Electronic commerce is something new that substantially disrupts the process of the internationalization of enterprises. Today, the Internet is an integrated market of nearly 100 million consumers who can act, interact, and consume. Therefore, this phenomenon places the consumer at the heart of the commercial: it can mediate constantly between all offers made on it and choose what it deems most satisfactory.
As a result, companies must now deal with this absolutely imperative reorganizing of these new information systems. This does not just mean opening a website, as most companies have quickly realized, to conduct electronic commerce. It is the integration of this website in operation in the organization and internationalization strategy of firms.
So what will be the consequences on them? This risk is a challenge to the traditional models of internationalization. Besides the traditional channels, new operators are emerging in the world, for instance amazon.com. How long is this going to take? How will these operators compete with older distributors? Furthermore, we are witnessing the birth of communities of consumers who initially shared a common type of purchase and product and who will gradually expand their interests to other areas.
How will these communities organize themselves? How will they communicate and contact with each other? It is not easy to briefly describe the impact of electronic commerce in terms of the internationalization process of firms. In order to carry out this study, it seems appropriate to dwell on the traditional model – the Uppsala model – to define the strategy of internationalization of companies and to understand the implications of electronic commerce on the latter.
Then, it is necessary to analyze whether the repeal of distance and time between persons and goods and services will change the terms of internationalization of firms substantially: can the Uppsala model be continued to face massive disintermediation? Finally, we will try to find out if electronic commerce is not a simple a tool to superimpose the Uppsala model.
The Uppsala model (U-model) was originally developed by the Swedish school of Johanson and Vahlne Wiedershiem Paul (1975 & 1977). Through their contributions, we may retain two key concepts: the process of learning and of psychological distance. By analyzing the internationalization as a gradual learning process, this model places the experience gaines gradually as the key to the internationalization (Johanson and Vahlne, 1977).
Thus, by incorporating the knowledge gained from this experience in foreign markets, the company supplies its decision process. The internationalization becomes the result of a series of incremental decisions. These authors find, from their studies of Swedish firms, that they follow a sequential process consisting of four stages: activities exports irregular and opportunistic; export via an independent agent; implementation of a sales subsidiary; production in the foreign country.
The second main contribution of this model concerns the psychological distance. In fact, Johanson and Vahlne (1977) use this concept, defined as the set of linguistic and cultural differences that influence the flow of information and decision-making in international transactions, to explain that as the international experience increases, the psychological distance that separates the territories of new foreign business is shrinking. This decreases psychological distance and favors a more extensive growth and a fuller use of the opportunities offered by the various countries known.
Tags: Johanson and Vahlne, Uppsala model, e-commerce
[...] Conclusion For firms experiencing development, the conquest of market share and international expansion are the major strategic areas. The internet is mainly discussed as a means of reducing operating costs, with the creation of platforms for e-procurement, while initiatives to customers or trading is limited. For many applications, the Internet represents a final technical progress improving the functioning of organizations, but does not change the model of internationalization itself. Thus the question now succeeds to the euphoria, and some analysts fear that the e-business is a costly option. [...]
[...] The company must set new goals with respect to its foreign customers before designing and embarking on an international strategy based on trade. II - The repeal of distance and time between persons, goods and services, or the changing patterns of the internationalization of firms: can the Uppsala model continue to face massive disintermediation? Is it already over? Electronic commerce is based on two main considerations related to space and time. Electronic communications repeal the distance and time between persons and goods and services. [...]
[...] Their activity will be to reassure the consumer's choice of one brand over another, including setting up certificates, Cluster Approval, etc . So far, the rationale for the Uppsala model does not seem to be basically disturbed. It also happens that the websites set up by some firms compete with their other activities, and ultimately lead to a destruction of value. For example, a number of major U.S. dailies have given up their versions of "online" newspapers because of the cost incurred on the one hand, and the falling sales in numbers caused on the other. [...]
[...] With this in mind, companies that have chosen the path of internationalization and must fully integrate this tool in their growth pattern. Electronic commerce will boost the volume of exports and increase the market share of these companies abroad. Electronic commerce has increased in recent years, and given the rapid pace of globalization, it has transformed from a concept which is "somewhat helpful" to one which is "totally essential". Therefore, it has redefined the rules of international trade and export, but also of internationalization, fully opening the world market to entrepreneurs for whom the traditional methods of exporting no longer seemed to be viable strategies of growth. [...]
[...] Thus, by incorporating the knowledge gained from this experience in foreign markets, the company supplies its decision process. The internationalization becomes the result of a series of incremental decisions. These authors find, from their studies of Swedish firms, that they follow a sequential process consisting of four stages: • Activities of irregular and opportunistic exports; • Export via an independent agent; • Implementation of a sales subsidiary; • Production in the foreign country. The second main contribution of this model concerns the psychological distance. [...]
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