Motives and barriers to the internationalization of smes case study of “nghia nippers corporation

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY NGUYEN THI HAI YEN MOTIVES AND BARRIERS TO THE INTERNATIONALIZATION OF SMES CASE STUDY OF “NGHIA NIPPERS CORPORATION” THESIS FOR MASTER OF EMBA EXECUTIVE MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City - 2017 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY NGUYEN THI HAI YEN MOTIVES AND BARRIERS TO THE INTERNATIONALIZATION OF SMES CASE STUDY OF “NGHIA NIPPERS CORPORATION” Major: Business Administration (Executive MBA) Code: 60340102 THESIS FOR MASTER OF EMBA EXECUTIVE MASTER OF BUSINESS ADMINISTRATION Academic Instructor: PR.DR HO DUC HUNG Ho Chi Minh City - 2017 Statement of Authentication I hereby declare that the work presented in this thesis is, to the best of my knowledge and belief, original The ideas and quotes taken from external sources are duly acknowledged in the text The material, either in full or in part, has not been previously submited to any other institution Ho Chi Minh City, 2017 Nguyen Thi Hai Yen Table of Contents Statement of Authentication List of Figures List of Tables Abstract .1 Chapter Introduction .2 1.1 Background of Research 1.2 Research purposes and research questions 1.3 Limitations and implications 1.4 Outline of the thesis Chapter Theoretical Framework .9 2.1 Definition of Internationalization 2.2 Theories of Internationalization .9 2.2.1 Economic approach of internationalization 10 2.2.2 Behavioral approach of internationalization 13 2.3 Latest internationalization approaches 19 2.3.1 Born Global 19 2.3.2 Network theory 21 2.4 Internationalization motives 23 2.5 Internationalization triggers 24 2.6 Internationalization barriers 28 2.7 Summary 29 Chapter Methodological part .30 3.1 Definition of Methodology 30 3.2 Choice of philosophical position 31 3.3 Formulating the research design 32 3.4 Research strategy 34 3.5 Data collection .36 3.6 Data analysis 39 3.7 Quality of the research issues .41 3.8 Summary 42 Chapter Empirical part 43 4.1 Presentation of the company “Nghia Nippers Corporation” 43 4.2 The results of the interviews 44 4.2.1 Characteristics of the firm 45 4.2.2 Characteristics of owner/manager of the company 47 4.2.3 Sources of information 47 4.2.4 Entry mode and market selection 48 4.2.5 Company’s strategies 48 4.2.6 Motives 49 4.2.7 Barriers 50 4.2.8 Advantages and Disadvantages of export activities 50 4.2.9 Future suggestions 50 4.3 Empirical findings 51 4.3.1 History of companies activities 52 4.3.2 Motives and barriers 54 4.4 Summary 54 Chapter Analysis 55 5.1 Internationalization process of “ Nghia Nippers Corporation” .55 5.2 Motives of the internationalization of Nghia Nippers Corp .57 5.3 Internationalization barriers 58 5.4 Summary 58 Chapter Discussion and Conclusions 59 6.1 Discussion 59 6.2 Summary of the study 60 6.3 Suggestions for the future research 62 Bibliography Appendix 1: Interview Guide Appendix 2: The company logotype and Product Lists for export Appendix 3: Quotation form Appendix 4: Purchasing Order (PO) Appendix 5: Profomar Invoice (PI) Appendix 6: Sales Contract Appendix 7: Commercial Invoice Appendix 8: Packing List Appendix 9: Certificate of Origin (C/O) Appendix 10: Bill of Lading (B/L) Appendix 11: Air Way Bill (AWB) Appendix 12: Customs Clearance (in Vietnamese) Appendix 13: Posters used of NNC in an international trade fair List of Figures Figure 1.1 The structure of the master thesis Figure Firm’s specific advantages needed when entering foreign markets according to Dunning’s eclectic theory .12 Figure 2 Internationalization process of the firm 16 Figure Born Global conceptual framework .20 Figure An example of an international network 22 Figure 2.5 Pre-internationalization: initiation of SME internationalization 24 Figure The research process plan 30 Figure Revenues of Nghia Nippers Corp in 2016 .46 Figure Chronology of firm’s activities (developed by author) 52 Figure Export Revenue of Nghia Nippers Corporation in 2016 .53 List of Tables Table The main internal and external variables both approaches to internationalization theory focuses on 10 Table 2 The International List Product Life Cycle Model 13 Table Innovation-related internationalization models 17 Table Major motives for starting export 24 Table Implications of social constructionism 32 Table Relevant situations for different research strategies .35 Table Comparative characteristics of firms .56 MOTIVES AND BARRIERS TO THE INTERNATIONALIZATION OF SMES CASE STUDY OF “NGHIA NIPPERS CORPORATION” Abstract This master thesis exposes findings for the research questions of kinds of motives and barriers impacting on the firm’s internationalization process From these outcomes, it shows the purpose of increasing the knowledge and provides insights on how internationalization affects SMEs in general and in the Vietnamese company “ Nghia Nippers Corporation” in particular Empirical results which are received from the interviews with the leader and owner of the company were summarized, structured and prepared for analysis The main findings of the study represent the description of motives and barriers of the internationalization process of “Nghia Nippers Corporation” All of these theories, approaches developed and findings are aimed to interpret the internationalization process which takes place, when a firm makes a decision to join export activities They can be not only valuable information sources for reference but also a good guideline for consideration for the similar companies which are able to carry out global trade Key Words: Nghia Nippers Corporation, SMEs, Internationalization theories, Internationalization process, Motives, barrier, Chapter Introduction Changes in the world environment are bringing totally new opportunities and threats to firms and individuals The challenge is to compete successfully in the global marketplace as it exists today and develops tomorrow Internationalization or International trade develops when certain countries are able to produce some goods more efficiently than other countries and start to join the world wide trade They exchange goods to satisfy their needs and wants Moreover, the motives are increased and barriers are removed gradually when more and more trade agreements have been discussing and signed The developing of information technology, logistics, transportation, facilities, internet, education, and labor forces also effect much to internationalization trend Nowadays, many countries are independent and have own their economics policies which are more opened The commerce around the world continued to expand faster than world gross national product and this promoted to increase importance of international markets (Albaumet.al, 2005) SHIPPED BY AIR/ SEA : as the buyer's arrangement Partial shipment : Allowed 4/ PAYMENT TERM: - The Buyer will pay 30% of the total contract amount after signing the contract - The balance amount will be transferred to the Seller’s account 7days before the date of shipping Beneficiary’s Name : NGHIA NIPPERS CORP Address : 10/20 Lac Long Quan Str., Ward 9, Tan Binh Dist., Ho Chi Minh City, Vietnam Account No :… Banker Name :… Banker’s Address : … Swift Code :… All banking charge outside Vietnam shall be born by The Buyer, including telegraphic and reimbursement charge WIC SRL NGHIA NIPPERS CORP Appendix 7: Commercial Invoice COMMERCIAL INVOICE Seller / Exporter : NGHIA NIPPERS CORP 10/20 LAC LONG QUAN ST.,WARD 9, Invoice Number and Date: NO: 7412INV/MET04 Date: Jan 11th, 2013 TAN BINH DIST., HOCHIMINH CITY, VIETNAM Consignee / Importer Contract Number and Date: NO: 7412KN/MET04 Date: Nov 6th, 2012 LLC «UNI» RUSSIA, Buyer (If other than consignee) MET, RUSSIA TEL +7 … Other references Notify Party : Same as consignee Vessel/ Flight No : To : RUSSIA No From : Hochiminh city ,Vietnam Departure date : Description of goods NAME CODE BUYER'S CODE Quantity (pcs) Cuticle Nippers C-04#12 CN-04 2,370 Cuticle Nippers (Double Spring) C-05#14 CN-05 2,450 Cuticle Nippers C-06 #14 CN-06 2,560 Cuticle Nippers C-07 #16 CN-07 2,350 Cuticle Nippers (Double Spring) C-08 #16 CN-08 2,360 TOTAL (USD) Unit price FOBHCMC (USD/PC) Amount FOBHCMC (USD) - 12,090 $0.00 Says: US dollars thousand … hundred and … cents only Origin : VIETNAM Number of packages Gross weight NGHIA NIPPERS CORP : 43 CTNS : 900.85 KGS Appendix 8: Packing List PACKING LIST Packing list Number and Date: NO: 7412PKL/MET04 Date : Jan 11th, 2013 Seller / Exporter : NGHIA NIPPERS CORP 10/20 LAC LONG QUAN ST.,WARD 9, TAN BINH DIST., HOCHIMINH CITY, VIETNAM Consignee / Importer : Contract Number and Date: NO: 7412KN/MET04 Date: Nov 6th, 2012 LLC «UNI» RUSSIA Buyer (If other than consignee) MET RUSSIA TEL +7 … Notify Party : Same as consignee Vessel/ Flight No : To : RUSSIA Other references From : Hochiminh city ,Vietnam Departure date : Description of goods No NAME CODE BUYER'S CODE Q'ty (pcs) Number of Packages (CTN) Gross Weight (Kg) Cuticle Nippers C-04#12 CN-04 2,000 161.62 Cuticle Nippers (Double Spring) C-05#14 CN-05 2,000 162.34 Cuticle Nippers C-06#14 CN-06 2,000 148.08 Cuticle Nippers C-07#16 CN-07 2,000 134.00 Cuticle Nippers (Double Spring) C-08#16 CN-08 2,000 138.06 Cuticle Nippers C-04#12 CN-04 370 44.94 Cuticle Nippers (Double Spring) C-05#14 CN-05 450 50.66 Cuticle Nippers C-06#14 CN-06 500 25.09 Cuticle Nippers C-06#14 CN-06 60 10 Cuticle Nippers C-07#16 CN-07 350 18.88 11 Cuticle Nippers (Double Spring) C-08#16 CN-08 360 17.18 12,090 43 900.85 TOTAL NGHIA NIPPERS CORP Origin : VIETNAM Number of packages : 43 CTNS Gross weight : 900.85 KGS Appendix 9: Certificate of Origin (C/O) Appendix 10: Bill of Lading (B/L) Appendix 11: Air Way Bill (AWB) Appendix 12: Customs Clearance (in Vietnamese) Appendix 13: Posters used of NNC in an international trade fair One picture of NNC’s Booth at an Exhibition which NNC joining in Hong Kong in 2013: ... structured and prepared for analysis The main findings of the study represent the description of motives and barriers of the internationalization process of “Nghia Nippers Corporation All of these theories,... of firms .56 MOTIVES AND BARRIERS TO THE INTERNATIONALIZATION OF SMES CASE STUDY OF “NGHIA NIPPERS CORPORATION Abstract This master thesis exposes findings for the research questions of. ..MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY NGUYEN THI HAI YEN MOTIVES AND BARRIERS TO THE INTERNATIONALIZATION OF SMES CASE STUDY OF “NGHIA NIPPERS CORPORATION