INTERNATIONAL BUSINESS AND TRADE

Questions

1. What are the main characteristics of born global firms?

2. What drivers and causes of globalization have allowed born global firms such as Instagram to internationalize at or near their founding?

3. What advantages do you think a young company can gain by entering international markets soon after its founding?

REFERENCE:

THE EMERGENCE OF BORN GLOBAL FIRMS

Instagram is an online photo-sharing service founded in 2010 for use withsmartphones. Instagram's strategy was to enter many international markets quickly.Today, although it has only a few dozen employees, Instagram boasts millions ofconsumers and businesses worldwide as its customers constituting one of thelargest social networks on the Internet. Only about 12 percent of those users live inNorth America; the rest are scattered around the world. Virtual InstaMeets allowusers from Mumbai to Munich to take photos and share them. People want to sharephotos to depict their life experiences. Instagram's social feed, paired with easy-to use editing tools, allows anyone to create nd share their distinctive pictures. Itsadvanced technology coincides with a global shift to a more visual style ofcommunication. Instagram is one of a growing number of small and medium-sizedenterprises (SMEs) active in international business. SMEs make up the majority ofall firms in a typical country and often account for more than 50 percent of nationaleconomic activity.

In contrast to large Multi-National Enterprises (MNEs) that historically have dominated cross-border business, most SMEs have far fewer financial and human resources. International business was often beyond their reach. Globalization and recent technological advances have now made venturing abroad much less expensive. This has created a commercial environment in which many more small firms can participate in international business. Born global firms target a dozen or more countries within the first few years of launching the firm. Their agility and flexibility help them serve both foreign and domestic customers better.

Born globals internationalize early for various reasons, some specializing in a product category for which de- mand is universal. Geo Search (www.geosearch.co.jp) is a Japanese company that develops high-technology equipment to help engineers survey ground surfaces for cavities and build safe roads, airports, and underground utility lines. The firm developed a land-mine detector to find buried bombs and discovered a ready market in countries such as Afghanistan, Cambodia, and Libya. Smaller companies such as Instagram and Geo Search demonstrate that any firm of any size and resource base can participate actively in cross-border trade and investment. More companies undertake international business today than ever before.