Categories
State Aspects
The state aspects of internationalisation are market commitment and market knowledge. Market commitment and market knowledge are assumed to effect decisions regarding commitment of resources to foreign market and the way current activities are performed.
Market Commitment
The concept of market commitment contained two factors, the amount of resources committed and the degree of commitment. The amount of resources could be operationalised to the size of investment in the market, while the degree of commitment refers to difficulty of finding an alternative use for the resources and transferring them to the alternative use. Resources located in a particular market can often be considered a commitment to that market. In some cases such resources can be sold and the financial resources can easily be used for other purposes.
The degree of commitment is higher the more the resources are integrated with other parts of the firm and their value is derived from these integrated activities. An example of resources with a high degree of commitment is a marketing department with special product knowledge and established integrated consumer relations in a particular market.
Market Knowledge
Knowledge is an important factor because commitment decisions are based on several kinds of knowledge. First, knowledge of opportunities or problems is assumed to initiate decisions. Second, evaluation of alternatives is based on some knowledge about relevant parts of the market environment. Internationalisation requires both general knowledge and market-specific knowledge. Market-specific knowledge is generally gained through experience in the market, where it can be transferred from one country to another. The Uppsala model stresses that it is important to have a direct relation between market knowledge and market commitment. Knowledge is considered a human resource and the better knowledge a company has about a market the more valuable are the resources and the stronger the commitment to the market.
Experiential knowledge is not transferable and is "closely associated with a particular set of circumstances". The relation to a consumer differs a lot, since every industrial buyer has unique characteristics. This is way established relations are valuable and it is also a explanation of way sales subsidiaries often are established by the acquisition of the former agent.