Internationalization process of a company commonly takes many years to expand into new geographic markets. Generally, company will start at home country and then expanding into international market. Many times that begins with exporting, licensing, strategic alliances or direct investments. It usually took a long time for company to do this process, while born global firms undergo a very early and very rapid internationalization process. In the other words, a born global firm is a new firm that makes international sales in the earliest moment to any new market.
Major factors of globalization are advances in transportation and communications infrastructure. As the world becomes more globalised, the number of born global firms will be more common. This is because globalization which means improvement in transportation and communications makes it easier for new firms to makes international sales in the earliest moment. Some of the born global firms generates more sales internationally compare with their home market. Improvements in transportation allow firms to distribute their product cheaper, quicker and safer. While improvements in communication help new firm to advertise their product internationally and help them to manage their international branch better. Besides that, globalization also covers interchange of world views, product, ideas and other aspect of culture. This is another reason that globalization will leads to more born global firms. Interchange of product, views and culture makes global firm more acceptable in the view of the customers. Globalization reduces barriers for customer to purchase the global firm product or services.
Will large multinational firms be able to compete internationally with highly innovative born global firms?
Multinational firms is firm that grew big in their home markets before expand into overseas. They follow traditional approach to internationalization in which a company first grow solidly in its home market and then starts exploring opportunity for expansion into adjacent countries in the region. As the company’s experience and familiarity with foreign markets grows, it subsequently ventures farther overseas. Compare with born global firms which focus more on foreign market and less on the home market, born global market have more advantages to compete internationally. However, large multinational firms are still able to compete internationally with highly innovative born global firms. One of factors is because large multinational firms have a good reputation in their home market which…