-Schmidt, N. (2013). Audi Ponders Dilemmas of International Growth; Building Close to Markets Conflicts With ‘Made in Germany’ Brand Image.
-Guler, I. & M. Guillén (2010). Home Country Networks and Foreign Expansion: Evidence from the Venture Capital Industry.
-Johanson, J. & J. Vahlne (1977...
Schmidt, N. (2013). Audi Ponders Dilemmas of International Growth;
Building Close to Markets Conflicts With ‘Made in Germany’ Brand
Image. Wall Street Journal. New York.
Summary
Audi has a quality reputation, because of its germany-made cars. The economy makes it
interesting to move production to other countries (Asian region, South America), but Audi
wishes to maintain this quality reputation. Audi will produce cars in other countries, but will
keep the production in Germany constant as well.
BMW has a high production in South Africa, China, but also in the U.S. Mercedes is also out-
sourcin, the production will be 50/50: half of all Mercedes will be built in Germany and the
other half in other countries.
More cars are sold in Germany, because of the ‘made in Germany’ brand identity, which
stands for luxery cars. Car manufacturers need to place some production abroad, to compete
with the other manufacturers. The sale of Audi cars is strongly increasing in the U.S. and
China, but regional developments in Europe are uneven. The car market will decline between
5% and 6% because of the debt crisis, which is not over yet. This year (2013), there will be
the lowest sales since the early 1990s. The car market in China is actually growing, there are
some fluctations but the long-term trend is growing. Audi is branching out in China, there are
300 dealerships now, there will be over 500 in 2020. Audi was the first premium car
manufacturer in China, this is paying off now. In U.S. the sales are increasing because Audi
makes sure the quality is increasing.
Audi will offer up to 60 different models in the coming year: a wider product range should
help Audi having more sales over BMW and Mercedes-Benz.
, Guler, I. & M. Guillén (2010). Home Country Networks and Foreign
Expansion: Evidence from the Venture Capital Industry. Academy of
Management Journal, 53 (2) pp. 390-410
Summary
The article seeks to show that the social network approach offers a comprehensive and
insightful analysis of the impact of a firm’s home country on its pattern of
internationalization. There are two advantages associated with a firm’s position in a social
structure: social status and brokerage. By social status the article means centrality in a
network. A broker or intermediary connects two clusters of firms which would be
disconnected otherwise. Other firms depend on the broker for information, deals or other
things.
Not all network-related advantages can be transferred to the foreign network. Some
advantages are location specific: marketing skills, others are transferable: technology or
organizational capabilities. Social status is valuable in many contexts and transferable.
Brokerage advantage is context specific and not transferable.
The authors test their arguments by using data on the foreign market entry decisions of U.S.
venture capital firms.
Firms face a liability of foreignness when they enter a new foreign market: they experience
higher cost of operating than their domestic competitors. Lack of knowledge and lack of
legitimacy needed to operate in the new market cause this liability of foreignness. Firms only
go abroad when they possess transferable advantages, otherwise it is too expensive to operate
in a foreign market.
The success of the firm in the new, foreign market depends on the demand the firm can
handle, the supplier relationships and the human resources it can attract.
An approach to assess the social status of a firm is by examining the social status of the other
firms to which it relates.
Social status is different from reputation: reputation is based on past performance and is a
more direct indicator of quality, social status is loosely linked to actual quality or
performance, but positively influences the collective perceptions of potential partners in
regard to the focal firm and its outputs.
High social status firms have several benefits:
- More desirable as exchange partners
- Legitimacy and deference from others
- Favorable access to resources (information, financial capital, human capital)
Firms with the brokerage advantages in their home market are less likely to go to a foreign
market. Advantages:
- Access to a wider diversity of information
- Early access to that information
- Control over information diffusion
The existence of brokerage advantages may lead potential partners to perceive the broker firm
as opportunistic and as a less desirable potential partner in a new network.
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