1.0 Introduction
As viewed in research, literature has widely questioned the feasibility of the Uppsala International Model and its generalizability in an organization’s internationalization strategy. This research study intends to apply the model’s assumptions in underscoring the process that Arrival Limited may follow in gradually increasing its resource commitment in its expansion and internationalization strategy in the Netherlands and Poland. Therefore, the research study seeks to underscore whether the organization will hold up efficiently to the specific characteristics, service characteristics, and a combination of the existing environmental variables in the two markets. Further, the research study will review and apply appropriate literature on some of the correct dimensions that Arrival Limited may use as defined in the Uppsala model. Based on this conceptual reasoning as provided in empirical findings, the study proposes a hypothetical view that supports a strategy that may explain the firm’s behavior in regards to the choice of its foreign entry mode, a move that is based on a set of circumstances that determine the performance implications of the process. In an effort driven towards testing the hypothesis, the key constructs notable in Arrival Limited’s strategy will be operationalized to achieve the end goal of the study.
2.0 Strategies of Entry into the Foreign Markets
The opening of international borders, major international treaties, and the development of cooperation between several countries such as the Netherlands and Poland through well-enhanced communication systems remains a factor that facilitates the growth and expansion of multinational entities to the markets. Given this, organizations such as Arrival Limited are often faced with the challenge of selecting feasible and efficient strategies that may span from considering an indirect exporting approach to evaluating a foreign direct investment (FDI) model in determining the firm’s future success (Vahlne, 2020). Organizations seeking to expand their operations in foreign markets are therefore left with the option of determining how much they would price their products abroad compared to their domestic market pricing structures, the typologies of the needs to conduct their operations, and the number of markets to enter. This is achieved by undertaking a market analysis strategy that takes cognizance of several environmental factors that enable firms to access their market potentials, determine the possibility of creating attractive products, and the firm’s future sales within the markets. Under several cases, organizations are often focused on beginning their internationalization process through an indirect exporting model, the consideration of domestic export agents, trained sales agents, and export cooperatives (Vahlne, 2020). However, considering these methods remains prone to the highest levels of risk establishes the need for strategic measures towards the internationalization of an organization in the foreign markets.
3.0 The Uppsala Model
The Uppsala model remains a widely cited model specifically in internationalization literature. As established by Ramskyi et al (2020), the Uppsala International Model was primarily designed following a series of case studies that several Swedish manufacturers conducted in their efforts to adopt a behavioral model that was inspired by the brain works of Penrose in 1959. The model primarily assets that an organization’s market knowledge or lack of it remains the driving force towards its internationalization success within a specified market. Further, the construct of market knowledge as indemnified in the model is viewed as a function of the psychic distance between a home country and the host market that requires the accumulation of experiences for firms seeking to internationalize their operations. To this effect, it is assumable that the model primarily contents that organizations such as Arrival Limited may choose new markets and countries for the sole objective of expansion, a factor that is by their locational or somewhat psychic closeness to a host market before moving to a distant country after gaining much knowledge and experience from its international operations (Ramskyi et al., 2020). It is equally evident that resource commitment as viewed in the model remains eminent in each selected country and market, which increases over time in incremental steps as the organization gains adequate experience of a market’s potential.
As specified in the model, organizations often internationalize firstly by considering physically close locations or countries before making gradual movements to some of the distant markets. As established in the views of Jonsson & Foss (2011), the model equally establishes that an organization may resort to the selection of a new foreign market and resort to the passage of the lowest resource commitment mode before moving to the highest commitment model, a move that comes following the acquisition of experiential knowledge of a foreign market. Further, Jonsson & Foss (2011) posits that the Uppsala model provides an outline of several phases, sequences, and stages in the internationalization process. The processes primarily include the need for organizations to consider the element of irregular exports, the exporting process through agents and the inclusion of other intermediaries, the establishment of sales subsidiaries, and other production subsidiaries. Given the stages above, organizations may consider underscoring several similarities between the levels or the degree of complexity in its internationalization process and the subsequent steps. Evidence, as adduced in the views of Johanson & Vahlne (2009) further, states that the more developed a company seems, the more demanding the consideration of its market entry strategy remains demanding, as seen in Figure 1 below.
Figure 1: The Uppsala Model
As viewed in the Uppsala model, the sequential processes and stages remain factors determined by an established chain of events. In the mid-60s, reports established that the pioneers of this international model primarily argued that an organization is likely to encounter cultural barriers in its entry into a foreign market (Johanson & Vahlne, 2009). Given the increase in its experience in foreign operations, these organizations gain the skills of entering markets from one area to the other. This is attributed to the Uppsala model providing a systemic approach that enables organizations to handle their risk problems by considering incremental strategies and decisions to further their operation. The consideration of incremental behaviors further augments an organization’s capacity to maintain its operations and control over its foreign operations and activities (Johanson & Vahlne, 2009). This factor gradually increases as the firms gain much experience conducting their operations within a diversified market.
4.0 International Expansion of Arrival Limited
4.1 Company Characteristics
Arrival Limited is a leading electric auto market in the UK currently eyeing a faster expansion and internationalization of its operations in new markets following its $13bn NASDAQ IPO. Arrival Limited is renowned for the manufacturing of vans and electric buses. As provided in the case study, reports reveal that shares in the company heightened significantly on the first day of its trading following the firm’s public offer of close to US$13bn (£12.5bn). This saw the Oxford-based organization detail plans driven towards launching its electric buses and vans in the market besides extending the firm’s production facilities to other markets, including the Netherlands and Poland. Recently, reports reveal that the organization merged with one of the largest UK tech companies—CIIG Merger Corp. This move saw the organization focus its attention on designing a unique model in the design and the production of its electric vehicles (EV) in the market. The move is further focused on; designing quality vehicles at a similar price to those of fossil inventions, a; a plan intended to consume up to $660 million in gross proceeds. The case study further establishes that the organization has three micro-factories, an aspect that establishes the need for expansion and internationalization to decentralize the firm’s production process. The scalability of the organization’s micro factors will further play a fundamental role in hiring the local talents, using the locally-based supply chains, and paying local taxes as the measures are designed for the regional mobility needs. However, expanding its operations into the international markets would detail the need for an entry strategy that would suit the organization’s needs, a phenomenology that this research seeks to underscore.
4.2 The Uppsala Model in the Internationalization Strategy of Arrival Limited
4.2.1 The State of Affairs in the Netherlands and Poland
Experiential knowledge and skill remain critical in the internationalization process of an organization as established in the Uppsala model. This is attributed to the fact that the knowledge plays a critical role in yielding measures that may be used in the reduction of the emanating risks that are involved in internationalizing a business abroad. As found in literature, for the process of organizational learning to occur, the sharing of the acquired knowledge remains key as viewed in the case study (Grant, 1996). This therefore details the need for a multinational company such as arrival Limited to understand the processes involved in internationalization and the administrative machineries that may be deployed to achieve the desired goal. One of the fundamental challenges that Arrival Limited may face in the Netherlands, as viewed by the organization’s advisory board, revolves around making a connection and contacts with the local partners within the region to establish subsidiaries. As an independent subsidiary seeking to establish a simplified stock branch, the firm may therefore consider establishing the sales and management of the organization in the Netherlands while heading the production of its vans and electric buses in the U.S (Grant, 1996). This, therefore, reveals that the presence of the Netherlands as a market will allow the organization to develop local partnerships within the region that is relevant for the organization’s engagement. Establishing its presence in this market will play a critical role in enabling the organization to build networks among the local players, which will significantly benefit from the infrastructural developments and technological innovation within the market (Dunning & McQueen, 1981). Contrarily, Poland remains a nation presenting a set of different market dynamics than the Netherlands. This is primarily attributed to the lack of proper infrastructures and technologies that may abet Arrival Limited’s operations in the market.
Therefore, the organization’s management team may consider establishing a commercial office within the region that positions its products within the market. The opportunity to open a strategic office within the region will play a fundamental role in increasing the organization’s competitiveness against other giants in the market. Efforts directed towards enhancing the organization’s value proposition and brand awareness support the need for the location of a strategic office in Poland as opposed to opening a micro-industry within the region. As provided in the case of the two countries, Arrival Limited may resort to using the Uppsala Internationalization model to establish its presence in the Netherlands and Poland. Several factors may need to be considered in an effort driven towards achieving the firm’s strategy (Dunning & McQueen, 1981). Firstly, the organization resorted to establishing its operations in Poland, given the fact that the market is nearby, efforts that would gradually increase its penetration in the Netherlands, currently considered a far-flung market. To achieve this, the organization resorted to establishing its presence in the markets by considering exports to the markets. This is attributed to the lack of other partners, sales partners, and subsidiaries.
4.2.2 Internationalization Strategic Model for Arrival’s Lean Internationalization
According to Dunning (1998), the Uppsala Internationalization model primarily advocates for a proper understanding of the varied assumptions as well as lessons gained from the organization’s internationalization strategy. The consideration of these factors is critical in the establishment of a lean internationalization process. Given this, Arrival Limited may need to focus on strategy-building approaches that would follow through in a sequential manner, denoting the need for a constant adjustment of its exporting strategy and the establishment of its strategic offices in Poland and the Netherlands. Secondly, facts establish that the two markets and countries differ in terms of their client needs and other environmental factors that may impact the consumption of products and services (Dunning, 1998). The organization may in this case, tailor products according to the demands of the market and in accordance with the local manufacturing requirements in the Netherlands and Poland. This necessitates the need for adaptability and flexibility in entering the two markets. Given this, Arrival Limited’s internationalization strategy may seek strategies to cut down on the invested resources in the Netherlands and Poland to maximize or rather increase the firm’s efficiency, reduce its operational costs, and increase its return on investments (ROI) (Dunning, 1998). The organization may further invest in field trips during the process and schedule meetings driven by understanding the market’s needs and clients’ needs.
Arrival company’s planning process of internationalization and expansion may further establish the essence of increasing the firm’s brand awareness in the new markets. In other words, Buckley & Casson (2009) establishes that increasing the organization’s brand awareness within the market remains key in its internationalization strategy in the Netherlands and Poland. Efforts driven towards achieving this goal revolve around ensuring that the organization’s management invests its time and resources in building the organization’s reputation in the two markets (Hill & Hult, 2019). The organization may achieve this goal mainly by increasing its operations and presence in several international events in these countries and fairs or exporting its vans and electric buses within the regions. Further, considering other strategies that include the consideration of Corporate Social Responsibility (CSR) remains another approach that may be used to increase the brand’s awareness and reputation within the two markets (Buckley & Casson, 2009). Arrival Limited equally needs to establish measures that may be used in identifying the establishment’s opportunities within the foreign market. These measures primarily involve engaging research and development in a move to identify the organization’s target clients, their specific needs and preferences, and the measures that may be put in place in addressing the established needs.
Following the completion of these measures, the company may consider engaging in business fieldwork within the two foreign markets driven towards selling the brand and obtaining relevant information regarding the market. As adduced in the views of Buckley & Casson (2009), the consideration of a value proposition as well as a competitive position remains another key and fundamental element that Arrival Limited may consider in its move into the market. The consideration of this step may focus on describing how the firm’s clients discovered its operation—efforts driven towards creating an existing relationship with the firm’s brand. This move may be followed by the determination of a strategy that would earn the organization a competitive advantage to determine how the clients perceive the firm’s products within the market. Under these circumstances, the validation of the organization’s value proposition against the local competitors may detail the need for the modification of its strategy against that of its competitors. Feedback from the customers may equally play a fundamental role in quantifying the measures and modifications that the company needs to establish a market-adjusted strategy (Buckley & Casson, 2009). Establishing its presence in this market will play a critical role in enabling the organization to build networks among the local players, significantly benefiting from the market’s infrastructural developments and technological innovation. Contrarily, Poland remains a nation presenting a set of different market dynamics than the Netherlands.
Lastly, the identification of the new and early adopters in the market remains another necessary step that the company may consider in its entry into the Netherlands. The consideration of this strategy primarily revolves around the organization’s strategy intended at identifying its partners and new clients besides the testing of the products that are developed and suited for their needs. The engagement of quantitative interviews may be considered in checking and understanding a number of features, parameters, and concerns on a specified scale in analyzing a set of clients in the market. Further, Buckley & Casson (2009) establishes that the use of the strategy may significantly accelerate the firm’s client chain following the identification of the organization’s potential client group within the two countries upon entry. This, therefore, means that Arrivals Limited’s strategy in establishing its presence in the two markets will play a critical role in enabling the organization to build networks among the local players, which will significantly benefit from the infrastructural developments and technological innovation within the market. The firm may therefore consider continuing this process repeatedly to reach a colossal number of clients within the market. Moreover, Arrival Limited may consider increasing its brand’s awareness within the two specified markets through the consideration of corporate functions and activities conducted online to create and position its presence within the new market (Buckley & Casson, 2009). These measures may revolve around the consideration of networking strategies and activities in the market to position the organization within the market and increase its presence, This, therefore, reveals that the presence of the Netherlands as a market will allow the organization to develop local partnerships within the region that is relevant for the organization’s engagement.
5.0 Conclusion
As revealed in the findings of this research study, the Uppsala International Model was primarily designed through a series of case studies that several Swedish manufacturers conducted in their efforts to adopt a behavioral model that was inspired by the brain works of Penrose in 1959. The model primarily assets that an organization’s market knowledge or lack of it remains the driving force towards its internationalization success within a specified market. According to the model, organizations often internationalize firstly by considering physically close locations or countries before making gradual movements to some of the distant markets. As established in this research study. The model equally establishes that an organization may resort to the selection of a new foreign market and resort to the passage of the lowest resource commitment mode before moving to the highest commitment model, a move that comes following the acquisition of experiential knowledge of a foreign market. Given this, Arrival Limited may need to focus on strategy-building approaches that would follow through sequentially, denoting the need for a constant adjustment of its exporting strategy and the establishment of its strategic offices in Poland and the Netherlands. Secondly, facts establish that the two markets and countries differ in their client needs and other environmental factors that may impact the consumption of products and services.
6.0 References
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Dunning, J. H. (1998). Location and the Multinational Enterprise: A Neglected Factor? Journal of International Business Studies, 29(1), 45–66. https://doi.org/10.1057/palgrave.jibs.8490024
Dunning, J. H., & McQueen, M. (1981). The eclectic theory of international production: A case study of the international hotel industry. Managerial and Decision Economics, 2(4), 197–210. https://doi.org/10.1002/mde.4090020401
Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109–122. https://doi.org/10.1002/smj.4250171110
Hill, C. and Hult, T (2019). International Business: Competing in the Global Marketplace (12th ed.). NY: McGraw Hill Education.
Johanson, J., & Vahlne, J.-E. (2009). The Uppsala Internationalization Process Model Revisited: from Liability of Foreignness to Liability of Outsiders. Journal of International Business Studies, 40(9), 1411–1431. https://doi.org/10.1057/jibs.2009.24
Jonsson, A., & Foss, N. J. (2011). International expansion through flexible replication: Learning from the internationalization experience of IKEA. Journal of International Business Studies, 42(9), 1079–1102. https://doi.org/10.1057/jibs.2011.32
Ramskyi, A., Soboliev, Yu., & Zhiltsov, M. (2020). APPLICATION OF THE ECLECTIC DANNING PARADIGM IN FOREIGN DIRECT INVESTMENT. Efektyvna Ekonomika, 11. https://doi.org/10.32702/2307-2105-2020.11.16
Vahlne, J. (2020). Development of the Uppsala model of internationalization process: from internationalization to evolution. Global Strategy Journal, 10(2). https://doi.org/10.1002/gsj.1375
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