222 retail internationalisation although retail

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Unformatted text preview: nationalisation can be traced back from the seventies (Vida & Fairhurst, 1998; Dupuis & Prime, 1996), the process was quite slow and the sector is a late starter in globalisation. As recently as 1992, Williams (1992) found that even though retail internationalisation was accelerating, many UK retailers remained in-ward looking. 20 US retailers were even further behind their European counterparts, with a strong focus on local growth. Wal-Mart itself only accelerated the drive for internationalisation in the late 1990s, having opened its first store outside the US in 1991 in Mexico (Palmer, 2005). Currently only 24% of Wal-Mart revenue is generated outside the US (Wal-Mart, 2011). However, retail internationalisation has been gathering pace in the recent past (Hill, 2007; Leknes & Carr, 2004), with a retail multinational, Wal-Mart, becoming the largest corporation in the world by revenue and employment (Fortune Magazine, 2011). This trend is expected to continue as spending power shifts from developed markets to emerging markets. As a result of the slower pace of retail internationalisation in comparison with other sectors such as manufacturing, literature in this area is also lagging behind other sectors (Leknes & Carr, 2004). A big body of literature on the internationalisation of retailers is based on general internationalisation theories, which have been discussed above. Alexander and Myers (2000) propose a conceptual framework for retail internationalisation, as depicted in Figure 4 below. The framework is based on the charateristics of retail organisations within the context of their markets. 21 Figure 4: The RI process Market of Origin Drivers of Change - Concept base - Technology based Internal Facilitating Competencies - Leadership Functional coordination Experience Perceptions & attitudes Location Decisions - Entry Method Political Economic Social Cultural Retail structural - Acquisition Organic Joint-venture Franchising Concessions Management contracts Strategy - Global Transnational Multinational Investment Mixed Internal Facilitating Competencies - Leadership Functional coordination Experience Perceptions & attitudes Drivers of Change - Concept base - Technology based Markets of Destination Source: Alexander and Myers (2000) The literature on retail internationalisation covers entry strategies, motives, obstacles, and selection of markets, as well as organisational and decision-maker traits (Alexander, Rhodes & Myers, 2011; Uusitalo & Rokman, 2004; Vida & Fairhurst 1998; Dupuis & 22 Prime, 1996; Williams, 1992; Alexander, 1990). Dupuis and Prime (1996) distinguish between two factors of internationalisation, namely environmental factors such as legal restrictions and economic growth, and firm internal factors such as economies of scale and ability to raise capital. Williams (1992) found that motives for international expansion are more complex than the simple push and pull factors previously proposed by Kacker (1985, cited in Williams, 1992), and the active-passive and proactive-active framework from exporting studies espoused by Johnston and Czinkota (1982, cited in Williams, 1992). Pelligrini (1994, cited in Dupuis & Prime, 1996) views internationalisation of retailers as one possible alternative of growth; the other including portfolio diversification. Dupuis and Prime (1996) believe harmonious stakeholder relations to be an important success factor in international retail expansion. They point to cultural aspects and the prism effect of international retail expansion as posing a risk of failure. Indeed, culture has been found to be more important for international retail expansion than technical aspects (Alexander, 1990). From a cultural point of view, the further away the country of expansion is from the home market, the greater the cultural challenges (Ghemawat, 2001; Dupuis & Prime, 1996). Distance in this case is not just geographical, but includes such cultural connections such as language and heritage (Ghemawat, 2001). Cultural differences can only be effectively managed if retailers recognise, prior to entry, their existence and understand how they impact on business (O’Grady & Lane, 1997). Williams (1992) emphasised that retailers should consider not only their differential firm advantages, but also their differential disadvantages. He argues that differentiated firm advantages may lead to product-led or market-led advantages. He cautions that even though retain internationalisation obstacles increasingly are becoming permeable, retailers may well underestimate these obstacles because they have no experiential 23 knowledge of them. Chan et al (2011) believe that both country and firm factors are determinants of growth. They propose that firms should pay greater attention to the economic growth of the country, and less so to the risk factors and population. They base this on the fact that population size does not correlate with spending power. A more reliable measure, they a...
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This document was uploaded on 01/24/2014.

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