Chapter© 2017 Cengage Learning®. May not be scanned, copie

Chapter
© 2017 Cengage Learning®. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole
or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-
protected website or school-approved learning management
system for classroom use.
8
Organizational Designs for Multinational Companies
duplicated, or posted to a publicly accessible websi te, in whole
Learning Objectives (1 of 2)Understand the components of
organizational design.Know the basic building blocks of
organization structure.Understand the structural options for
multinational companies.Know the choices multinationals have
in the use of subsidiaries.

Learning Objectives (2 of 2)See the links between multinational
strategies and structures.Understand the basic mechanisms of
organizational coordination and control.Know how
multinational companies use coordination and control
mechanisms.
Organizational DesignThe best multinational strategies do not
guarantee success. Managers must design their organizations
with the best mechanisms to carry out domestic and
international strategies. Organizational Design: How
organizations structure subunits and use coordination and
control mechanisms to achieve their strategic goals
The Nature of
Organizational Design (1 of 2)Two basic questions involved in
designing an organization:How shall we divide the work among
the organization’s subunits?How shall we coordinate and

control the efforts of the units we create?In small organizations,
there is little reason to divide work. Everyone does the same
thing and everything
The Nature of
Organizational Design (2 of 2)As organizations grow, there is a
need to divide work into specialized jobs and the organization
into specialized subunits.Once an organization has specialized
subunits, managers must develop measures to coordinate and
control their efforts. Decision-making may be centralized or
decentralized.There is no one best organizational design.
A Primer on Organizational StructuresOrganizations usually
divide work into departments or divisions based on functions,
geography, products, or a combination of these criteria. Each
way of organizing has its advantages and disadvantages. A
company’s choice of subunit forms is based on management’s
beliefs concerning the best structure or structures to implement
the chosen strategies.

The Basic Functional Structure (1 of 2)In a Functional
Structure, departments perform separate business functions such
as marketing or manufacturing.The functional structure is the
simplest organization.Most smaller organizations have
functional structures.Even large organizations have functional
subunits.Organizations choose a functional structure for its
efficiency.
The Basic Functional Structure (2 of 2)Efficiencies arise from
economies of scale in each function because of cost savings
when a large number of people do the same job in the same
location.Coordination is difficult, as functional units are
separated from each other and serve functional goals.The
functional structure works best when the firm has few products,
locations, and types of customers.Works best in a stable
environment, with minimal need for adaptation.

Exhibit 8.1:
A Basic Functional Structure
The Basic Product and Geographic Structures (1 of 4)Product
Structure: Building departments or subunits around a particular
product. Geographic Structure: Building departments or
subunits based on a particular geographic region. Product and
Geographic units must still perform all of the functional tasks
of a business.Functional tasks are duplicated for each unit,
leading to loss of economies of scale, and loss of efficiency.
The Basic Product and Geographic Structures (2 of 4)But, such
inefficiencies disappear as customer groups and products

proliferate.And even for small organizations, a product or
geographic unit may offer competitive advantages:It allows a
company to serve customer needs that vary by region or
product.Managers can quickly identify customer needs and
adapt products.
Exhibit 8.2:
Basic Product Structure
Exhibit 8.3:
Basic Geographic Structure

The Basic Product and Geographic Structures (3 of 4)Recent
research also suggests the customer-focused organization
structure, which uses groups of customers related by industry or
application as the basis for designing the organizational
structure. MNCs are adopting such structures because
of:Pressures to reduce costsSubsidiary coordination
The Basic Product and Geographic Structures (4 of 4)Few
organizations adopt purely organizational forms.Each
organization has unique trade-offs based on efficiency, product
types, and customers’ needs. Companies design organizations
with mixtures of structures that will best implement their
strategies.Mixed-form organizations are called Hybrid
Structures.A Hybrid Structure mixes functional, geographic, and
product units.
Organizational Structures

to Implement
Multinational StrategiesWhen a company first goes international
(as a passive exporter), it seldom changes its structure.Even
though exporting, it prefers to rely on EMCs and ETCs rather
than change organizational structure.Similarly, a licensing
strategy has little impact on domestic structure.However, when
international sales become more central, the structure needs to
be changed.
duplicated, or posted to a publicly accessible w ebsite, in whole
The Export DepartmentThe Export Department coordinates and
controls a company’s export operations.The Export department:
Is created when exports become significantDeals with
international sales of all productsSales representatives in other
countries may report to the Export Department manager.
with a certain product or service or otherwise on a passw ord-
Exhibit 8.4:
A Functional Structure with an Export Department

Foreign SubsidiariesForeign Subsidiaries are subunits of the
multinational company that are located in another countryThese
are a growing component of international business.The United
Nations estimates that worldwide, there are more than 65,000
multinational corporations with more than 850,000 foreign
subsidiaries employing nearly 25 million people.
Subsidiaries (1 of 3) Types of subsidiaries:A Minireplica
Subsidiary is a scaled down version of the parent firm. It uses
the same technology and produces the same products as the
parent firm.A Transnational Subsidiary supports a multinational
firm strategy based on location advantages. It has no firm wide
form or function. Each subsidiary contributes what it does best
or most efficiently anywhere in the world.

Foreign Subsidiaries (2 of 3)
Most subsidiaries are neither pure minireplicas nor pure
transnationals.Foreign subsidiaries take many forms and have
many functions. Foreign subsidiaries are the structural building
blocks for running multinationals.
Foreign Subsidiaries (3 of 3) Multinationals choose the mix of
functions for their foreign subsidiaries based on:The firm’s
multinational strategy or strategies;The subsidiaries’
capabilities and resources;The economic and political risk of
building and managing a subunit in another country;How the
subsidiaries fit into the overall multinational organizational
structure.
International Division (1 of 4)The International Division differs
from the export department in several ways: It is larger and has
greater responsibilities. It has more extensive staff with

international expertise.It is responsible for managing exports,
international sales, negotiating contracts, and managing foreign
subsidiaries.It is the usual step after the export department.It
deals with all products.It manages overseas sales force and
manufacturing sites.
International Division (2 of 4)The International Division has
declined in popularity among large multinationals.It is not
considered effective for multiproduct companies operating in
many countries.However, for companies of moderate size with
limited numbers of products or country locations, the
International Division remains a popular and effective structure.
International Division (3 of 4)There are several structural
options to deal with the shortcomings of the International
Division:Worldwide product structureWorldwide geographic
structureMatrix structureTransnational network structure

or in part, except for use as permitted in a license distri buted
International Division (4 of 4)Why do companies often abandon
their international divisions? Too many products overwhelm the
capacities of the international division. When the number of
locations in different countries grows, it is difficult for the
international division to manage multidomestic or regional
adaptations.The international division makes it more difficult to
implement international strategies using worldwide products or
location advantages.
Worldwide
Geographic Structure (1 of 3)In the Worldwide Geographic
Structure, regions or large-market countries become the
geographic divisions of the multinational company.The primary
reason to adopt this structure is to implement a multidomestic
or regional strategy.Differentiation of products or services
requires an organizational design with maximum geographic
flexibility.

Worldwide
Geographic Structure (2 of 3)In the Worldwide Geographic
Structure, regions or large-market countries become the
geographic divisions of the multinational company.(cont’d)The
semiautonomous subunits provide flexibility to meet local
needs.Country-level divisions usually exist only when a
country’s market size is sufficiently large to support its own
organization.Separate divisions make sense for large market
countries.
Exhibit 8.5:
International Division in a Domestic Product Structure

Exhibit 8.6:
Royal Vopak’s Worldwide
Geographic Structure
Worldwide
Geographic Structure (3 of 3)Product divisions form the basic
units of the Worldwide Product Structure:Each product division
is responsible for producing and selling its products or services
throughout the world.It may be the ideal structure to implement
an international strategy in which the firm gains economies of
scale by selling worldwide product activities based at
home.This type of structure sacrifices the regional or local
adaptation strengths derived from a geographical structure.
Exhibit 8.7:

Worldwide Product Structure
Hybrids and Worldwide Matrix Structures (1 of 4)Both
Worldwide Product Structure and Worldwide Geographic
Structure have advantages and disadvantages:A Product
Structure supports global products.A Geographic Structure
emphasizes local adaptation. Multinationals often want both
abilities.To achieve this, most multinationals use a Hybrid form
of structure, which combines both.
Hybrids and Worldwide Matrix Structures (2 of 4)To balance
the benefits of geographic and product structures, and to
coordinate their subunits, some multinationals create a
Worldwide Matrix Structure:Unlike hybrids, it is a symmetrical
organization with equal lines of authority for worldwide product
groups and geographical divisions.The Geographic Divisions
focus on national responsiveness.The Product Divisions focus
on finding global efficiencies.

Hybrids and Worldwide Matrix Structures (3 of 4)A Worldwide
Matrix Structure:Balances the benefits produced by area and
product structuresWorks best with near equal demands from
both sidesRequires extensive resources for communication and
coordinationRequires middle and upper level managers with
good human relations skillsIn theory, produces quality decisions
Exhibit 8.8:
Worldwide Matrix Structure
Hybrids and Worldwide Matrix Structures (4 of 4)Problems with
Worldwide Matrix Structures:Slow decision making processToo

bureaucraticToo many meetings and too much
conflictResult:Some companies have abandoned their matrixes
and returned to product structures.Others have redesigned their
matrix structures to be more flexible with speedier decision
making.
The Transnational Network Structure (1 of 5) Unlike the
symmetrical matrix structure, The Transnational Network has no
basic form, symmetry or balance between geographic and
product divisions. Instead, The Transnational Network links
different functional, product, and geographic subsidiaries
dispersed worldwide.Nodes, units at the center of the network,
coordinate product, functional and geographic information.
The Transnational Network Structure (2 of 5) No two subunits
are alike. Transnational units evolve to take advantage of
resources, talent and market opportunities wherever they exist
in the world.Resources, people and ideas flow in all directions.

The Transnational Network Structure (3 of 5)The Dutch
multinational Philips Electronics N.V. works in 60 different
countries, making products as diverse as defense systems and
light bulbs. Philips has 8 product divisions with more than 60
subgroups based on product similarity. The product divisions
have subsidiaries, which may focus on only one product or on
an array of products. Subsidiaries can specialize in R&D, sales,
etc. Some units are highly independent, some tightly controlled.
Transnational Network Structures (4 of 5)Philips divides the
world into three groups:Key countries such as the Netherlands
and the United States produce for local and world markets, and
control local salesLarge countries such as Mexico and Belgium
have some local and worldwide production facilities and local
sales.Local business countries are smaller countries that are
primarily sales units and that import products from the product
divisions’ worldwide production centers in other countries.

Exhibit 8.9:
Geographic Links in the Philips Transnational Structure
Exhibit 8.10:
Product Links in the Philips Transnational Structure
The Transnational Network Structure (5 of 5) The basic
structural framework of The Transnational Network has 3
components:Dispersed subunits are subsidiaries located
anywhere in the world they may benefit the firm.Specialized
Operations are subunits that specialize, whether in product
lines, research or marketing.Interdependent Relationships must
exist to manage the dispersed and specialized subunits which

share resources and information continuously.
Beyond the Transnational: Is There a New Structure for the
Multinational? (1 of 5)Large entrepreneurial multinationalCan
tap into pockets of innovation, technology, and markets located
around the worldAn evolution of the transnational network
structure that develops extensive systems to encourage
organizational learning and entrepreneurial activities
Multinational? (2 of 5)Structure for multinational firms
continues to evolve. A new structure is emerging called The
Metanational, a large, entrepreneurial multinational firm able to
tap into hidden pockets of innovation, technology and markets,
especially emerging markets worldwide. The Metanational is
similar to the Transnational:It is a networked, but centerless
organizationDecision-making resides with the subunits.

Multinational? (3 of 5)The Metanational is different from the
Transnational in that:It has an overriding objective to learn
from anywhere in the world, and to share that knowledge with
everyone in the company.The Metanational organiza tion uses
the latest in virtual connectivity to link team members
worldwide.
or in part, except for use as permitted in a license di stributed
Multinational? (4 of 5)The characteristics of the Metanational
structure are:Nonstandard business formulas for any local
activityLooking to emerging markets as sources of knowledge
and ideas, not just for local laborCreating a culture and
advanced communication system that supporting global
learningExtensive use of strategic alliances to gain knowledge
for varied sources

Multinational? (5 of 5)The characteristics of the Metanational
structure (cont’d):High levels of trust between partners to
encourage knowledge sharingA centerless structure that moves
strategic functions away from headquarters and to major
marketsA decentralization of decision making to managers who
serve key customers and strategic partners
Multinational Strategy and Structure: An OverviewMost
companies support early internationalization efforts with export
departments.Depending on globalization strategy, they evolve
into product or geographic structure.Pressures for local
adaptation and global efficiencies move to matrix or
transnational network structures.Most companies never quite
reach a pure structure, and instead, adopt a hybrid structure.
Exhibit 8.11:

Multinational Strategy, Structure, and Evolution
Control and
Coordination Systems (1 of 2)Although different subunits
perform specialized tasks, managers must design organizational
systems to control and coordinate their activities. Control
Systems help link the organization vertically, up and down the
organizational hierarchy in two ways:They measure or monitor
performance of the subunitsThey provide feedback on
effectiveness to subunit managers
Control and
Coordination Systems (2 of 2)Coordination Systems link the
organization horizontally.Coordination Systems provide
information flows among subsidiaries so that they can
coordinate their activities. Example: Ford plans to use advanced
information systems so that designers in Europe, the U.S. and

Japan can coordinate their design efforts for the world market.
Design Options for
Control Systems (1 of 5)
There are four broad types of control systems:1. Output control
systems2. Bureaucratic control systems3. Decision-making
control systems4. Cultural control systems
Design Options for
Control Systems (2 of 5)1. Output Control Systems:Assesses the
performance of a unit based on results, not on the process used
to achieve those resultsResponsibility for profit is the most
common output control. Example: a Profit Center.

Design Options for
Control Systems (3 of 5)2. Bureaucratic Control
Systems:Focuses on managing behaviors, not outcomeExamples
include budgets, statistical reports, and centralization of
decision-making.Budgets set financial targets for
expenditures.Statistical reports provide information to top
management on non-financial outcomes.Standard operating
procedures (SOPs) provide rules that identify approved ways of
behaving.
Design Options for
Control Systems (4 of 5)3. Decision-making Control
Systems:The level of the organization where managers have the
authority to make decisions.In decentralized organizations,
lower-level managers make many important decisions.In
centralized organizations, higher-level managers make most
important decisions.Transnational structures do not have a
tendency for control in either direction.

Design Options for
Control Systems (5 of 5)4. Cultural Control Systems:Use
organizational culture to control employees’ behaviors and
attitudesStrong organizational cultures develop shared norms,
values, believes and traditionsSuch cultures encourage high
levels of commitment and support for the organization.
Design Options for Coordination Systems (1 of 4)There are 6
basic horizontal coordination systems:Textual Communication:
e-mail, memos, and reportsDirect Contact: face-to-face
interaction of employeesLiaison Roles: part of a person’s job in
one department to communicate with people in another
departmentTask Forces: temporary teams created to solve a
particular organizational problemFull-time Integrators: cross-
unit coordination is the main job responsibility

Design Options for Coordination Systems (2 of 4)Teams:
(groups of employees working together)The strongest
coordination mechanismPermanent units of the
organizationCome from several organizational subunits to
specialize in particular problems
SummaryGood strategies do not guarantee success. The MNC
also needs a good organizational structure to achieve its goals.
The MNC needs the right organizational design to carry out its
strategic intent, goals and objectives.Chapter 8 reviews basic
organizational structures and discusses international
organizational designs and structures.
Chapter
7

Small Businesses and International Entrepreneurship:
Overcoming Barriers and Finding Opportunities
Learning Objectives (1 of 2)Understand the basic definitions of
small business and entrepreneurship.Explain how small
businesses can begin as global start-ups or follow the stages of
internationalization.Understand how small businesses can
overcome barriers to internationalization.Identify when a small
business or entrepreneurs should consider going international.
Learning Objectives (2 of 2)
Describe how small businesses or entrepreneurs can find
customers, partners, or distributors aboard.Understand how new
venture wedge strategies can be used in foreign markets.Explain
the factors driving entrepreneurship at an international level.

What Is a Small Business? (1 of 2)“Small” businesses:
Constitute over 98% of businesses in Europe, North America,
and JapanEmploy more than 50% of their local
populationsProduce nearly 50% of these countries’ GNPsCreate
more than 2/3 of new private sector jobs in the US
What Is a Small Business? (2 of 2)The term “Small” business is
variously defined. The small business has:UN & OECD: less
than 500 employeesThe popular press: less than 100
employeesUS Small Business Administration:
Definition varies by industry
Uses both sales revenue and the number of people
Internationalization and the Small BusinessTwo models:Small
business stage model: process of following incremental stages
of internationalizationGlobal start-up or Born-global firm:

company that begins as a multinational company
Small Business Stage Model of Internationalization (1 of 2)
Stage 1: Passive exportingFirm fills international orders but
does not seek export business. Does not realize it has an
international market.Stage 2: Export managementSpecifically
seeks exports, usually relying on indirect exporting due to
resource limitations. Major orientation change for the firm:
Exporting is seen as an opportunity.Stage 3. Export
departmentSignificant resources dedicated to seeking increased
sales from exporting. No longer see exporting as a prohibitive
risk. Key is to find good local partner for distribution.
Small Business Stage Model of Internationalization (2 of 2)
Stage 4: Sales branchesHigh demand justifies setting up local
sales office. Must have resources to transfer manager or hire
local managersStage 5: Production abroadFirm moves beyond
downstream activities; uses licensing, joint ventures or direct
investment. This is a difficult stage because failure may put
whole firm at risk. Stage 6: The transnationalIts small size does

not prevent the firm from developing a global integrated
network.
Small Business Global Start-ups, or Born-Global Firms (1 of
2)Companies begin as multinationals; they must pursue a global
vision from inception and globalize rapidly.Born-globals are
critical to the international business environment. Threat to
traditional multinationals: Very flexible, fast moving,
knowledge intensive; introduce innovations.Global start ups are
riskier than domestic startups.Yet, they offer an avenue for new
venture success in rapidly globalizing industries.
Small Business Global Start-ups, or Born-Global Firms (2 of
2)Steps to foster a mindset to create a born-global
Adopt global culture from the start
Network with partners with international experience
Start selling a minimally viable product
Develop a global business model
Make strategic use of information and communication
technology

Overcoming Small Business Barriers to Internationalization (1
of 2)Small size barriers include:Limited financial and personnel
resources to dedicate to international operationsLack of
sufficient scale to produce goods efficientlyTop managers with
limited international experience, or negative attitudes, viewing
them as being too riskyOrganizational cultures with strong
domestic orientationContextual and environmental issues that
magnify difficulties in international operations
Overcoming Small Business Barriers to Internationalization (2
of 2)Many barriers to internationalization seem internal, small
businesses also have to face contextual and other environmental
issues, such as liabilities of foreignness.Liabilities of
foreignness: the lack of familiarity small firms may have when
facing the new country environment.

Developing a Small-Business Global Culture and a Learning
Culture (1 of 3)Global culture is achieved when managers and
workers value view strategic opportunities as global and not just
domestic.Workers share common language to describe
international operations at all levels.Develop a framework to
understand international operations.Develop an international
mindset.Global thinking: Do business and conduct value chain
operations anywhere in the world.
Culture (2 of 3)Characteristics of decision makers affecting
development of a global culturePerceived psychological
distance to foreign marketsInternational experienceRisk
aversionOverall attitudes toward international strategies

Culture (3 of 3)Small businesses also need to develop a learning
culture to overcome the liabilities of foreignness. Learning
culture: the willingness of the small business to learn from its
international experiences to further its future
internationalization plans. How can small firms develop
learning cultures?Engage in systematic foreign market
analysisLearn by developing networks
with a certain product or service or otherwise on a passw ord-
Changing Attitudes of
Key Decision MakersHow to change attitudes of key decision
makers:Begin with sales to countries close in culture and
geographyExperience and success overcome skepticism
regarding the international markets.Eventually, foreign markets
perceived as more profitable than domestic.But positive
attitudes crucial for global start-ups from beginning.
Exhibit 7.2: Attitudinal Differences Concerning
Internationalization for Small Business Exporters and

Nonexporters
Gaining Experience:
Duties and the Personal Life of the Small Business
CEOInternationalization affects personal life and company
duties of the CEO more than workers.For small firm, opening
new markets is CEO’s time-consuming and challenging personal
responsibility. The CEO must bear social and business
costs:Increased travel, stress from undertaking a new venture,
can adversely affect family life, risk whole business.Job
restructuring, retraining, new skills for international business
requirements .
Exhibit 7.3:
Training and Knowledge Needs of Small Firm CEOs Entering
Internationalization

Is Size a Barrier for Small Business Internationalizati on? (1 of
2)Liabilities of smallness: challenges facing small businesses in
the resources necessary to internationalizeLarge firms serve
more national markets, have access to resources, can negotiate
with geographically dispersed partners, & invest in cross
cultural training.Small firms lack scale to produce goods or
services as efficiently as larger companies, and absorb
risks.Size liabilities, however, may exist only in the initial
internationalization stage.
Is Size a Barrier for Small Business Internationalization? (2 of
2)International sales intensity: the amount of international sales
divided by the total sales of the company. Once involved in
international ventures, small multinational companies often gain
sales revenues proportionally equal to or greater than those of
large multinational companies.

Using the Small Business AdvantageSpeed becomes the small
business advantage:Faster innovationCan change products and
internal operations fasterSpeed can overcome size
disadvantagesLarger firms must often overcome bureaucratic
procedures, slow to take advantage of new marketsFirst to
market allows capture of market share before larger companies
can react.
The Future: Falling Barriers to
Multinational Small Businesses and More Global Start-
UpsGovernment programs to support small businesses are
expanding.High impact trade agreements (NAFTA, WTO) make
trade less complex and reduce resource requirements.Growth in
international business information available on Internet makes
knowledge easily available to small businesses. Such knowledge
encourages entrepreneurs to consider going global.

When Should a Small Business Go International? (1 of 2)A
small business that answers “yes” to these questions may be
ready to go global:Do we have a global product or service?Do
we have the managerial, organizational, and financial resources
to internationalize?Are we willing to commit resources to face
the risks of internationalization?Is there a country in which we
feel comfortable doing business?
When Should a Small Business Go International? (2 of 2)A
small business that answers "yes” to these questions may be
ready to go global (cont’d):Is there a profitable market for our
product or service?Which country should we enter?Do we have
a unique product or service that is not easily copied by large
multinationals or local entrepreneurs?Do location advantages
exist upstream in the value chain?Can we afford not to be a
multinational?
Getting Connected to the International MarketParticipation

strategies:Same participation options as larger firmsExporting,
licensing, joint ventures, and foreign direct investmentMost
small businesses choose exporting, and use services of ETCs or
EMCs to get their product to international markets
Finding Customers and PartnersCustomer contact techniques
include:Trade showsCatalog expositionsInternational
advertising agencies & consulting firmsGovernment-sponsored
trade missionsDirect contact
Ready to Go and Connected: A Synopsis (1 of 2)Ask the
diagnostic questions on readiness for internationalization.Focus
on whether the small firm has the right products and adequate
resourcesThen consider the competition & countries where it
might do business.If the firm is ready & opportunity exists,
there are several mechanisms to make customer & partner
contacts.

Ready to Go and Connected: A Synopsis (2 of 2)Detailed
research will reveal more sources, and increase the likelihood of
international success.Finding the right overseas partner may be
most crucial. Even if this is the right company, right product,
and potential customer, the small firm still needs a wedge to
break into a new market.Small firms can use traditional
entrepreneurial wedge strategies.
New-Venture Strategies for
Small Multinational CompaniesEntry Wedge: a strategic
competitive advantage for breaking into the established pattern
of commercial activity:New Product or Service and First Mover
AdvantageCopycat Businesses

New Product or Service and First-Mover Advantage (1 of
2)First-mover advantage: Being the first to introduce a product
or service: Product or service must be innovative and
comprehensive.Comprehensive: Must meet customer
expectations in areas such as warranty, customer service &
expected components. Without these, its easy for competitors to
imitate.Technological leadership: being first to use or introduce
a new technology; most common source of advantage; gives a
head start for further innovations
New Product or Service and First-Mover Advantage (2 of
2)Advantages of being first-mover:Have first access to natural
and social resources.Can choose the best locations for
resources, proximity to customersHave the best access to social
relationshipsLeads to personal contacts to build effective
channels of distribution , & to build trust & commitmentReduce
switching costs, which a customer incurs when going to a
competitor’s product (Apple v Windows)

Copycat Business (1 of 2)Copycat Business: Adopts existing
products or servicesA copycat business follows the “me too”
strategy.Competitive advantage comes from varying the nature
of a product or service, or how the firm provides the product or
service.Successful copycats do not copy existing business
identically. They find a niche or slight innovation to attract
customers.
Copycat Business (2 of 2)Successful copycat moves include
these:Be the first to change to a new standard.Go after the
toughest customers.Play to minor differences in customer
needs.Transfer the location.Become a dedicated supplier or
distributor.Seek abandoned or ignored markets.Acquire existing
business.
International Entrepreneurship and Family Businesses (1 of
7)Entrepreneur: A person who creates new ventures that seek
profit and growthThe entrepreneur faces risks and the
uncertainty of new and untested businessNew ventures: exist
when:a firm enters a new market, oroffer a new product or

services, orintroduces a new method, technology or innovative
use of raw materials
7)International entrepreneurship: The “discovery, evaluation
and exploitation of international market opportunities.”Most
experts consider entrepreneurship the driving force of small
business.Without the entrepreneurial spirit, few small
businesses would exist anywhere in the world.
duplicated, or posted to a publicly accessible website, in whol e
International Entrepreneurship and Family Businesses (3 of 7)If
we want to fully understand the small businesses in any nation,
we need to examine the level of entrepreneurship
there.Entrepreneurship is the driver of innovation and economic
development anywhere. In a country context which allows
entrepreneurial activities to flourish, rapid industrialization
occurs. Entrepreneurship not only creates new jobs but also
generates new wealth and growth.

7)Many multinational firms rely on entrepreneurs and small
businesses to do business when entering a new country.Small
businesses can often provide critical products or services,
thereby facilitating entry.Small businesses can assist MNCs in
offering or developing new products. MNCs’ location decisions
often based on level of entrepreneurship existing in country of
choice.
7)Understanding entrepreneurship in emerging markets is also
critical.Recent research revealed findings about
entrepreneurship in emerging economies.
The importance and influence of networks
Strong focus on individual entrepreneurial characteristics, such
as self-commitment, dynamism, and experience)

Exhibit 7.6:
Total Entrepreneurial Activity (TEA) for Selected Countries
7)Family business: Business owned or controlled by members of
a family.Although family businesses can be very large, the
majority of small businesses tend to be family run.Most
countries have family businesses that make important
contributions to the economy. A complete understanding of
small businesses is not complete without an understanding of
issues facing family businesses.
7)Small family businesses tend to have conservative growth
strategies.Challenges arising from the business passing

hands:Family tension and stressFamily turnover can impede
growthThe role of gender: a growing percentage of family
businesses worldwide are headed by women.
Summary and ConclusionsChapter 7 provides crucial
background information on small businesses, and also discusses
international entrepreneurship. Small businesses are important
aspects of economies of all nations.Small businesses often
provide the most jobs, economic growth and the best
innovation.The world offers opportunities and challenges for
international small business and entrepreneurship.

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