FRAMEWORK FOR PERFORMANCE & INTERNATIONAL MARKETING Introduction “A firm increases its likelihood of survival when it goes international” Reference Article. Justin Paul & Erick Mas (2019) Toward a 7-P framework for international marketing, Journal of Strategic Marketing http://drjustinpaul.com Globalization “Globalization has made firms’ search for foreign market opportunities necessary in order to survive” “...there has been rapid increase in international transactions taking place in the recent years” http://drjustinpaul.com Global Strategies “...firms have had to rethink their global strategies” “We argue that a firm from an emerging economy should carry out an analysis based on the first “P” constructs from our framework before going global so that they can perform better after internationalization” http://drjustinpaul.com 7-P FRAMEWORK Figure 1:”Paul & Mas, 2019” http://drjustinpaul.com 1.POTENTIAL Refers to the opportunities and activities in the host market that create a favorable or unfavorable position for incoming firms. • Identify • Timing • Political and economic • Less Developed Countries http://drjustinpaul.com Proposition 1: “ Firms from emerging countries could find high probability of success in other developing as well as Less Developed Countries” http://drjustinpaul.com 2.PATH -Strategy, Fund sources, Type of firms “Firms from Developing countries traditionally begin internationalization using exporting as their first mode of entry, then set up subsidiaries later” http://drjustinpaul.com Proposition 2: “ Firms from emerging countries needs to formulate specific strategies to expand into developed countries” http://drjustinpaul.com 3. Process • LATAM companies are often slow to internationalize (Anand et al., 2006). • Focus on being competitive on current market. • Gradually expand abroad, mainly to USA. • Latecomer firms from emerging markets forced to internationalize early. • Catch up strategy. http://drjustinpaul.com Proposition 3: “Firms from developing (emerging) countries, in general, do not have the propensity to be born global, as they are primarily regional.” http://drjustinpaul.com 4. Pace • Speed of internationalization. • Determinant factors: Technology • Competition • Mediating perception of entrepreneurs • Moderating forces of knowledge • Network • • CPP Model by Justin Paul & Rosarito Sanchez (Conservative, Predictable & Pacemaker markets) • Speed at which a firm’s international expansion by switching from one entry mode to another • How many countries a firm enters per year http://drjustinpaul.com Proposition 4: • “Firms from developing (emerging) countries, use exporting as an entry mode to begin the process of internationalization and use more than one entry mode or switch entry modes over the years.” http://drjustinpaul.com 5.Pattern • Relates to “what” and “where” • What product or service is sold internationally? • Where it is sold? • Example, Main LATAM industries abroad (Vasquez- Parraga and Felix’s 2004): • Products: food, beverages, raw materials, and agriculture • Services: construction, financial, and software/technology firms http://drjustinpaul.com Example http://drjustinpaul.com Proposition 5: “Firms from Developing countries, tend to succeed primarily in exporting agricultural items rather industrial products.” http://drjustinpaul.com 6. PROBLEMS Figure 2: Problems of Internationalization for Emerging Market Firms (EMFs) Paul & Mas, 2017 http://drjustinpaul.com Problems (Continued). 1.Cognitive Bias • Foreign firm’s product is seen as inferior based on country of origin (Thomas et al., 2007). • To combat this bias, firms must position their product properly to combat the negative implications on product quality http://drjustinpaul.com Problems (Cont). 2.Liability of Foreignness • Social costs associated with lack of knowledge/experience in the host country (Miller et al., 2008). • Additional costs incurred due to entry barriers (taxes; government imposed regulations such as labor, environmental, safety and health laws). (Brenes et al., 2009). • Difficulties faced by Firms from developing countries when negotiating with Multinational Enterprises from developed countries. http://drjustinpaul.com Problems Cont. 3. Resource limitations/constraints • Third major Problem of internationalization of companies from Developing countries. • Emerging Market Firms usually experience initial losses in internationalization. http://drjustinpaul.com Proposition 6: “ Firms from Developing (emerging) countries in particular, Small and Medium-sized Enterprises often face problems such as Cognitive bias, Liability of Foreignness and financial constraints while trying to internationalize their business.” http://drjustinpaul.com 7. Performance. What determines performance? Other six Ps: 1. Potential 2. Path 3. Process 4. Pace 5. Pattern 6. Problems http://drjustinpaul.com Proposition 7: “ Internationalization positively affects the performance of the firms from developing (emerging) countries” http://drjustinpaul.com Implications & Directions • Comprehensive research integrating more than two Ps • Firm performance AFTER internationalization should be studied • Further development of the 7 P-Model of Internationalization • Extending framework to encompass the internationalization of any enterprise • Cover additional areas of international business http://drjustinpaul.com Conclusion • Globalization has sparked an interest in internationalization • The 7 P-Model of Internationalization was presented to explain the Potential, Path, Process, Pace, Pattern, Problems, and Performance of the internationalization of firms, from emerging markets • Firms need to identify opportunities in terms of their potential and follow the 7P Model to make strategic choices for internationalization http://drjustinpaul.com Contact me • Facebook.com/drjustinpaul • Web: drjustinpaul.com • Email: [email protected] http://drjustinpaul.com Reference •Justin Paul & Erick Mas (2019) Toward a 7-P framework for international marketing, Journal of Strategic Marketing http://drjustinpaul.com
