Sjaak Brinkkemper Slinger Jansen Session 16

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Internationalization

Sjaak Brinkkemper Slinger Jansen

Course Product Software Session 16

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Agenda

Internationalization and Software export Theories on export

Uppsala model Business Network theory

Product Software Export Planning Method Export success factors Steps Case study and validation Conclusions

Discussion and questions

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Internationalization

Definition Internationalization is the process of increasing

involvement of enterprises in international operations.

In history the export of physical goods has always been there. Country specific goods Power play and tensions Taxation and regulations

What about exporting software?

What about offering an online software service?

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Software export from NL

7.7% ≈ 1.93 Beuro

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Agenda





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Theory: Uppsala model

The Uppsala model (Johanson and Vahlne, 1976) is a theory that explains how firms gradually intensify their activities in foreign markets

The key features: Firms first gain experience from the domestic market Then move to foreign markets; Where:

• firms start in culturally and/or geographically close countries • move gradually to culturally and geographically more distant

countries

What: • firms start by using traditional exports of product • move gradually to more intensive and demanding operation modes

(sales subsidiaries, local services, partners, etc.)

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Theory: Business Network Model (D’Cruz and Rugman (1992)

Selected Competitors

Flagship Firm

Key Suppliers

Key Customers

Non-Business Infrastructure

Network Partners Governments

Flow of Strategic Control Flow of Products and Services

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Business Network Theory

Selling in market of Platform leader RunBook add-on on SAP

Follow the customer USoft: UK office deal with Texaco UK US office to serve Texaco US, then sales starts

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Agenda





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Research project: Method for software export planning

Development of a planning method that supports strategic planning of product software export initiatives.

Identification of the areas of concern in exporting product software to new (geographical) markets

Joint work of Mari Pulkkinen, Johan Versendaal, Ronald Batenburg and Sjaak Brinkkemper

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Research trigger

Exporting is an opportunity for product software companies Limited home market Easy distribution

Not much research, except for Adaptation for local markets (financials, legal); Localization Distributed product development Release planning

Product software export is special No physical goods distribution Highly dynamic markets To serve multiple customers Cultural and country differences Making localizations is relatively easy

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Research approach

Literature research on success and fail factors of (software) export

Method construction

Case study application: Novo Cetec

Expert validation

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Export success factors

Product and market Product quality, after sales service, product development

process Customer needs, competitors, partners

Export execution Export documentation quality, customer communication,

smooth distribution Management and finance

Management commitment, skills and resources Marketing and distribution strategy, funding and customer

payments

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Software specific export success factors

Success factors for software export: Localization/ product adaptation to customers’ needs Obtaining market information Export finance Communication with customers

Relevant information about: Competitors and their products Customers (value chain and processes) Product suitability

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General export literature findings

Recommended steps to perform during export planning: Internal review External review Product review Objectives, strategies and action plans Export arrangements Finance

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PSEPM – Method overview

Step

1. Industry Trends

3. Customers external partners’

4. Customers’ operation

5. Product suitability

2. Competitors

Phase I: Country Analysis Techniques

Phase II: SDOT Analysis Techniques

Industry trend analysis, using: • Secondary data (e.g. Internet) • Survey (e.g. questionnaire) • Porter’s five forces model (Porter, 1985)

Similarities/ differences analysis and opportunities/ threats analysis, using: • Brainstorming • Weighting of importance • Porter’s five forces model

Value chain analysis, using: • Secondary data • Customer studies

(e.g. semi-structured interviews)

Process analysis, using: • Secondary data • Customer studies

Product analysis, using: • Offering analysis • Customer studies

Competitor analysis, using: • Secondary data • Survey

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1. Industry trends

Establish information on industry trends in foreign country based on Porter’s five forces model

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2. Competitors

Collect data on competitor performance

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3. Partners of customers

Investigate partner system of customers

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4. Customer’s operation

Describe the process of the customers

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5. Product suitability

Establish the suitability of the product in the foreign market

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Phase 2 – SDOT analysis

Similarities Differences Opportunities Threats

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Case study - Description

Product software company Solution for the health/home care sector Small sized company Based in Holland Export to Finland (has historical ties)

Plan of action Interviews Desk research Internet

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Case study – Similarities and differences

Both countries: Increasing rivalry among existing firms Medium threat of new entrants Low bargaining power of suppliers Most competitors are small Four competitors have 95% market share

Main differences: Buyer bargaining power (NL higher than FI) Tougher competition in NL More product differentiation and specialization in NL

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Case study – Opportunities and threats

Differentiation strategy in FI Demonstrate market knowledge Show rich functionality for niche Identify best requirements

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Expert validation

Six experts: (former) managers of product software companies

Interview questions: Complete? Time efficient? Executable? Easy to communicate?

Results, increase: Internal analysis Cultural environment analysis Financial analysis Entry strategy determination

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Conclusions

PSEPM is of use for: Product managers Project managers Partner managers Company board

PSEPM can be improved: Include stakeholder dynamics (e.g. due to regulations) Include internal, cultural, financial and entry stratagy analysis More case studies

PSEPM is dependent on correct and complete information retrieval

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Documents

Sjaak Brinkkemper Slinger Jansen Session 16