Globacom Nigerias Internationalization Process Management Essay
This research work studies the factors that have contributed to Globacom Nigeria’s internationalization process on the African continent. Globacom Nigeria is an international telecommunication company with headquarters in Lagos, Nigeria and with physical presence in 5 African countries as well as roaming presence all over the world.
Ahmad and Hashim (2007), states that internationalization is a very important factor in a firm’s bid to grow and develop economically and technologically. Early entrants in the telecommunication industry are enabled by internationalization to gain massive first mover benefits due to the short-lived period of the windows of opportunity and the possibilities of influencing the regulatory process as an incumbent. To gain these numerous economic and strategic benefits, firms usually adopt a strategy of pre-emption, both of markets and partners(Sarkar et al,1999).
According to Elango(1998), there are a number of theories or explanations which have been provided to enlighten us on why a firm internationalizes its operations; explanations which includes: Market power,, Unique assets and Transaction costs have been used to justify the decision by a firm to move into the international markets(Rugman,1980;Buckley,1985). Krugman and Obstfield(2009)’s theory of multinational enterprise expands these views by stating that a firm’s penchant to own foreign investment is as a result of location and internalization benefits.
The account of international expansion in the telecommunication industry has been mostly controlled by the Firms in the more advanced western world. The past decade has experienced leading firms from the advanced European markets such as Vodafone, Deutsche Telekom, Telenor, Orange, etc, adapting their domestic experiences and operations into other neighboring countries, before heading further to other countries. A major share of the attention in the telecommunication industry is controlled by mobile markets in the advanced areas of the world. However, in subscription terms, this gap is gradually closing up, as there is now an increasing number of mobile phone users in developing markets. (ITU,2010).
1.2 Research motivation
Rapid Economic development is identified to be highly influenced by investments in telecommunication industry(Lin,2008), because it is said to be the most important sector that drives most of the overall interest in private infrastructure investment in countries of the developing world(Kambhato, 1998). It is also a known fact that the concept of internationalization in telecommunication is still virtually, a new area as regards to theories construction and testing, and this is in spite of the fact that infrastructural development in the telecommunication sector is being accorded rising importance in the economies of the emerging markets(Javalgi and Martin,2007).
This Area of study is relevant because till date, research on Entrepreneurship in Nigeria and Africa as a whole, in major academic journals in Norway and Europe is still on the low side. Nigeria and Africa have one of the largest populations in the world, with the largest untapped markets still existing and with one of the largest sources of natural resources still left grossly undeveloped, but still remains the world’s poorest region.(Khavul et al,2007). According to Sakarya, Eckman and Hyllegard(2007), research on traditional market selection fails to account for an emerging market’s dynamism and future potential, because its analysis relies on mainly macro-economic and political factors; thus, it is believed that multi-national companies in the western world would be more inclined to invest in Nigeria and Africa as a whole, if a successful company’s approach to expansion in Africa is investigated and analyzed.
The utilization of the Globacom Nigeria as an object of this study on internationalization in the telecommunication sector presents several benefits. First, the recent occurrence of events, enables us to benefit from the opinions of Key players playing a major role in the internationalization process; secondly, the gradual increase in the pace of internationalization process, from a slow base to a faster base, calls enables a large range of actions to be captured, and thirdly, the pace of its transformation is similar to an accelerated research, and enables us to observe happenings over a short period , while providing control over unconnected factors(adapted from Klein and Wocke,2007).
1.3 Research scope
The scope of this research report is prepared by adopting the micro and macro level forces which propel the internationalization in the telecommunication sector according the framework of the emerging markets and it is directed through, by the description of the following terms:
1.3.1 Emerging Market Multinationals
According to Yeung(1994), Emerging market multinational is defined in the context of this study, as any domestic enterprise with its headquarters in developing countries, which controls assets and influences the decision making process of one or more cross-border subsidiaries or affiliates and it is known as “third world multinationals”. The term “Emerging market Multinationals” is preferred over other alternative terms because according to an Author, who was known as Krishna Kumar, in his book published in 1981, He wrote that, and I quote:”The typical reaction to the title: Multinational from Developing countries is genuine skepticism, if not utter disbelief. We are so used to associating multinationals with nations of the Developed world, and we react negatively to the possibility suggested by the title of this book”. Also, according to Yeung(1994), there is an apparent lack of sensitivity in the definition of the term:”Third world Multinationals”, as the use of this term could be misleading, due to the disagreements concerning the imperialistic concept of “third world”.
In summary, Multinationals were defined and invented by first world Economies, but like everything else in our globalised era, they are no longer associated only with the West.(Accenture,2008).
1.3.2 Emerging Markets
The term “Emerging markets” has been utilized in place of other terms such as “Third world Countries”, “Less developed countries”, and it is used to highlight a country’s sources of cheap raw materials and labor, as an alternative to their markets(Arnold and Quelch,1998). Emerging markets according the framework of this research report is defined as a term, which seeks to identify Countries that have adopted a transition in their political and economic system, and are also experiencing rapid Economic development(Fan, 2008).
1.4 Telecommunication Background in Nigeria
Nigeria is one of the biggest and fastest growing telecom markets in Africa, attracting huge amounts of foreign investment, and is yet standing at relatively low levels of market penetration. Far reaching liberalization has led to hundreds of companies providing virtually all kinds of telecom and value-added services in an independently regulated market.
The West African country has overtaken South Africa to become the continent’s largest mobile market with now over 75 million subscribers, and yet market penetration stands at only around 50% in early 2010. However, subscriber growth slowed significantly during 2009, partly as a result of the global economic crisis. Much of the remaining addressable market is in the country’s rural areas where network rollouts and operations are expensive. This, in combination with declining ARPU levels is forcing the networks to streamline their operations and to develop new revenue streams from services such as 3G mobile broadband, mobile payments/banking, and others. At the same time the operators are rolling out national fibre backbone networks to support the ever increasing demand for bandwidth.
Nigeria is also the most competitive fixed-line market in Africa, featuring a second national operator (SNO, Globacom) and over 80 other companies licensed to provide fixed telephony services. The alternative carriers combined now provide over 95% of all fixed connections, the majority of which has been implemented using wireless technologies. This gives the network operators the opportunity to also enter the lucrative mobile market under a new unified licensing regime and has helped them to secure hundreds of millions of US$ in investments from local and foreign investors.
Nitel’s monopoly on international fibre bandwidth via the SAT-3/WASC submarine cable system ended in 2009 when Globacom’s Glo-1 cable landed in the country. Additional submarine cables are scheduled to go online in 2010 and 2011. This is set to revolutionize the country’s underdeveloped Internet and broadband sector by reducing the cost of international bandwidth by up to 90%. New powerful players from the fixed-wireless and mobile network operator camps have entered this market with 3G mobile and advanced wireless broadband services such as WiMAX. The IP-based next generation networks currently being rolled out are enabling converged voice, data/Internet and video services. VoIP is already carrying the bulk of Nigeria’s international voice traffic. Applications such as e-commerce, online banking and e-payments, e-health, e-learning and e-government are rapidly evolving(PRLog free press release,2010).
1.5 Introducing Globacom Nigeria Telecommunication company
Globacom is a Nigerian multinational telecommunications company headquartered in Lagos, Nigeria. GLO is a privately owned telecommunications carrier that started operations on 29th of August 2003. It currently operates in 4 countries in West Africa namely Nigeria, Republic of Benin, Ghana and Ivory Coast. As of June 2009, the company has employed more than 2,500 people worldwide. Also, Globacom is Africa’s fastest growing telecommunications company. Owned by the Mike Adenuga Group, Globacom is the market leading mobile service provider in Nigeria. It has a reputation as one of the fastest growing mobile service providers in the world(www.gloworld.com).
As a company, Globacom recently made history as the first single company to build an $800 million high capacity fiber-optic cable, known as Glo-1. It is the first successful submarine cable from the United Kingdom to Nigeria; and it will decrease telecom process and provide excess bandwidth to all the cities connected to the cable. This historical initiative will also improve teleconferencing, distance learning, disaster recovery and telemedicine among several other benefits. As part of giving back to the communities in which it operates, Globacom Nigeria sponsors the national football teams and the premier leagues in Nigeria and Ghana. In 2010, Globacom sponsored the African Handball tournament in Benin Republic as well as the biggest cultural festival (FITHEB) held in the Benin republic. Globacom has also sponsored the annual confederation of African Football (CAF) Awards since 2005. Finally, apart from aiming to be the most socially responsible citizen in all its host countries, Globacom aims to be recognized as the biggest and best mobile network in Africa(www.gloworld.com).
1.6 Objective of the study and organization of the study
The objective of this research report is to investigate the factors that have influenced the internationalization process of Globacom telecommunications, Nigeria on the African continent. A detailed examination of its internationalization process reviews a strong linked boundary between the Micro(internal) and Macro(external) forces. These 2 combined forces have enhanced Globacom’s ability to forcefully pursue the vast international opportunities which exists beyond its domestic market and in market which are opening up on the International level.
The organization of this research work is as follows; First, the Internationalization and Internalization theories, which comprises the 2 major schools of literature concerned with International expansion, are evaluated to comprehend their positions as related to the tempo of Internationalization, modal preference and size of the firm within the Telecommunication Industry.
The evaluation of the 2 major schools of literature leads to the design of a conceptual framework, which is done with the literature review in mind, after which the research questions are developed and presented. In furtherance, there is an emphasis placed on the Data and method adopted in the internationalization process of Globacom in Africa; and in addition, there is an analysis of the Data on Globacom’s investments in Africa in order to determine applicable patterns.
This research work is finally concluded, by integrating conceptually all arguments that may be appropriate to Industries possessing related features(adapted from Sarkar et al., 1999).
2.0 LITERATURE REVIEW
Various literatures on Internationalization were reviewed in order to ascertain the philosophies which dominated internationalization theories. Recent Schools of thoughts on Internationalization and internationalization which are related to mobile telecommunication service suppliers and telecommunication Foreign Direct Investment(FDI) formed the main focus of this literature review. The literature review was also expanded in order to create a theoretical background for investigating the research problem which was introduced in chapter 1 and also, it was performed using the emerging markets of Africa, Asia and latin America as the main context.
The analysis of the International expansion of firms requires studying all areas of Internationalization which includes Individual investment/entry decisions and its strategic and process features, such as the rate of Internationalization, the progression of market commitment as revealed through the size of investments and the tactical choice of deciding would be markets and partners( Sarkar et al., 1999). The main aim of this review is to establish the factors which are vital to influencing the internationalization of communications within the context of an emerging market.
2.2 Market Expansion and Internationalization issues
Internationalization issues is said to rank as one of the most talked about areas in International Business and Global Marketing(Anwar,2003). Furthermore, it is a very popular belief that firms can increase their profitability by expanding internationally. But for a few notable exceptions, academic literature has supplied unsatisfactory details concerning the different patterns and procedures for internationalizing a company. The few notable exceptions includes the Uppsala Internationalization model and the theory of Internalization(Mintzberg, 1989).
2.2.1 The Uppsala Internationalization model
The Uppsala Internationalization model which establishes its theoretical base by adopting the behavioral theory of the firm(Cyert and March,1963) and Penrose’s(1959) theory of the growth of the Firm, signifies that firms display an evolutionary procedure, where their internationalization activities goes through a sequence of evolutionary stages(Johanson and Vahlne,1990). This model identifies different stages which occurs during the process of a firm’s internationalization by adopting the empirical research of the Internationalization process of 4 Swedish firms.
It is believed that firms execute their internationalization plans through exportation by targeting firms that are psychically nearby and then through assurance, amassing of business knowledge and possession of International experience, firms invested greater amount of resources and began to target Countries that are far away “psychically”. This Model highlights the need to acquire the knowledge and experience of the features of foreign markets which are on the Internationalization path, which leads to a reduced level of ambiguity and confusion inherent in foreign markets before investing(Ahmed and Hashim,2007).
2.2.2 Internalization theory
Internalization theory’s origin can be traced back to Ronald Coase(1937), who stated that there are situations in which it is more resourceful for a firm to establish an Internal market rather than enter foreign ones; one of the situations includes the cost of transaction in foreign activities. According to Internalization theory researchers, market failures which includes information costs, opportunism and asset specification are the main reasons that motivates a Multinational Enterprise(MNE) to use direct investment rather than licensing. Foreign Direct Investment takes place when the advantages are more than the costs of Internalization(Fina and Rugman, 1996).
According to Axin and Mathyssen(2002), Internalization theory views MNEs as representing an alternative mechanism for organizing economically profitable activities across national boundaries; this is important because of market imperfections such as Government intervention or Buyer uncertainty and finally, this theory shares some roots with transaction cost theory which it moved its attention from using hierarchy to organize economic activity in foreign markets to forecasting when and whether contracts are efficient or not.
2.2.3 Eclectic Theory
According to Axinn and Matthyssens(2002), this theory was formulated by Dunning(1977,1979,1988) and it was studied because it integrated roots and elements from Internalization theory, transaction cost theory and Industrial organization theory to enlighten us on why firms invest and produces abroad.
Finally, according to this theory, a firm’s decision to participate in Foreign Direct Investment depends on the interaction of 3 variables which includes: ownership-specific advantages, Internalization advantages and location attractiveness of countries.
2.2 Criticisms of the Uppsala Internationalization Model
According to Zander(1994), the Uppsala model has gone through several criticisms, he stated that some firms mainly those with a lot of resources do not compulsorily fulfill any consistent pattern during the process of Internationalization; invariably, firms can bypass stages and transfer learning from one market to another.
Furthermore, according to Oviatt and McDougall(1994), a theory proposed by them, known as “The Born Global theory”, further augments the arguments against the stages process. This theory propagates the view that increasing global competition and increasing development in technology are now compelling firms to internationalize more quickly, without compulsorily going through an incremental process. These firms, theoretical are international or Born Global from the onset. The Uppsala model as regards its incremental and progressive approach is viewed as being too deterministic and path dependent and does not accept the role of other firm profile factors, such as the path breaking strategic choices of Internationally oriented Entrepreneurs and Managers that leads to an increased speed in Internationalization(Weerawardena, Mort, Liesch and Knight,2007).
Hirsch and Meshulach(1991) further argued that in explaining the internationalization process, the Uppsala Model centers more on the internal resources of the firm(Knowledge of the market and experience from the foreign activities). In addition, the Uppsala Model completely overlooks other factors such as capabilities of the market and conditions for competition(Ahmad and Hashim, 2007).
Both the Uppsala model and the Internalization theoretical postulations integrates the spatial aspects of foreign activities by adopting the psychic distance concept, although in numerous diverse approaches. While, in the Internalization theory, psychic distance increases organization costs and uncertainty, which affects the choice of structure in Governance. The Internationalization model argues that firms would initially enter and invest resources to markets in countries with related economic, cultural, social and political systems; consequently, firms expands into countries with greater psychic distance. Both of these theories have been criticized for neglecting matters concerned with investment timing(Sarkar et al., 1999). Furthermore, according to Axinn and Matthyssens(2002), the context of psychic distances and cultural proximity is not easy to maintain in the light of an accelerating culturally homogenous world.
Finally, theories which rely on economic theory as a foundation underrates the significant positions taken by managers in making decisions on Internationalization; In today’s global world, where there are flatter hierarchies, business unit structures and more elastic inter-firm relationships, managers play an increasingly significant position in the establishment of firms internationalization strategies(Axinn and Matthyssens,2002).
2.3 A conceptual framework as a research guide
Despite the avalanche of criticisms(Anders on, 1993), these theories have made significant contributions to the development of International business research. However, International expansion in the area of Telecommunication is relatively a recent phenomenon and has largely received very little interest. Now, there have been a lot of questions which have cropped up on if existing frameworks need to be supplemented , so that contextual eccentricities are overtly integrated into sector-specific theories(Sarkar et al. , 1999) cited in Bohlin and Granstrand(1994).
There is a cogent need to initiate a conceptual frame work in order to facilitate a better comprehension of the key variables which influences the tempo of telecommunication firms’ internationalization in emerging Economies, which is due to the lack of research on Internationalization of telecommunication firms and the divergent opinions concerning the relevance of existing theories. The suggested framework(Fig. 2.1) is meant to be indicative and can further be altered and tested empirically. It integrates a variety of situations that might affect and give reasons concerning a firm’s decisions on internationalization, actions and dynamic approaches(Jones and Coviello, 2005).
In figure 2.1, the important variables of a model of fast internationalization of firms in emerging economies are directed by micro level(Firm differentiation forces) and Macro level(environment/country differentiation forces) (Javalgi and Martin, 2007). Despite the arguments of some analysts that multinational telecommunication firms are increasingly sovereign and disconnected from macro level restrictions(Ramamurti,2001;Loveridge and Mueller,1990). It is a known fact that MNCs in responsive telecommunication infrastructure industries are still subject to the vagaries and pressures of the governments of the host countries(Wells and Gleason,1994), thereby causing the analysis of the host government and investing firm to be equally important(Doh and Teegan,2003).
Figure 2.1: A diagram and Description of the Conceptual framework of Rapid internationalization of Emerging Market Multinationals in the Telecommunication sector.
(Source: Adapted from Johnson and Tellis, 2008.
Non measured construct
Macro level country differen-tiation
Microlevel firm differentiation.Firm strategy
Host country features
Host home location
Country of Origin effects
The conceptual framework is initiated as a guide in enlightening us on the distinctive behaviours which stimulates the speedy Internationalization of Emerging market multinationals in the telecommunication sector. A review of the existing literature on the conceptual framework is conducted below:
2.4 Micro-level forces
2.4.1 Entry mode
According to Slangen and Hennart(2007), there are several different entry modes through which internationalizing firms can penetrate into foreign countries and they include contractual modes such as direct exports and licensing, to equity modes such as Greenfield joint ventures(JVs) and full acquisitions. Additionally, the response of a firm to challenges inherent in entering a new country and marketing its products successfully is determined by the mode of Entry(Gillespie, Jeannet and Heennessy, 2007) .
Furthermore an expansion into the transaction cost/internalization theory argues that the choice made by a Multinational Enterprise between Greenfields joint ventures and acquisitions is dependent on an assessment of the costs associated with utilizing or acquiring immediate inputs through these 2 foreign establishment modes(Slangen and Hennart,2007). Multinational Enterprises might decide to utilize or acquire the entrenched technological knowledge which is normally implicit and therefore expensive to trade through the market and with the possession of this kind of knowledge, there is a probability that Multinational Enterprises may want to utilize it abroad in order to achieve economies of scale in production(Hennart,1982).The transaction cost associated with exploiting such knowledge through Greenfield joint venture are generally less than those linked with exploiting it through acquisitions, because Greenfields aid Multinational Enterprises in establishing their technologies from the onset and to transfer the consequent skills to a cautiously selected workforce able and enthusiastic about taking them in(Hennart and Park,1993).
According to Arnold(2004), the above view is sustained by resource based theories, which places the firm’s chances of increased success on the degree of foreign control, as the firm can set up key resources that are vital to success. Furthermore, it allows the practice of internal operational control which is vital for a firm’s success in emerging markets and it also enables a firm to control key corresponding resources which are necessary in ensuring a firm’s success in any country.
2.4.2 Entry Timing
During the 1990s, there were arguments by the international entrepreneurship researchers concerning the view that internationalization was portrayed as a gradual process that is revealed during the course of time(McDougall, Shane and Oviatt,1994). A contradictory view was that entrepreneurial firms that initiated internationalization earlier in their lives would surpass those that internationalized later, since entrepreneurial firms would not suffer from structural inertia(Hannan and Freeman,1977, 1984), Dominant logic(Bettis and Prahalad,1995) and cognitive blinders(Walsh,1985,1955).
Furthermore according to Johnson and Tellis(2008), a firm’s success and failure in the international market is determined by its early entry, timing and he points out that early entry has so many advantages and disadvantages. The Advantages includes the ability of the Early entrants to restrict access to key resources, such as distribution channels and suppliers; secondly, being an early entrant enables them to set the pathway of consumer preference. Thirdly, early entrants are allowed to be the first to utilize governmental concessions and incentives ; on the other hand, according to Golder and Tellis(1993) states that early entrants are occasionally not the winners in the market during the long term, due to several reasons which includes Firms rushing to newly opened emerging markets, while late entrants have a flatter learning curve because they can learn from early entrants’ mistakes.
2.4.3 Firm size
Johnson and Tellis(2008) states that literature is not undivided about the function of firm size on international expansion; for instance, some researchers claim that firm size helps, while others claim that it is harmful. There have been several motives given on why larger firms might be more successful than the smaller ones. First, larger firms are more likely to acquire a greater range of product and market specific knowledge than the smaller ones.
Secondly, larger firms have a higher ability to sustain periods of negative business performance on entry into a host country than smaller firms and thirdly, larger firms have more access to more resources, both material and financial than smaller firms. On the other hand, in cases where larger firms usually go through a high degree of “redtapism”, which usually obstructs their inventive abilities, smaller firms are usually less rigid, largely unbureaucratic and thus they enjoy a lot of internal conditions that provides conducive environment for innovation to thrive; also the flexibility of young and agile firms increases their chances of transforming a product and process innovations into business activities that encourages a higher business performance(Knight and Cavusgil,2004).
Finally, Arnold and Quelch(1998) states that for small and young firms, who are knowledgeable about the significance of International competition and customers, emerging markets are seen as a better way of being a “Born Global”, because of the high growth rates, less developed brand preference, more fragmented industry structures and less severe competition..
2.4.4 Entrepreneurial Proclivity
Entrepreneurial proclivity is refers to as the firm’s predisposition to engage in entrepreneurial process, practices and decision making, characterized by its organizational culture for innovativeness, risk taking and proactiveness (Zhou, 2007). These 3 elements of a firm’s Entrepreneurial proclivity positively simplifies the process of making a firm being able and willing to participate in market learning activities(Zhou,2007). In addition, entrepreneurial proclivity provides international firms with self motivated capabilities to participate in international business and trade activities(Zhou, 2007) cited in Toyne(1989).
In recent times, there have been a sizeable amount of research inputs on the specified drivers of a firm focused on internationalization on the level of entrepreneurial assumptions amidst the stakeholders involved in the internationalization strategy of the firm. A positive relationship existing between entrepreneur’s international development has being disclosed to be the outcome of the study(Zucchella,Palamara and Denicolai, 2007 citing Ibeh and Young,2001; Westhead et al.,2001).
According to Perlmutter(1969,p.11),it is believed that “the more we infiltrate into the living reality of international firms, the more we find it compulsory to attach serious considerations to the way executives imagine the ways through which business is conducted around the world. Finally, according to Weerawardena et al.(2007), rapid internationalization is believed to be stimulated by Entrepreneurial managers and owners whose mindsets are globalised, as these kind of mindsets enables them to fin and utilize market opportunities internationally.
2.5 Macro level forces
According to Perez-Bates and Eden(2008), right through the 1990’s and till now, emerging economies in the whole world liberalized, deregulated and privatized their domestic markets which led to fundamental and far reaching institutional changes for emerging market firms. Emerging markets are beneficial due to some reasons which includes:
The developing and transition economies( emerging markets), have attracted half of global foreign direct investments inflows in 2010, which amounts 1.2 trillion US dollars in 2010 and is expected to rise further to 1.3-1.5 trillion Dollars in 2011 and then head towards 1.6-2trillion US dollars in 2012 (world investment report,2010); all this figures proves that the strength of the emerging market economies is still increasing.
Firms with stronger international and global status, have better abilities to attract new customers relatively faster in new markets(Nakata and Sivakumar,1997).
188.8.131.52 Country Risk
Country risk is defined as when the environment is uncertain and it has 3 sources: financial, risks, economic and political risks(Johnson and Tellis,2008) cited in Erb et al.(1995). Financial and economic risks is visible in several forms which includes recessions, currency crisis, unexpected occurrence of inflation(Johnson and Tellis, 2008), while the political risks is visible in dangers of civil disorder, harsh government policies, limitation in funding, restricted changes in patent and trademark protection and regulation(Nakata and Sivakumar, 1997).
According to Johnson and Tellis(2008), openness is referred to as a situation when there is no regulatory framework and any other impediment to the entry of foreign firms in an international market; furthermore, the ability of global intermediaries to effectively operate in a country’s economy depends on how open the economy is. Market liberalization in combination with trade agreements and privatization aspires to improve economic efficiency through the removal of market imperfection caused by restrictive and harsh government policies.
Finally, in recent times and in increasing rates, more countries are opening up their territories to international trade, external financial transactions, technology transfer and foreign investment in ways never experienced before.(Nakata and Sivakumar,1997).
2.5.2 Cultural Distance
According to Wang and Schenn(2008), culture is refers to as a kind of collective programming of the mind that differentiates the members of one human group from another and also, it is usually shared by people from the same country. Therefore, cultural distance is defined as a degree to which the shared values in one country are unique to those in another country and it has an influence on the choice of an Multinational Enterprise’s establishment mode; in addition, the term “cultural distance” is used by several studies as an extended version of the transaction cost/Internalization theory(Slangen and Hennart, 2007) cited in Hofstede(2001).
Furthermore, there would hardly be any increase in cost attached to the issues of transferring practices to Greenfield joint ventures subsidiaries, because the Multinational enterprises can provide those subsidiaries with new employees, who are beginners to any practice and thus are open to taking in those of the Multinational enterprise(Slangen and Hennart,2007) cited in Hofstede(2001).
Finally, citing Cho and Padmanabhan(1995) and Larimo(2003), the analysis of cultural distance is concluded by stating that there should be an increase in the preference of Multinational enterprises to Greenfield joint ventures over acquisitions, due to the cultural distance to the target country.
2.5.3 Country of origin effects
The Industry conditions in a home country has a key influence on the process of internationalization and this is due to several factors, which includes the fact that the concept of comparative advantage established in the 19th century which shows that some countries have higher productivity and efficiency in comparism to other countries and whose tenets were published further by Porter(1990), in his work on the competitive advantage of nations where it was revealed on how the conditions of an industry in a home country can influence the competitive success or failure of firms in the international market based on the value of 4 factors which includes factor endowments, conditions of demand, firm strategy/ rivalry and related/supporting industries; Secondly, every international company, no matter the level or degree of its internationalization, all started from the domestic and local market(Elango and Sethi,2007).
Furthermore, according to Sethi and Elango(1999), there are some factors which influences the competitive conduct amongst firms operating in the international market, which includes country of origin, resources of a firm and industry structure. The country of origin factor endows firms originating from them with a different set of factor endowments, cultural attributes and socio-political infrastructure, which avails them with distinctive competitive advantages when weighed against firms originating in countries which are less tolerable in those aspects. This blend of factors is what is known as country of origin effect and it stimulates the displays of different behaviors by multinational companies while making strategic choices and formulating their modes of operations.
A critical analysis of the literature review performed above has underscored the point that well set up theories on internationalization have failed to account for the speedy rate of internationalization in telecommunication firms from emerging markets. Furthermore, despite the fact that internationalization processes of companies dealing with high level of technologies are unique amongst themselves, they all still feel very eager to internationalize(Axinn and Matthyssens,2002) cited in Crick and Jones(2000).
Therefore, all internationalization models have to be formulated and modified to stimulate the enthusiasm in which the entrepreneurial factors, internal factors and external factors simultaneously affects a firm’s internationalization blueprint and processes. Finally, investing in emerging markets, requires an entry strategy structure in which firms must strive to be informed about a whole continent and not just a single country or industry and also, they must develop strategies which would overcome the institutional lapses present in emerging or developing markets.
3.0 RESEARCH QUESTIONS
The establishment of factors that significantly influenced the blueprint, patterns and process of the internationalization of Globacom Nigeria on the African continent serves as the main aim and purpose of this research report. A literary review performed in section 2, laid due emphasis on the need to conduct more research into emerging market multinational’s internationalization in specific sectors and then research questions were consequently formulated and would be used to analyze Globacom Nigeria’s entry on the African continent.
3.2.1 Research Question One
Does the degree of control increase or reduce the chances of success when entering emerging markets?
3.2.2 Research Question Two
Does early entry increase or reduce the chances of success in internationalization?
3.2.3 Research Question three
What influence does the size of a firm have on internationalization?
3.2.4 Research Question four
What influence does Entrepreneurial proclivity have on strategies of Internationalization ?
3.2.5 Research Question five
What influence does institutional development have on internationalization strategies which are utilized within the framework of an emerging market?
3.2.6 Research Question six
What influence does cultural distance have on internationalization?
4.0 RESEARCH METHODOLOGY
4.1 Description of Methodology
According to Easterby-Smith(2003), Methodology is refers to as a blend of techniques used to analyze a precise situation and it gives the reader an idea of how a scientific research is conducted, including the tools which are to be utilized to collect empirical data, as well as the validity and reliability of the results.
This research report is founded on a detailed and in-depth study, which analyzes the factors that influenced Globacom’s international expansion in Africa within the last decade. The case study research methodology is generally tilted towards solving research problems within the constructivism paradigms, rather than the positivist paradigm.(Perry,2001) cited in Perry et al (1998a). It involves a detailed analysis of a single instance of a phenomenon of interest and is frequently referred to as an exploratory work, utilized in areas that have few theories or are generally lacking in areas of knowledge(Hussey and Hussey,1997).
The Researcher is able to study the important factors rigorously, because only a single instance of the phenomenon of interest has been selected.
4.2 Motivation for selected Methodology
The case study methodology is appropriate due to the great magnitude and intricacies involved in Globacom’s internationalization process in Africa which has demanded a cogent need for a devoted attention and rigorous study to comprehend the factors which has influenced it’s internationalization. According to Yin(1994), if the existing knowledge base of a phenomenon or area of study is poor, then it is suitable to utilize the exploratory case studies which should be founded on primary data . According to Hutchinson et al.(2007) cited in the works of Gummesson(2000), it is stated that in order to gather, analyze and interpret Data holistically, it is essential to adopt the qualitative approach and that understanding it effectively well is very beneficial to a research that examines the issues involved with managerial decision making in an organization.
4.3 Unit of Analysis
A Unit of Analysis is referred to as a type of case, whose data is collected and analyzed, whose variables or phenomena is being investigated, as well as to which a research problem is referred to and also, it is also defined as an entity that forms the basis of any sample( Hussey and Hussey,1998;Easterby-Smith,2008).This case research has the internationalization process of Globacom Nigeria on the African continent as its unit of Analysis.
4.4 Population of Relevance
According to Easter-Smith et al(2008), Population is defined as the whole of entities that decisions relate to. The Population of relevance for this research work is referred to all the stakeholders that are directly involved in Globacom’s Africa expansion and who are actively involved in key decision making processes of the organization. These stakeholders include Executive officials, Engineers, Legal advisors, Consultants, Investment analysts and Facilitators.
4.5 Sampling method and Sampling size
The sampling size for this research work would be attained by using the non-probability sampling method , known as the Judgmental sampling. According to Hussey and Hussey(1997), Judgmental sampling takes place when the participants are selected by the researcher based on how potent their experiences are, on the phenomenon being studied; also, the researcher decides before the interview commences and does not pursue other contacts, which may arise during the study. The sample which consists of 15 current executive board members of Globacom group and senior officials across its various business units in Nigeria, were spotted by utilizing Newspaper reports, Research articles, Internally generated published documents and Investor reports.
4.6 Research Instrument
According to Hussey and Hussey(1997), In a phenomenological study, the researcher is identified as the research instrument, because of his or her close participation under the paradigm. Therefore, the researcher is responsible for gathering, capturing and analyzing all data for this case research.
4.7 Data collection method
In-depth interviews constituted the primary method of data collection. An In-depth interview is referred to as an opportunity usually within an interview, to probe deeply and open up new dimensions and insights(Easterby-Smith et al,2008). The In-depth interviews were performed with Individuals members of the sample as portrayed in section 1.5. The Interview questions are structured in accordance with the research questions, and they are designed in a format which is easy, clear and neutral, in order to permit the interviewee to respond at length. The duration of the interview was estimated at 30minutes; notes were taken by the researcher during the course of the interview which were later written out, immediately after each interview. The questionnaire which consists of the complete list of questions asked during each interview is attached as an annex at the end of the work. The Interviewees were guaranteed anonymity, due to the sensitive nature of the content of the subject.
Three independent sources constituted the sources of data and they include: Globacom Nigeria, Independent industry analysts and regulators, and their components are stated below:
Globacom Nigeria: Open ended interviews, annual reports, press releases, and documents published internally.
Independent industry analysts: Investment reports by financial analysts, media comments and analysis.
Regulators: Regulatory policy documents.
These three independent sources of data allowed for data to be effectively triangulated(Yin,1989).
4.8 Data Analysis
Due to the phenomenological approach utilized by this research report, it was deemed unrealistic using the quantifying methods for qualitative data analysis. The method of Cognitive mapping was applied in stimulating the structure and de-textualising the data. Cognitive mapping is refers to as a modeling technique that aims to portray Managers’ ideas, beliefs, values and attitudes and show how they inter-relate (Easterby-Smith et al.,2008) and it is also a method utilized in making sense of written or verbal accounts of problems. According to Hussey and Hussey(1997), there are 3 main stages in cognitive mapping and they were used in the research work as thus:
A detailed view of the problem was divided into expressions of about 10 words, which retains the words of the person presenting the view. These were examined as separate concepts, after which a graphical format was used to re-unite them, thereby disclosing their reasoning mode.
Secondly, a single concept was utilized in bringing together pairs of phrases, in which each one presented important disparity to each other.
Thirdly, the separate phrases were connected to create a pecking order of means and ends.
Based on the researcher’s capacity to discover and attach different levels of information, the main themes were enabled by cognitive mapping to intermingle across findings. The content and frequency analysis were used to analyze the interview data, in order to discover any themes, which ignored by the researcher during the course of cognitive mapping. The content analysis was performed using an outline designed for every research question with an excel spreadsheet. This enabled each response in the measured conduct, to be confined in a line relevant to the research question.
Finally, the Data analysis was brought to an end, by using the basic sample profiling statistics to discover the themes which emerged from demographic profiling. These themes includes employment expenses, marital status, age, education and foreign language skills.
4.9 Evaluation of Data Analysis(Validity and Reliability)
According to Hussey and Hussey(1997) cited in Lincoln and Guba(1985), in order to ensure validity, there are for recommended principles utilized for the evaluation of the Data analysis.
Credibility: This reveals that the research was performed in such a way that, there was an accurate identification and description of the subject of enquiry. The researcher through triangulation can improve credibility by using different sources and methods of data.
Transferability: This relates to if the findings can function in another situation, which is adequately related to allow the generalization.
Dependability: This seeks to prove that research processes are organized, precise and well cited.
Confirmability: This seeks to evaluate whether the findings are determined from the data collected.
Now, applying the recommended principles to the evaluation of the Data analysis in order to determine the validity and reliability of this research work: First, it is stated that the credibility criteria was met, because the structure from which Globacom’s internationalization pattern and process was analyzed was built up through published sources of information and in addition, there was a conformity with the triangulation criteria, through the utilization of data gotten from multiple sources.
Secondly, the transferability criterion was fulfilled, because the concept of the emerging markets, served as the context in which the research was conducted, of which the findings can be utilized to situations of similar background.
Thirdly, the dependability criteria was observed, because as a result of the utilization of published sources of information, the informants were enabled by the recent occurrence of events to accurately recollect events and actions. Furthermore, all interviews were written out into a formal data, as soon as each interview ended and this method allowed the researcher to remember information which was not subject to bias and which cannot be interpreted.
Finally, the confirmability criterion was fulfilled because a minimum of 2 sources of information was utilized in examining each of the construct of internationalization and also a 2 step procedure was utilized in analyzing the data, that is in the structure of cognitive mapping by the researcher and secondly, through the technique of content and frequency analysis, perform in an excel spreadsheet.
4.10 Research Limitations and Further research
There were certain limitations which affected the conduct of this research study, and they include:
First, there is no statistical measurement of the constructs in the research report. A study with a similar context which will empirically test these constructs will be appropriate for further research and findings.
Secondly, the rising rate of internationalization requires a deeper analysis and measurement of the rate of internationalization as regards a time based appraisal of entrepreneurial tendency, ex-ante and post -hoc internationalization. This research study concentrates on the constructs based on ex-ante internationalization.
Thirdly, this research is concentrated mainly on Globacom’s internationalization process in Africa, a detailed view on how the company acquired it’s telecommunication license in the Nigerian market, was not adequately examined in this research work.
The research design and the selected methodology were designed to achieve the objective of this research report, which is to identify the factors through Globacom’s internationalization in Africa was influenced. The interviews, in conjunction with detailed secondary data, provided exceptional ideas into the impressive ways that Globacom conquered the hindrances to speedy internationalization.
Please specify the industrial sector in which your company operates â€¦â€¦â€¦â€¦â€¦â€¦
Please review Globacom when it launched its operations in Nigeria in 2003 â€¦â€¦â€¦â€¦â€¦â€¦.
What work experience did you acquire before you joined Globacom? ………………….
What do you identify as the primary stimulators of Globacom Nigeria’s internationalization and expansion? â€¦â€¦â€¦â€¦â€¦â€¦â€¦..
Why was internationalization and expansion considered at that early stage? â€¦â€¦â€¦â€¦â€¦â€¦.
Why choose Africa as your first continent of internationalization and expansion? â€¦â€¦â€¦â€¦â€¦â€¦â€¦
How did Globacom handle the various economic and political risks linked with conducting business in Africa? …………………….
Why did Globacom choose Greenfields investment particularly in Africa? â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.
What was the state of mind of the team members and decision makers on Globacom’s expansion project? â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦..
How did Globacom forecast the large and concealed demand for cellular telecommunication in Africa? â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.
What forms of organizational structure was adopted by Globacom to promote and execute its expansion in Africa? â€¦â€¦â€¦â€¦â€¦â€¦..
How did Globacom overcome the different cultural backgrounds of the different African countries in which it operates? â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦