Internationalizationand networks: From theoryto practice MARTIN JOHANSON

Transcription

1 Internationalizationand networks: From theoryto practice MARTIN JOHANSON

2 Let s start with practice GustafDe Laval was a Swedish innovator. He developed machines for the dairy industry, including the first centrifugal milk separator and milking machines. His first separator was patented in 1887, and his first milking machine in From the early 1880s, De Laval's cream separator, was promoted internationally. De Laval was not active in the Chinese market until the beginning of the 1990s, but then.

3 DeLaval designs, manufactures, and supplies equipmentand systems to dairyfarms for milkproductionand animal husbandry. Milkingequipmentand systems represent48% of its sales. DeLavalemploys4,077 peopleand is present in morethan100 markets. It has been active inthe Asia Pacific region since it enterednew Zealand in DeLaval snextasianventure camein the 1970s when it entered Japan.

4 DeLaval

5 DeLaval begins export Dairy products were not part of the Han Chinese diet, so demand was low,but consumption grew. DeLavalbegan to export but did not make anyinvestment or adaptation to the market. DeLavalreceived its first order from China in 1979, following the country s economic reform. The import order was placed by the Shenzhen GuangmingHuaqiaodairy farm for a pipeline milking system. DeLaval developed one weak relationship with a customer. Establishment of the sales subsidiary As export increased, DeLavalneeded presence in the market and opened offices in Hong Kong and Shanghai. There was a need for information about customers and the market. Development of rather weak relationships with customers, but at the same time, the number of relationships increased.

6 Founding a joint venture Activities increased, mainly through NuPulse, which produced a simple machine, suitable for the Chinese market. DeLavalneeded to increase its presence and founded a joint venture. Development of one strong relationship; several weaker relationships also emerged. The growth of the Chinese dairy industry Took over the ownership completely and moved office to Shanghai. Began to interact more closely with the customers in order to increase their competence and develop their technology. Developed the Mobile Bucket in order to reach small farmers. DeLavaldeveloped several new relationships with customers. The existing relationships became stronger. The number of relationships increased, several of them strong and several others weak. DeLavaldeveloped indirect relationships with firms that it did not do business with.

7 DeLaval begins sourcing Increased activities to find suppliers and to develop relationships with existing suppliers. Training and technology transfer to the suppliers in order to raise the quality of the products purchased.delavalmaintained relationships with its customers, but it also built up a supply network. The number of relationships increased; the relationships with the suppliers were strong. The melamine poisoning crisis The crisis in the dairy industry led to DeLavaltaking initiative in several projects involving both business and non-business actors, such as government and different authorities, in order to increase the competence in the industry and to develop standards and regulations. Moved its office to Beijing in order to be closer to the customers.delavaldeveloped relationships with non-business actors. Some of these actors were commercial firms, but the relationships did not include any business. The number of indirect relationships increased, while several relationships with customers and suppliers became stronger.

8 DeLaval sentryintothe Chinesemarket Instiutions Network strategy Network commitment Three periods of changing institutions: Policies in order to stimulate milk consumption ( The shopping basket programme ) and to move production to Northeastern China ( ) China joins WTO but also several new regulations on standards for milk. ( ) Regulations and supervision (total reconstruction of the industry) due to the melamine milk crisis, but before this several policies on strengthening of dairy farming and production. ( ) Three shifts in strategy took place: The first shift meant that instead of seeing China as a pure export market, sourcing and production became key activities. ( ) DeLaval began to interact more with the end-users and to reach the customers. ( ) A shift to a strategy, which meant more collaboration with the government, but also that the Chinese operations were give a more important role in the firm. ( ) Three paths of commitment: DeLaval East Asia, factories and sourcing centre established. ( ) Mobil bucket for small-scale customers. (2005) Increased engagement with Sino- Swedish Dairy center phase 2, 1 st and 2 nd CDF and relocation of sales office to Beijing. ( )

9 In around 20 years, DeLavalwent from being a complete outsider in the Chinese market to an established actor and market-leader MAIN OBSERVATIONS Impressive speed otook around 20 years to go from no operations to turning China to one of the key markets and the Chinese operations to a global hub for R&D and the subsidiary running all Asian operations and this is a market, where they do not drink milk Relationships and networks were critical obusiness relationships okey persons and social networks oprivate vs. professional ties The market changed oinstitutions onetwork

10 Why are networks so important? The importance of the network varies depending on the market Asia vs. Europe Growth and expansion in foreign market take place with the help of the network The network plays different roles in different phases From finding an opportunity to developing it into a relationship Adding a relationship Replacing a relationship Buying a relationship Creating the network

11 The business is done here, the money is made here Long-lasting and producing value Information flows and knowledge is gained in the network Learning with and from Networks are stable and predictable, thus less uncertain and risky Trust and reliability Business opportunities are mediated by the networks Growth and expansion

12 Based on what we have seen so far, how can understand high-speed entry into a foreign market? Time elapsing Position in the network Ability to manage dynamics and change

13 Position in the network Type (business, social and institutional) Number Strength (relationship-specific investment and commitment) Direct and indirect Time elapsing When is the start, and when is the end? Time unit Network position/time elapsed from first activity in the foreign market

14 Ability to manage dynamics and change Synchronization The word has its roots in Greek, where syn means same and chromos is the word for time The ability and activities to match and temporally coordinate the business operations to change and stability in the network

15 Temporal order Sequential synchronization Simultaneous synchronization Context System synchronization Partial synchronization

16 Network synchronization Network entry speed

17 Network Network Network entry Network dynamics synchronization speed performance

18 Thank you!