of people using search engines to find the goods, information and services
they need. Many people over Youtube, an online video site, stumble upon Zumba.
Smartphone Aids, ipads, and other devices have increased the rate of information transmission,
enabling it to be readily available to all. Anyone can view the video online at any time, at almost
anywhere. It's also easy to upload, and can quickly go viral. In social media channels Zumba is
As Zumba kept the clothing lines to themselves rather than licensing, they were able to do
extensive market research without wasting a great deal of money and becoming a sensation
themselves.
As Zumba kept the clothing lines to themselves rather than licensing, they were able to do
extensive market research without wasting a great deal of money and becoming a sensation
themselves.