9 investment . It then makes a subsequent resource commitment , perhaps buying out its local distributor or investing in a local manufacturing plant , which allows it to develop additional market knowledge . Gradually , and through several cycles of investment , the company develops the necessary levels of local capability and market knowledge to become an effective competitor in the foreign country .
Whereas many companies internationalize in the incremental approach depicted by the so called Uppsala model , a great many do not . Some companies invest in or acquire local partners to shortcut the process of building up local market knowledge . For example , Wal-Mart entered the United Kingdom by buying the supermarket chain ASDA rather than developing its own stores .
Others minimize their local presence by subcontracting to local partners . Amazon . com has a business in Canada without a single Canadian employee-it manages its website from the United States , and it fulfills orders through the Canadian postal service . Cases such as these highlight the complexity of the decisions multinational enterprises ( MNE ) face in entering a foreign market .
One important set of factors is the assimilation of local market knowledge by the subsidiary unit , a suggested by the Uppsala model . Other , equally important factors contribute to their Market Knowledge MNE ’ s will include its overall level of commitment to the foreign market in question ; they will carefully examine the required level of control of foreign operations , and the timing of its entry .
To help make sense of these different factors , it is useful to think of the different modes of operating overseas in terms of two factors : the level of market commitment made and the level of control needed . Some companies internationalize by gradually moving up the scale , from exporting through joint venturing to direct foreign investment . Others , like Wal-Mart , prefer to move straight to the high-commitmenthigh-control mode of operating , in part because they are entering mature markets in which it would be very difficult to build a business from nothing . Still others choose to adopt a low-commitment-Iow-control mode , such as exporting or subcontracting . For example , Amazon . com is able to make this approach work in Canada because it retains control of its website from the United States and has secured a reliable local partner for order fulfillment .
To be clear , none of these approaches is necessarily right or wrong , but they should be consistent with the overall strategic intentions and motivations of the MNE . It is also important to emphasize that some firms are “ born global ,” establishing significant international operations at or near their founding . Whether this is due to their International orientation , or the need to move quickly due to the nature of their product of services such firms do not take such an incremental approach .
Similarly not all MNEs are large firms . By definition , most large MNEs started out small . Yet many small and medium-sized enterprises ( SMEs ) retain such a size , while still ignoring the benefits of internationalization due to a fear of the risks involved in expanding into global markets . They need professional guidance- like what our firm offers- in the process of internationalization .