Global Strategy II:

Doing Business in the Global Economy!

Professor Marcelo Bucheli

Module 2 ..............................................................................................................................2
Lesson 2-1: Questions and Concerns about Going Global ....................................................... 2
Lesson 2-2: Where to Go? .......................................................................................................... 6
Lesson 2-3: When to Go?.......................................................................................................... 10
Lesson 2-4: How Big or Small Should We Go?........................................................................ 17
Lesson 2-5: Born Global Firms ................................................................................................... 25

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

Module 2
Lesson 2-1: Questions and Concerns about Going Global

In previous lessons, we explored the question on whether a firm should become a

multinational or not and how to decide to become a multinational corporation or not. We
use the OLI framework. The ownership location and internalization advantage
framework to try to answer these questions. Now, after making this decision the
following other questions arise, where to go, when to go and how big or small to go.
These are the questions that we're going to explore in these module. Let's start with
where to go question. We explored some aspects when we discussed the location
advantages in the OLI framework. What we're going to do now to is to look at some
specific favorable conditions that a firm needs to take into consideration when deciding
whether to go into one, into some other country or not. So let's start talking about
different favorable conditions.

The first one is respect for property rights. Some countries have a record of
expropriating either domestic or foreign property. This might have happened back in
time or in more recent times. Both situations need to be taken into consideration, to see
if something that was used to be done in the past is coming back. Now, the fact that
some countries expropriate foreign property does not mean that these expropriations
affect all multinationals in the same way. It might depend on the industry you are into.
Usually extractive multinationals are more likely to be expropriated than let's say retail
multinational corporations, and your nationality also matters. Let's take the case of
Venezuela during the early 2000s. This is a country that expropriated a large amount of

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Doing Business in the Global Economy!
Professor Marcelo Bucheli

both private and foreign property within its territory. Now, it depended on whether you
were from, in those times as well. If you were a Brazilian or a Russian multi-national,
chances were that the risk of being expropriated were lower than if you were Spanish,
let's say or an American multinational. So this is something that also depends on the
relationships between both countries. Let's take another example to look at the place of
origin as a source of risk of the multinational corporation.

Let's remember the story of the Dubai Port Authority Corporation, the Dubai Ports
World. This corporation is one of the largest port management firms in the world, has a
very good reputation at managing ports. In the year of 2006, this firm applied to manage
six large American ports, six main ports within the United States. There was a lot of
opposition, political opposition against the Dubai Port World firm managing American
ports. It was not because they were consider bad at what they were doing or they were
considered inefficient or inept. It was basically because they came from the Muslim
world. The political opposition was so strong that even though the U.S. government
supported the Dubai Port World application, and even though Dubai as a country was at
war against the enemies of the United States, in those times, the political pressure was
too strong, and this firm eventually withdrew its application. So, there was no risk of
expropriation here, but the home country element played a role.

So, you need to look at also, the relationship and perception of your home country, in
the country in which your firm is investing. It's not only about relationships, like let's say
Russia and Venezuela in the 2000s, but again it's about perceptions. In the year of
2006. Dubai was a strong ally of the United States in the war against Al Qaeda but that

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Professor Marcelo Bucheli

didn't matter for those opposing this action. Another element determining whether the
conditions are favorable or not, are the general economic conditions. A country might be
going through an economic crisis which is obvious, an unfavorable condition but also
the crisis might be on the making. I mean some countries go through bubbles that
eventually burst like the housing bubble in Spain or in the United States. Let's take the
case of the German multinational corporation Aldi. This is a low cost retail firm that has
expanded into many countries.

One of the countries into which it went was Greece before the euro crisis in that country.
Once Aldi was there, the crisis hit Greece and this affected the whole economy.
Eventually, Aldi left Greece in 2010. This is something that has been analyzed as a
case in which many factors played, but arriving right before the crisis was certainly
something that did not work well for this firm. Depending on the business a multinational
is involved in, the degree of openness of an economy might also generate favorable or
unfavorable conditions. Most of the times, you want a country that is open for foreign
investors and is very well integrated in world markets. How to determine this. There is a
particular tool which is the DHL openness index created by Pankaj Ghemawat which is
part of the material of this course. Now, this index measures how integrated an
economy is to the rest of the world, and how open it is to both capital and goods.

So not all countries are equally open and this index gives you a general idea of which
places of the world are more open to the rest of the global economy or not. So, let's take
a look of some of these places and and how they rank in the world economy. According
to the DHL index the most integrated place in the world, the most integrated economy in

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

the world is Holland. Holland is a place more open to foreign investment, and that at the
same time has an economy really inserted in the world economy. In second place, we
have Singapore that small city state in Asia but with a big economy and big links to the
rest of the world economy. In the third place, we have Ireland connected both to Great
Britain, to the rest of Europe and the rest of the world. And just to look at others, number
four we have Switzerland, number five Luxembourg, and in the number six position
Belgium. Let's continue with other ones. The big economy of Germany ranks number
seven and the United Kingdom by the year of 2017 ranked number eight. Other major
economies rank in the following ways: the United States ranks 27th and China ranks
68th.

These are as we know, the two major economies of the world, but in terms of integration
and openness to the rest of the world they rank lower than other smaller economies of
the world. So again, depending on how important this is or not, this is that kind of
ranking that a corporation needs to take into consideration. More and more analysts in
international business have pointed out that when it comes to connectedness of places
to the rest of the world, we should not just focus on countries as a whole, because many
times, particularly our cities, relate to the rest of the world in very different ways from the
country they belong to. So this is why the DHL index also classifies cities rather than
countries in terms of how integrated they are with the rest of the economy, and if their
appointees to conduct a business in a particular city, not necessarily the country in
which the city is located, this is something very important to take into consideration as
well.

For example, let's let's look at the ranking of the most connected cities in the world. In
number one, we have Singapore which again ranked also as a very integrated country,
is almost a city state, so it's not a surprise that it's considered the most integrated city in
the global economy. In second place, we have Manama, the capital city of Bahrain. As
we know, the Persian Gulf mini states are strongly linked to the rest of the economy of
the world. Number three- Hong Kong, number four- Dubai, number five- Amsterdam in
Holland, and number six- Tallinn in Estonia. Other major cities in the world rank in the
following ways: in number 27 we have Copenhagen in Denmark, number 23
Johannesburg in South Africa, number 41 Istanbul in Turkey, number 47 London in the
United Kingdom, number 69 Berlin in Germany, and in number 76 New York City in the
United States. So, again we see the integration of cities is different in terms of
integration with the rest of the world as integration of national economies, and
sometimes we might have certain perceptions of how integrated our city is in the world
economy. Certain polls have shown that many people think London and New York
should rank higher than many other cities which as I just mentioned is not the case. So,
there are tools to analyze this, and the integration of cities is at the analysis of the
integration of cities is as important as in policies of integration, economic integration of
countries.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

Lesson 2-2: Where to Go?

As I have emphasized repeatedly in this course and I will continue emphasizing is

politics matter and politics are important when conducting international business. So
when analyzing where to go the political landscape is very important. The media very
often relates stability with favorable conditions. Now we know that stability that's not
necessarily mean that things are not going to change. Let's take a very particular
example that we use a lot of times in this class. The case of Egyptian President, Hosni
Mubarak. Now Hosni Mubarak was in power for around three decades. So this shows a
lot of stability. I mean, no change or very small changes throughout time during his
administration. But once a type of administration like this is overthrown for some reason
or another many, many things can change. So, this type of stability of particularly
authoritarian regimes needs to be analyzed in detail. And because their sources or
seats of instability might be actually here.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

Now the World Bank has created tools to analyze the type of stability or instability of a
particular country. It ranks countries according to how likely or how uncertain things are
in their political environment then we will rank countries like number one, two, three. But
they created certain different groups segments of countries according to their political
stability. So let's look at this classification. It has a first group of the most stable
countries of the world. Basically countries that will not give you surprises in terms of
politics. Among these countries they include Canada, New Zealand, Iceland, and
Switzerland. The second group of countries is also composed by pretty stable countries.
But again that are not as stable as the first group that I mentioned before. Example of
countries belonging to this group are Australia, Sweden, Norway, and Finland. Then
comes a third group of countries.

This is composed by the United States, Spain, the United Kingdom, and France. A
fourth group of countries, the next one in terms of degree of instability or stability is
composed by countries like Brazil, Argentina, South Africa, and China. The fifth group
includes countries like Colombia, Venezuela, Mexico and Russia. And the sixth group of
the most unstable countries includes Syria, Libya, Congo and Ukraine. I did not mention
all the countries of the world in each one of these groups. But this is for us to have an
idea of degrees of stability. And these website of the World Bank also provides
information about the quality all five governments of these countries.

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Doing Business in the Global Economy!
Professor Marcelo Bucheli

Basically how well managed they are or not. Here you have the address of this website
that you can consult with free information from the World Bank about how the political
environment of all the countries of the world is. So to summarize this tool, the degree of
stability of different countries is measured by the World Bank in this ranking. And the
groups I just mentioned are ranked from the most stable group of countries to the least
stable group of countries. I just provided examples of countries in each one of these
groups.

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Doing Business in the Global Economy!
Professor Marcelo Bucheli

But you can look up for other countries by going to that website and using that tool.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

Lesson 2-3: When to Go?

Let's now explore the question of, "When to go?" For many industries and many
businesses, timing is everything. We hear a lot about first mover advantages, but here
we will explore both the advantages and disadvantages of being early or late. Let's start
by exploring the advantages of early entry. A firm that enters their market early can
create certain barriers to its competitors. First, it can set the standards under which the
industry or the market will operate. This is something that will force other competitors to
adapt to the standard set by this firm. A second advantage of an early entry and that is
related to the first one is that the firm can establish high switching costs.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

Once, everybody gets used to a particular way of doing business or a particular product,
they might not want to go into their competitors if the competitor arrives once the market
has been established. And this is something that a firm can also take advantage of
because an early entrant can accumulate experience that their competitors might not
have or will not have, and this is certainly something that will turn into an advantage for
the firm.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

We know that early movers have advantages at creating switching costs, getting to
know the new market, and kind of like blocking the competition from dominating the
market that they entered first. But certainly there are some disadvantages that firms
need to take into consideration. First, it's certainly more risky. While you are the first
entrant, many other firms might be looking at you, watching you, and learning from your
mistakes or your successes. So you might be the experiment, the guinea pig for other
firms that are seeing what you are doing. Second, if you're involved in an industry that is
very innovative or offering a very different good for this new market, you don't know if
you're going to be the target of new regulations by the host government.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

A host government that might not be familiar with your industry or your product might
actually say, "Let's impose this regulations." And you will have to be the one adapting to
those regulations while your competitors, again, just will be watching and will be
adapting more easily to these new regulations. And we know that entering a new market
involves a lot of trials and errors. You will spend time, energy, and money experimenting
things that might actually just benefit your competitors. That again, as I mentioned
before, might be looking at you. So, here we have the possibility of an early entrant
again creating the market, shaping the market, and blocking competitors. But on the
other hand, being the one leading, dealing with the problems that are entailed around
an early entry. We don't need to be too scared also of course, of the costs of early
entrance. Many of you might not remember, but in the early 1980s when China began
growing, many in the business media were saying, "It is not worth going to China.
They're still way too poor.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

We don't know if they're communist parties who is serious about its market reforms, and
that country is just unreliable. So, many firms waited. Many entered early. Many of them
failed but those that entered early and succeeded certainly raved a lot of benefits from
this. They entered at a moment in which nobody was really believing in that country,
and this was a bet that paid off for many. Now, let's look at some examples of firms that
have taken advantage of their early entry, but at the same time others that have taken
advantage of watching the early entrant.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

KFC, an American multinational corporation specialized in fast food restaurants,

distributed all over the world and that offer mainly fried chicken. KFC was one of the first
fast food corporations to succeed in China. And they were very early entrants in China.
They, as I mentioned before shaped the market in a way. For several years, the idea of
fast food in China was KFC. So, this is something that certainly benefited KFC.
However, while KFC was going through these changes, it was being watched closely by
another big fast food multinational corporation, McDonald's.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

McDonald's entered second, and it actually benefited from KFC's early entrance
because KFC created the culture of fast food. KFC was the one that had to deal with a
culture shock. That had to deal with the learning and teaching experience of a firm
teaching their Chinese consumers about fast food. And then McDonald's arrived when
that culture already existed. So, we see both firms benefiting both from their early
entrants and their late entrants and that it depends on the kind of benefits you might
want to reap from your early or late entrance or the capability of resisting potential
threats, and the learning experience as an early entrant. But this is something that
depends on the firm's capabilities of resisting over time until the market adapts.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

Lesson 2-4: How Big or Small Should We Go?

Let's now explore the scale of entry. Are we going to enter big or are we going to enter
small into another country? What we're going to do here now is to explore the
advantages and disadvantages of each one of these two possibilities. Entering big,
entering big into our foreign markets certainly creates a presence for the multinational
corporation. That means recognition, all of a sudden or in a short amount of time, the
people in that other foreign country will know about you and will know about your brand.
These brand recognition and association of your brand -- especially if you're offering a
new product -- association of your brand with that new product, will also create an
advantage for the firm.

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Doing Business in the Global Economy!
Professor Marcelo Bucheli

By entering big, you also give little time for the rivals to react, especially the rivals that
are in the host country. And it might even make other rivals abroad to think about twice
whether they would like to enter and compete against you in that market that you
entered big. So again, recognition and little space of maneuver for those competitors is
certainly one advantage for a multinational that wants to enter big into a foreign market.
Of course there are certain disadvantages about entering big. The most obvious one is
that it is expensive. You need to have a lot of resources to be able and capable of
entering big into another market.

So, if you're a big, if you're a company and cannot really afford entering big, this is
something to certainly consider. Second, is certainly a decision that is very hard to
reverse. If you enter big and aggressively, then if the market conditions are not as good
as you were expecting them to be, then turning back might come at a very, very high
cost. So again, is the firm capable of reversing the decision if something that needs to
be analyzed with care? And a firm that enters too big can also generate a feeling of
threats among locals. You can be called like an invasion. I mean you can even generate
nationalistic feelings. All of a sudden there's this big presence of this foreign actor in my
country and that is not hiding, but actually the opposite, because you want to get a
name, brand recognition, and all these kinds of things that we mentioned before. But
these can be seen as a threat.

So much of a threat that maybe you never know. Sometimes governments might react
against your presence just because you're entering so big, and you might look as a
threat for the domestic businesses. This has happened sometimes among big retailers

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Doing Business in the Global Economy!
Professor Marcelo Bucheli

that go into underdeveloped countries, and the shopkeepers, the traditional ones see
their presence, all of a sudden as a big threat. And this is something that again can
generate social tensions and political tensions, that depending on the brand, on the
country you're coming from or the type of industry you're developing, these can be seen
as a threat or not. But take a look at a case of a firm that entered big and gained big
brand recognition in a particular country which is a case of the Dutch financial firm ING.
This firm wanted to enter the very profitable American market in the 2000s, but the
leadership of this firm knew that either they entered big or they did not enter at all, or at
least this was their rationale behind ING. So they entered really big. With a lot of
resources spent on advertisement, on marketing trying to convince people to start
saving with small amounts of money like $25 or $50 in their accounts, as a way to start
creating their savings.

ING created what they called their coffee houses in several cities in the United States,
in New York, in Chicago, in San Francisco. And the presence all a sudden was very
clear for everyone. This was the most and like the biggest thing, the biggest bet ING
had done. However, something happened afterwards. It left very little space for
maneuver, managing these giant became very complicated and little space also to
move into other countries. One could say, "Well, you're entering the U.S. financial
market, that's good enough." But this Dutch Corporation also had interests in other
places. In the end, by the year of 2012, ING sold all its operations to an American
financial firm, Capital One which is the one that took over all their activities in the United
States. It entered big, gained all these advantages that we mentioned, but eventually it
became way too big to manage and to maneuver. Another example is a firm that we
already talked about Aldi Germany from Germany in Greece.

It decided to enter Greece big and with a big presence and locations in many places of
that country. As I mentioned before, you enter big and there is an economic crisis and
reversing that decision or reshaping the way you're doing things becomes very
complicated. So this became another one of the challenges that Aldi faced when
entering big into the Greek market, right before a big economic crisis. Let's now explore
the advantages or disadvantages of entering a foreign market in small size. The first
advantage is one related with flexibility, it allows you to go through a learning process
and understanding the market in a more careful way. A place or a region or a city or
even a neighborhood that you thought was going to be the hottest place to go might not
be right, after conducting more research or learning more about that place, and
therefore, this flexibility is something that you see valuable.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

At the same time, the locals might not feel threatened by your presence. You're just one
minor player and this is something that might lead the locals, that might have felt
threatened to get used to your presence. And this is something that when politics are
involved, might be a problem. Disadvantages of entering small. Certainly, you're giving
more opportunities to your rivals to know about your presence, especially if these rivals
are the local firms, because let's remember, they know their market in a better way than
you do and they can anticipate the steps that you need to make, before you learn about
them. So, this is something that can be a disadvantage, a serious disadvantage for a
firm entering small.

You also might be giving the opportunity to other multinationals to enter that market.
What if you enter small into a market, and other multinational decides to enter into the
same market entering big? Then you might have done their homework for them. You
might have explored, and being their guinea pig again, in the beginning, and then, if
they enter it big, you will lose all the advantages of entering small. And brand
recognition might be another problem. If you enter small, it will take longer for people to
learn about your brand. You might even be giving time to potential firms that want to just
copy your model, even your logo, even your name. Give them more time to start
building their own brands, and maybe overtaking the market that you wanted to
dominate. So these are elements that need to be taken into consideration when
entering small. So, let's look at some examples of successful cases of firms that entered
small.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

The first one, the American multinational corporation 7-Eleven in Asia, particularly in
Japan. At the present time, 7-Eleven has a stronger presence in Japan than its home
country, the United States. Now, when 7-Eleven entered Japan, it entered using... 7-
Eleven is specialized in establishing small convenience stores through franchises in
different places. 7-Eleven entered Japan through a Japanese corporation into that
country, through their franchise system. There were political problems there. The small
store owners were very well organized around certain particular political parties. The
legislation favored these small owners.

How did 7-Eleven do it? They started approaching some small store owners that were
struggling at that time, and offered them a way to survive by bringing them the services
and resources, particularly in terms of the supply of goods that 7-Eleven could provide.
At the same time, the small store owner provided an advantage to 7-Eleven because
that individual knew the neighborhood, knew the market, and knew the customers. So,
this created good synergies between 7-Eleven and the store owners. In this way 7-
Eleven did not come as an invader that was going to displace the traditional mom and
pop stores in Japan, but came to work together with these traditional stores. People
started getting used to 7-Eleven up to a degree that 7-Eleven was considered more like
a local brand rather than an American brand. And it started popping up in all the
Japanese neighborhoods. Little by little, and eventually became a major force and a
major brand in that country.

But it avoided the political problem by approaching those who needed it. It did not
displace existing stores but actually gave the franchises to existing stores already. And

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

in this way, it became big but by starting small. Let's take a look at another firm. This
time originated in the Philippines. This is Jollibee which offers fast food in the
Philippines or that's the way it started. How did they enter foreign markets? It entered
small but with a very careful strategy. There is a big diaspora of people from the
Philippines all over the world, in the United States, in other countries of Asia. Filipinos
make a significant segment of the labor force. These was the target of this multinational
corporation. So instead of rolling let's say to Indonesia or Singapore or Hong Kong,
trying to offer their food to the local people, they went following this Filipino diaspora.

These were the ones that continued eating the same food they ate in the Philippines,
but in the new countries in which they were living as immigrants. In this way, Jollibee
started appearing in immigrant neighborhoods and these started giving the firm a little
bit more and more of brand recognition. But this was the first way, you enter with the
people you know. And in this way, Jollibee was not exploring new markets. It was
targeting the same Filipino market, it was used to in the Philippines. But then by
entering and knowing that this customer base was going to be there, then they could
start learning about their market, the political conditions and other elements of the
countries in which these Filipino diaspora was. So, this is another case in which
sometimes entering small, and actually not even learning about the foreign market, but
following your local market can be an advantage.

Let's look at another example of entering small. This time I'm talking about the American
multinational corporation 3M which produces a lot of office supplies all over the world.

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Doing Business in the Global Economy!
Professor Marcelo Bucheli

3M expands around the world using the following principle, that is, "Make little, sell a
little."

So how does this work? When they enter a particular market, they have a big range of
products, but when they enter a particular market, they enter with one good, just one,
and this allows them to start exploring that market. So this gives them space for
maneuver. OK. If let's say, the post-its didn't work we just withdraw and this is not very
costly, but if something works then they add another one and another one. And in this
way they just enter markets little by little. This is something that they do in order to learn
about the markets, to learn about the country, to learn about those who are going to be
distributing their goods because they don't have their own stores. Their goods are sold
in supermarkets or in a store specializing in selling notebooks and pencils and these
kinds of things.

So in this way, they learn how the market works, they learn what people want, they
learn the government policies, all these in a relatively cheap way, and little by little they
start adding and adding and adding more products. So this requires patience but this
has paid off for 3M. They have used it even in large countries. One of the countries in
which they were most successful at doing this was Russia where they entered just with
one product, and because they did not know Russia, and they thought, "We are not
going to learn about Russia in the hard way, a country we don't know much about their
politics, their economy, their language anything like that. So let's just enter little by little
with some products, with one product and then we start expanding through regions,
through cities and with more and more products.". In the previous modules we've

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Doing Business in the Global Economy!
Professor Marcelo Bucheli

explored, first I mean, how we came here, how the global economy evolved, what
institutions that permit trade do, how countries relate to each other. When to decide to
become a multinational or not. We learned about the OLI-Framework, the cage analysis
and now we're talking about entry strategies, regarding where to go, when to go and
how to do it. So this, let's remember, when, where, and how that we just explored need
to be framed within the other elements that we mentioned before. From again, OLI to
cage to cost and responsiveness pressures and in this way, with all these elements, we
should be able to make an informed decision about an entry strategy in a particular
country.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli
Lesson 2-5: Born Global Firms

While many multinational corporations proceed with caution by developing their core
competencies and saturating their home market before entering foreign markets, some
firms began to answer nationalized very quickly after their founding. In this video, we'll
address the rise of born global firms and what they can teach us about international
expansion. To begin, it's important to note a standard or traditional approach to
internationalization. The Uppsala model of internationalization, named after a university in
Sweden, was advanced by researchers in the 1970s to explain the stages that firms go
through as they internationalize. After developing core competencies in the home country,
a firm will expand into a neighboring or nearby country and generate sales that
supplement those generated in the home market. Firms often start by exporting their
products to a new country, learning how to navigate the market and then gradually making
more commitments to the country, such as eventually establishing a sales office or
production facility. A firm's first entry into a new country often occurs decades after the
firm was founded as international expansion is seen as risky. This model has been used
to explain the patterns of internationalization we see among well known firms such as
General Motors and ExxonMobil.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

Born global firms, standards stark contrast to firms that follow the Uppsala model of
internationalization, rather than gradually and cautiously approach international
expansion, born global firms engage in rapid internationalization, which means that they
make their first investment abroad within the first two the eight years of founding. Although
there's no clear delineation as the timing for initial foreign market entry, born global firms
are perceived of as seeking a very high portion of their sales from multiple countries
immediately after their founding. This typically equates the foreign sales being at least 25
percent of total sales very early on in the firm's history.

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Professor Marcelo Bucheli

For example, WeWork, a US firm that provides co-working spaces to freelancers,

entrepreneurs, and established corporations, was founded in 2010 and made as initial
international investment in 2014 by going to London. By 2018, 41 percent of its sales
came from non-US locations as the firm had expanded to over 20 countries. The rise of
born global firms can largely be attributed to the development of information technology
over the past few decades. They are primarily found in knowledge and technology heavy
industries and often offer niche specialized projects to consumers. Furthermore, they are
often led by individuals with significant international experience who do not fear the
challenges of going abroad, and who have a global vision from the outset. Going back to
the WeWork example, one of the firms earliest mission statements focused on, "Deploying
a worldwide platform that provides its clients with flexible access to beautiful spaces."
Although the firm is based in the United States, one of the original co-founders is from
Israel, which became the location for the firm's second international expansion.

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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli

Similarly, Platzi, an online course platform similar to Coursera, but focused on Spanish
speakers that was founded in 2012, had an international mission from the start. The co-
founders who are from Colombia and Guatemala aims to provide easy access to
education for Spanish speakers, not just in South America but across the globe. This type
of mindset often leads to rapid internationalization. Entrepreneurs who are considering
how quickly they should expand internationally often had to ask themselves the following
questions.

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Doing Business in the Global Economy!
Professor Marcelo Bucheli

One, do I need human resources such as skilled labor from other countries for my firm to
succeed? Two, do I need financial capital from other countries for my firm to succeed?

Three, will target customers prefer the services of my firm over the services offered by
domestic competitors? Four, do I want to build a brand around the world right from the
start? Many entrepreneurs end up answering these questions in the affirmative and
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 Global Strategy II:
Doing Business in the Global Economy!
Professor Marcelo Bucheli
then proceeds to go global immediately. While born global firms represent a growing
trend, we don't have concrete statistics on which firms in society fit into this category.
We can likely get a better sense of these types of firms by making inquiries into national
and international and directories of exporters and comparing firm's founding dates with
the date they began exporting, along with the percentage of sales made from exporting.
But despite a lack of concrete data across countries, born global firms represent an
important topic in global strategy and international business more broadly, as the way
they internationalize suggest that firms can take multiple paths to successfully growing

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