Introduction
Every business has a particular strategy, and all the management of companies are following some specific model of theory to get more competitive advantages from the market. These essential models of methods are made by some famous economist or some successful entrepreneurship as depends on their experience, such as Porter’s Diamond model, Uppsala model. This report will focus on some business model, such as the Diamond model and Uppsala model and will also try to relate with a company named Tata Consultancy services in Sweden. This study will also focus on some crucial decision about the Uppsala model to get more competitive advantages from today’s business environment.
Critical evaluate and compare two international theories
Concept of the Uppsala model
The Uppsala model is one of the most popular and essential for those businesses which business is trying to spread in the international market. This U-model is established by the famous economist, named Wanger in 2009 while this person was watching a Swedish film. It is a business-related film, and while watching this film, this person has made two individual steps that are important for the international business, such as network theory and IET theory (Allen and Kapodistrias, 2020) (Refer to Appendix 1).
Figure 1: Types of Uppsala model
(Source: Ayanie, 2019)
Network theory
In this theory, it defines some systems or ways, that are helpful for the international business, such as suppliers, contractor supplier (Ayanie, 2019). In the global market, if the management of the company will try to supply their raw materials from their own country to another country, then it can increase the expenses. Therefore, in order to expand business in the international market, the stakeholder of the company needs to analyse the business infrastructure of those countries’ to collect all the criteria from that market to control expenses.
International Entrepreneurship theory (IET)
In this theory, it is mentioned that in order to expand business in the international market, then the management of the companies needs to know or analyze some factors that can impact on business policies. The following factors are competitors’ activities, government rules and taxes, market demand and many others. Therefore, during executing any plans or making some budgets in the international market, these factors can be useful for changing business rules or policies in future.
Concept of Diamond model
It is also known as Porter’s Diamond Model, which also defines the same processes as the Uppsala model, but it represents all the strategies very quickly. As opined by Kharub and Sharma (2017), in this model, there not included any models as the Uppsala model, but there included some steps that make a business process more accessible, especially for the international market, such as
Figure 2: Steps of the Diamond model
(Source: Kharub and Sharma, 2017)
Firm, strategy, structure and rivalry
These are also crucial factors for growing a business properly in the international market. Before expanding business in the global market, the administration of the companies is analyzing the effectiveness of their products’ for those countries because this is an essential factor that helpful for generating more revenue in future. For example, if a UK product will launch in any African countries, then because of the higher price rate, many people do not afford this. Therefore, it can be a significant risk factor for this company, and it can reduce the amount of earning revenue in future. In order to mitigate this risk, the stakeholder needs to analyze the market correctly. The management of the companies are also concerned about the activities of competitors to understand the market risks and the future revenue for the future (Vandevijvere et al., 2019).
Demand condition
It is also an essential thing for spreading business in the international market. Before expanding market, the stakeholder of the company needs to know the demand for their products to get a better knowledge about future revenue (Afzal et al., 2019). Therefore, it is also a concerning factor for a business to gain better income from the international market.
Related and supporting industries
In this phase, it helps identify some supporting factors that are useful for making a company more profitable, such as suppliers, contractors (Grubb et al., 2020). Before investing in the international market, the administration of the companies needs to analyze the availability of the above factors to know for controlling their expenses. For example, if the stakeholders are imports their raw materials from another country, then it can increase the cost. Whereas, if in a country, there can found all the raw materials properly, then it can decrease the expenses during the production or servicing process (Dow et al., 2018).
Factor conditions
It is also an essential factor for international companies to control it properly in future. In this phase, it includes some conditions, such as political factors, government rules and taxes, economic status and others (Wu and Vahlne, 2020). It can impact on organizational culture, and it can reduce future incomes. Therefore, the management needs to be concerned about it.
After that discussion, it is shown that the Diamond model and the Uppsala model have delivered the same strategy and rules for the international businesses’. However, the main difference between these models is the Diamond model is comparatively more comfortable than the Uppsala model for controlling business activities and policies.
Identify and discuss two real-life examples.
There are two real-life companies, named Nordic School, which is following the Uppsala model and Tata consultancy in Sweden, which is supporting the Diamond model. After following this model, this organization and institution are properly controlled its business process even in the international market also.
In order to understand these models equally, then, Heckscher-Ohlin theory can be most appropriate to get better knowledge. This organizational theory is specially made for the international companies, and Eli Heckscher and Bertil Ohlin were made for analyzing comparative analyze during the global market. This theory is implemented by putting the above models in the same place. Therefore, this theory also delivers the same process as the Diamond model and the Uppsala model (Sun et al., 2019).
After analyzing the Uppsala model, the administration of the Nordic school controlling their business correctly. This school is a private school, and the CEO of this institution spread this institution in other countries for doing education-related business. Therefore, many consumers have interested to admit their child in this school, and it is also helpful for this school to generate more revenue compared to other educational institutions.
On the other hand, the management of Tata consultancy has applied the Diamond model for expanding its business (TCS, 2020). The headquarter of this company is established in India, but it now has grown in Sweden. By applying this model, this company now successfully compete with other companies in the international market and also generate better revenue than other organizations. After using this strategy or model, the manager of this company is now more concern about the government policies and taxes of Sweden, and now they have a better knowledge about the market demand.
After a discussion about this topic, it is clear that the meaning of the Diamond model and the Uppsala model is the same. Still, the Diamond model helps to provide a better understanding of the international market. Therefore, it can be said that the Uppsala model is a traditional model, where the Diamond model is a classic one (Steenkamp, 2020). By using the Diamond model, Tata consultancy of Sweden is now controlling its organizational activities better than the other companies, and this company is operated in 45 countries. In order to get better competitive advantages for international business, then the Diamond model can be more effective than the Uppsala model for controlling business activities properly.
Conclusion and Recommendation
In can be concluded that the Uppsala model is a traditional process where the Diamond model is a more advanced model. The Diamond model helps to gather more knowledge and provide a better understanding of the international business, where, the Uppsala model provides some problematic ways to understand business process and activities. Therefore, it can be said that the Uppsala model does not apply to today’s business environment because today’s market is more competitive. In that situation, a small mistake can make a big difference in the organizational process. Therefore, all the company needs to apply or follow the ways of the Diamond model to expand business in the international market.
From this study, it is more helpful to identify the difference and importance of the Diamond model and the Uppsala model for the international business. There are also some different alternatives of the Uppsala model, such as network theory and IET theory. However, in the Diamond model, it does not include any methods, but it added some essential steps that can help spread business internationally. From this study, it is also shown that the Heckscher-Ohlin theory is one of the most useful methods for an international company that is combined with the Diamond model and the Uppsala model.
Reference list
Afzal, M., Lawrey, R. and Gope, J., (2019). Understanding national innovation system (NIS) using porter’s diamond model (PDM) of competitiveness in ASEAN-05. Competitiveness Review: An International Business Journal. Available at https://www.emerald.com/insight/content/doi/10.1108/CR-12-2017-0088/full/html Accessed on 9.8.2020
Allen, H.J.H. and Kapodistrias, A., (2020). To what extent do informal institutions influence the business strategy of developed multinational enterprises in China?. Available at https://lup.lub.lu.se/student-papers/record/9019087/file/9019089.pdf Accessed on 9.8.2020
Ayanie, F.T., (2019). Internationalization Strategy, Entry Modes and Cultural Dimensions of Chinese Way of Doing Business in Europe. Available at http://www.academia.edu/download/60282154/5272-19320-1-PB20190813-91706-1udyqwc.pdf Accessed on 9.8.2020
Dow, D., Liesch, P. and Welch, L., (2018). Inertia and managerial intentionality: Extending the Uppsala model. Management International Review, 58(3), pp.465-493. Available at https://espace.library.uq.edu.au/view/UQ:723276/UQ723276_OA.pdf?dsi_version=d92b757729cf0d4138af36f02eb2f031 Accessed on 9.8.2020
Kharub, M. and Sharma, R., (2017). Comparative analyses of competitive advantage using Porter diamond model (the case of MSMEs in Himachal Pradesh). Competitiveness Review: An International Business Journal. Available at https://www.emerald.com/insight/content/doi/10.1108/CR-02-2016-0007/full/html Accessed on 9.8.2020
Steenkamp, J.B.E., 2020. Global Brand Building and Management in the Digital Age. Journal of International Marketing, 28(1), pp.13-27. https://journals.sagepub.com/doi/abs/10.1177/1069031X19894946
Sun, J., Yoo, S., Park, J. and Hayati, B., 2019. Indulgence versus restraint: The moderating role of cultural differences on the relationship between corporate social performance and corporate financial performance. Journal of Global Marketing, 32(2), pp.83-92. https://www.tandfonline.com/doi/abs/10.1080/08911762.2018.1464236
tcs (2020). Tata consultancy services. Available at https://www.top-employers.com/en-in/companyprofiles/se/tata-consultancy-services-sweden/#:~:text=Present%20in%20the%20Nordic%20region,)%2C%20servicing%20leading%20Nordic%20companies. Accessed on 9.8.2020
Vandevijvere, S., Jaacks, L.M., Monteiro, C.A., Moubarac, J.C., Girling‐Butcher, M., Lee, A.C., Pan, A., Bentham, J. and Swinburn, B., 2019. Global trends in ultraprocessed food and drink product sales and their association with adult body mass index trajectories. Obesity Reviews, 20, pp.10-19. https://onlinelibrary.wiley.com/doi/abs/10.1111/obr.12860
Wu, J. and Vahlne, J.E., (2020). Dynamic capabilities of emerging market multinational enterprises and the Uppsala model. Asian Business & Management, pp.1-25. Available at https://link.springer.com/article/10.1057/s41291-020-00111-5 Accessed on 9.8.2020
Appendices:
Appendix 1: The Uppsala model
(Source: Allen and Kapodistrias, 2020)
