Internationalisation in a network based world

Abstract: The organisational forms of companies have undergone a transformation from a hierarchal structure towards a network based form. The network form has proven to be the best structure for the current competitive environment. With technological advancements in almost every area it has become almost impossible to produce everything “in-house” and still stay competitive. This has caused an increase in the degree of outsourcing parts of the value chain to suppliers. Therefore, the competition has now moved from between companies to between entire value chains. For a manufacturing company, with a large part of the value chain outsourced to suppliers the task of setting up production in a new market brings forth new questions such as: is it possible to move an entire value chain to a new country? The purpose of this thesis is to explore what factors influence the construction of a strategic network of suppliers of a manufacturing company when entering a new market. The purpose was divided into two research questions: How is the internationalisation process performed in a strategic network situation and what factors influence the construction of a supplier structure in a world based on networks? Three multinational companies with a large part of their value chain outsourced to suppliers were chosen for interviews: Ericsson, Scania and Volvo Truck Corporation. The internationalisation process of a manufacturing company is conducted as follows: the first step is the decision to enter a new market followed by a rather quick set up of a production plant. In this initial phase of the establishment, everything or almost everything is imported which is possible due to a global network of suppliers. The last step depends on the strategic objective with the establishment, either importing will continue or a complete organisation will be established in the country. A complete organisation is in this aspect when the company makes large investments inthe market and starts constructing a supplier network, surrounding sales and marketing functions. Factors influencing the internationalising process are: degree of networking, the type and structure of the network surrounding the company; level of knowledge, the accumulated experience of operating in foreign markets; type of market, the characteristics of the market and degree of commitment i.e. will an entire organisation be built up or will importing suffice.