Instructions Your assignment for this unit is to create a proposal to garner support from partners in your family business. You are an up-and-coming manager in your family business, which is run by ol

A start-up company is one that is in its infancy; it is just beginning operations. Therefore, a global start-up company is one that must adopt a mindset of seeking international business immediately. This type of venture seeks to sell products or services worldwide, making it a much riskier investment than a domestic company. A born-global firm is one that pursues the global market from inception without domestic interactions (Cullen & Parboteeah, 2017). There are major differences between companies that follow the small-business model versus the born-global firm. For instance, the born-global firm should have a strong distributing network or supply chain community, while the small-business model may initially have a loose network of sources being used for foreign distributors. Overcoming Barriers Large companies such as Wal-Mart have an advantage when they decide to go global. Much of Wal-Mart’s global transformation ability was related to their financial status resulting from their size along with their success in the United States. Unfortunately, a small business encounters barriers when pursuing opportunities to become an international company. What barriers do small businesses have to overcome when entering international markets? The size of the company may actually be the first barrier because managers may not have experience in the international arena and may be hesitant to enter international markets. Additional barriers may include “limited financial and personnel resources to dedicate to international activities. Small size can also mean a lack of sufficient scale to produce goods or services as efficiently as larger companies” (Cullen & Parboteeah, 2017, p. 161). There is also an issue with the lack of international experience from the management team as well as the risk of going global. There might also be a lack of understanding of international cultures when doing business in foreign countries. What about the cost of travel to the company when needing to do business overseas? Larger companies may encounter the same barriers, but they are financially able to conquer these obstacles much quicker than the small business. In addition, they are able to employ managers who have multinational experience (Cullen & Parboteeah, 2017). While there are many hurdles, the barriers for a small business are not a permanent entry obstacle for the small company. Many smaller firms have been able to successfully establish operations in foreign countries. Once a small business has overcome the challenges of going global, along with learning the language and the country’s currency, and it has entered into global markets, the small business must develop a culture that Figure 1. Stages of internationalization (Cullen & Parboteeah, 2017) •Waiting for and filling orders without seeking export Passive Exporting business •Seeking export sales to increase business Export Management •Adding resources to seek increased export sales Export Department •Creating local branches to increase sales in a region or Sales Branches country •Moving production to a new region, possibly the Production Abroad riskiest stage for a small business •Developing a network that integrates global The Transnational operations MBA 6631, Intercultural Management 3 UNIT x STUDY GUIDE is acceptable to the foreign country. In addition, business leaders must also understand the competition that Title they will face both abroad and at home (Cullen & Parboteeah, 2017). Now that the small company is doing business in a foreign country, where do leaders gain the experience they need to run an international company? How do they cope with the drastic change in their personal life? These concerns may have an effect on management’s role in the company. Small companies are usually run by the owner, who has many duties that are time-consuming and challenging (Cullen & Parboteeah, 2017). Owners and managers must develop a learning culture within the company to overcome a small-business mentality for the company to pursue growth opportunities. Advantages of Small Business There has been much discussion on the barriers and challenges of the small business entering international markets; however, there are a few advantages to being a small company. Author John Naisbitt (as cited in Cullen & Parboteeah, 2017) believes “small multinational businesses will have even greater advantages in the increasingly global economy. He argues that small companies can change products and internal operations faster to take advantage of evolving technologies” (p. 165). Another advantage for a small business is the ability to move rapidly when needed. For instance, small businesses can react to the market needs faster than their larger competitors. When should a small business go international? How does management know when the time comes to enter the global market? Before making an international move, there are certain questions that must have affirmative answers. For example, managers must analyze the international environment and know which countries are favorable for specific products or services. The organization must also be sure the company product or service is suited to an international market without having to make wholesale changes from the domestic version. Next, technology, infrastructure, and efficient managers are needed to enter foreign markets (Cullen & Parboteeah, 2017). Of course, there are other questions that require answers before the international move should be made, but more importantly, the business must be sure it can afford the jump to international markets. Once a company has made the international move, leaders must become connected to the international market. Where will they find customers and partners that will do business with them? Just as they do in their home market, they must develop a plan for attracting customers and partners. Small businesses will have many of the same opportunities to find customers and partners as larger companies (Cullen & Parboteeah, 2017). Due to the technological advantages available today, social media may also be a possibility to connect with foreign customers and gain partnerships. International entrepreneurships and family businesses also have advantages in going international. If a new market is at the forefront, new ventures are very possible for entrepreneurs. Just as it would be for the large and small company, an international market for the entrepreneur opens new doors. Family businesses are usually small businesses, and it is also possible for a family business to want to emerge into the global market. There are a lot of foreign countries that welcome the family businesses concept. Many foreign countries are familiar with family-oriented businesses and feel that they successfully contribute to their country’s economy (Cullen & Parboteeah, 2017). There is certainly an opportunity for this type of business to comfortably enter the foreign market. Figure 2. Customer contact techniques (Cullen & Parboteeah, 2017) Customer Contact Techniques Trade Shows Catalog Expositions International Ad Agencies Consulting Firms GovtSponsored Trade Missions Direct Contact MBA 6631, Intercultural Management 4 UNIT x STUDY GUIDE Organizational Designs Title The success of a multinational company may completely depend on the company’s structure. The structure that an organization uses to achieve its goals is called the organizational design. While the company is exploring new markets, it has to also face competitive challenges. To properly function, the company design must align with the company’s needs. One simple organizational design is the functional structure; it is also the most commonly utilized structure (Cullen & Parboteeah, 2017). This structure allows the employees to be grouped according to their roles within the company. It is also adequate and efficient for a small company. The functional structure is composed of subunits that allow the groups to operate according to their function. The geographic structure groups its personnel by geographic divisions to accommodate the product or service. In addition to being structured by a geographic area, this type of structure must still perform the required functions necessary to operate the business. This structure may regionally organize the company to better serve customers. This type of structure might cause a duplication of roles that will eventually result in more employees and managers being hired. “These organizations are usually less efficient than the purely functional organization” (Cullen & Parboteeah, 2017, p. 183). The hybrid structure is a combination that can include the functional, geographic, and product units. The benefit of this type of structure is the flexibility that is allowed for work distribution, which is advantageous for a small business. Exports When exports are a large portion of a company’s business, a separate export department is created to enable the company to successfully perform tasks. This department is instrumental in assisting the company with increasing international sales and handling international customer concerns. The export department managers have the role of managing distribution and sales. Foreign Subsidiaries and International Divisions A foreign subsidiary is a subunit of the parent company that is set up in another country to support operations in that region. This type of setup helps the business with its overseas expansion. There is more than one type of subsidiary. A minireplica subsidiary “often becomes a scaled-down version of the parent company” (Cullen & Parboteeah, 2017, p. 187). The transnational subsidiary “supports a multinational firm strategy based on location advantages” (p. 187). A company’s success could lead to such a growth that it requires an international division that oversees the foreign subsidiaries. The worldwide geographic structure allows the regions to become geographic divisions, while worldwide product structures have the responsibility of selling products or services. The transnational network structure connects various product, functional, and geographic structures and simply links the subsidiaries instead of creating a basic form to follow (Cullen & Parboteeah, 2017). If existing structures are not effective, a multinational company may be better served using an emerging structure called the metanational structure. Some of the characteristics of the metanational structure are seeking emerging markets for information, creating partnerships specifically for knowledge sharing, and creating strategic alliances (Cullen & Parboteeah, 2017). These companies focus on research as a fundamental attribute to success in international markets. Whether large or small, companies entering international markets will face barriers and must do their due diligence when considering entry options. Additionally, these companies must ensure the infrastructure and mindset of management are ready to face adversity in dealing with different governments and cultures. Reference Cullen, J. B., & Parboteeah, K. P. (2017). Multinational management: A strategic approach (7th ed.) [VitalSource Bookshelf version]. Retrieved from https://online.vitalsource.com/#/books/9781337655736