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International Entrepreneurship - Entrepreneurial SMEs Adoption of Evolutionary Strategies

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  • " International Entrepreneurship 1INTERNATIONAL ENTREPRENEURSHIPby Student?s NameCode + Course NameProfessor?s NameInstitution of LearningCity, StateDateInternational Entrepreneurship 2Question 1: Many entrepreneurial SME’s do not follow a planned, s..

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  • " International Entrepreneurship 1INTERNATIONAL ENTREPRENEURSHIPby Student?s NameCode + Course NameProfessor?s NameInstitution of LearningCity, StateDateInternational Entrepreneurship 2Question 1: Many entrepreneurial SME’s do not follow a planned, strategic approach tothe issue of internationalisation. Most do so by means of an evolutionary strategy based ona combination of methods and options. Using relevant illustrative example for eachapproach, review the various options that can be used, the advantages and disadvantagesthese options and how the probability of success can be maximised. Entrepreneurial SMEs adoption of Evolutionary strategiesThe focus on entrepreneurial SMEs? internationalization strategies is imperative sinceSMEs role in the economies is very crucial. Among the OECD countries, SMEs represent 95%of all enterprises and generation of more than half of employment of the private sector (cited byKumar, Antony and Douglas 2009). According to the OECD?s statistical findings, SMEs fromthe most industrialised countries have of late accounted for substantial export proportions(Knight 2001). These internationalisation trends of SMEs are anticipated to gain increasedmomentum owing to the increased integration of the global economy coupled with the continuedtechnological advancement and the decline of government-imposed trade barriers (Lu 2001).Business internationalisation according to Welch and Luostarinen (1988) is the process inwhich organizations get involved directly or indirectly in international operations. It is theprocess of bringing together resources and strategies and adapting them to internationalenvironment (Calof and Beamish 1995, cited by Javalgi and Todd 2011). It is considered as theprocess is been considered to combine different resources within the enterprise (Gankema, Snuifand Zwart 2000). Research has shown that SMEs have adopted different approaches to approachinternationalisation. These approaches include; network approach, stage and internationalentrepreneurship approach. It is studied that for these approaches to be effective, they should beInternational Entrepreneurship 3resource based to sustain establishment of firm?s international activities (Ahokangas 1998). Theincentive to venture into international markets through exportation and creation of subsidiarieshelps firms increase rents as well as increase access to technology with an ultimate goal ofremaining competitive According to Bell, Crick and Young (2004), there are three main factors that affect theinternationalisation of SMEs. Among these, management and ownership issues take precedence.This is due to the fact that ownership influences a firm?s business strategies as well as theirinternational focus. Second, market and product development strategies affect SMEs?internationalisation. Further, the introduction of new technology processes direct SMEs? re- examination of their strategic directions.Internationalisation takes different entrepreneurial options to warrant efficiency andcompetitiveness. As an internationalisation option, joint venture is said to be an agreementbetween parties to develop a new entity by contributing equity where parties exercise controlover the enterprise and share rents as well as benefits, costs and expenses subsequently (Ippaso2002).The main purpose of joining ventures is to bring a combination of expertise and wealthresources to converge to one entity with joint management in a synergistic manner. In addition,other benefits include profit and loss sharing as well as joint proprietary interest. An example ofthis option is Microsoft and GE joint venture as well as Cadbury Schweppes PLC Carlyle Groupjoint venture. Joint ventures are considered to help entrepreneurial SMEs grow and expand intonew markets although they can be complex and may require reliable relationships within (Ippaso2002). Some of the advantages identified for this option include: joint ventures can help enterpreviously barrier bound entries, they can also provide a platform to access expertise withoutInternational Entrepreneurship 4hiring more staff, and they can leverage on existing technologies and share the risks ofuncertainly high-risk venture (Inkpen and Crossan 1995). In addition, joint ventures can helpestablish SMEs presence in new and untapped markets and especially in the international level.Although the benefits and merits of joint ventures make it much desirable an option, some of thepitfalls can be so detrimental. Joint ventures can be grounds to setting unrealistic businessobjectives that may not be aligned to common goals and poor tactical decisions can be madewhen the member companies? roles are misunderstood as well as complexities in the adoptionand integration of differing cultures, styles of management and working relations.On the other hand, franchising as an internationalisation option is the use of a firm?smodel of business and its brand for a subscribed period (Abecassis -Moedas, Ben, Dell'Era,Manceau and Verganti 2012). An example of this option is the Cream British Luxury franchise.This internationalisation business venture requires less capital making it advantageous andstrategic. Other advantages of the franchising include it guarantees rapid expansion since itallows multiplicity of units, this also facilitate market dominance due to multiplicity of locationpresence. In addition, it places the business owner in charge as well as increasing namerecognition. Although the option gives the franchisee the management position to run thebusiness on day-to-day basis, the independence of the franchisee is challenged. This is becausethe franchisee operates upon the franchisor?s discretion. Internationalisation is said to take different forms including; export, import, internationalcollaboration and foreign direct investment (Jones and Leo 2008). In either of these forms,export expansion as a characteristic of internationalisation needs to adopt and follow someexport structures in order to fit into the existing and the potential international marketopportunities, which are bound by formalised administrative arrangements with the view to help "

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