ABSTRACT
Internationalization is an increasingly current topic in the area of business. Companies have increasing needs to go abroad in order to stay competitive, yet many Finnish companies have not taken this step. Out of those that have taken this action, many stay within the EU and Sweden for example. What are the reasons that Finnish companies do not explore the developing markets more? For example Nigeria is a growing market with plenty of opportunities.
There are several internationalization theories that attempt to explain the process and the reasons and considerations in the process. The Uppsala model suggests that companies tend to first explore the nearby markets and as the internationalization deepens, the company may then explore the further markets. The network theory states that companies are reliant on other companies’ resources and thus need to engage in networks. As the network expands, the company may internationalize to the markets that the network has connections to. Then again, the resource based view states that companies should first look for a promising market and then see how to use their resources to exploit it, instead of the opposite. Lastly, the non-availability and availability approach states that a country should import the goods that are not readily available in the country and exports those goods that are present in abundance.
Nigeria is a challenging market with various development issues at hand. Nevertheless, it is a booming consumer market with rapid economic growth providing plenty of opportunities in several sectors including construction, health care, education, agriculture etc. Sweden on the other hand is a well-developed and organized market with slow economic growth. Nevertheless, there are several lucrative markets due to the aging population and the electronic dependence. Such sectors include cyber security, e-health and green construction, automotive and power sectors.
The data collection was challenging due to the lack of commitment from the companies as well as the amount of potential companies that could be used for the study. The data collection form of structured email interviews was finally chosen due to the failure to engage companies in face to face interviews. The data limitations included the amount of collected data, interviewer as a collection instrument, the interview questions as well as the quality of the data collected. The most interesting findings were the lack of engagement from companies to consults expert services when considering internationalization as well as the underestimation of cultural barriers as challenges in the internationalization process.For further investigation and research the controlling of variables is recommended e.g. using companies that are directly comparable in sector. Also the research design could use more closed questions.
KEYWORDS:
Internationalization, Nigeria, Sweden, Barriers
TABLE OF CONTENTS
Abbreviations
Tables and figures
1 Introduction
1. 1 Research objectives and questions
1.2 Structure of the document
2 Literature review
2.1 Internationalization process and barriers to internationalization
2.2 Internationalization theories
2.2.1The Uppsala model
2.2.2 The Network theory
2.2.3 Dunning's eclectic paradigm
2.2.4 Resource based view
2.2.5 The availability and non-availability approach
2.3 Developed markets
2.4 Developing markets
3 Economic environment and market situation in Nigeria
3.1 Nigeria: country facts
3.2 Economic overview of Nigeria
3.4 Regulatory challenges and opportunities
3.3 Market situation and booming industries
3.4 Summary
4 Economic environment and market situation in Sweden
4.1 Sweden: country facts
4.2 Economic overview of Sweden
4.3 Regulatory Challenges and Opportunities
4.4 Market situation and sectors of opportunity
4.5 Summary
5 Research methodologies
5.1 Research design
5.2 Data collection
5.2.1 Primary data
5.2.2 Secondary data
5.2.3 Limitations to data collection
6 Analysis of results
7 Conclusion and implications
Bibliography
CHAPTER ONE
1 Introduction
In the recent years, internationalization and globalization have been and continue to be current issues in the world of business. An increasing amount of companies are taking the steps towards international operations. However, Finland still has a long way to go to increase competitiveness by internationalizing. According to the Statistics Finland, there were approximately 322 000 companies operating in Finland in 2012 (Statistics Finland, 2014). Another report states that 4900 Finnish companies had operations abroad in 2012 (Statistics Finland, 2014). This suggests that only 1, 5 % of Finnish companies operate abroad. Over 60% of the 4900 companies’ international operations take place within the EU and Europe and over 24 % in Asia, while Africa only counts for 0,9% of international operations (Statistics Finland, 2014). Furthermore, the statistics kept by the Finnish Customs appear to suggest that most of Finnish exports end up in Sweden, representing over 11% of total Finnish exports and Russia, representing 10% of total Finnish exports (Finnish Customs Statistics, 2012).
On the 6th of April 2014 BBC news announced that Nigeria had become the largest economy in Africa with a GDP of almost $510 billion, yet many still criticize the positivity of this announcement and want to remind the world of the problems in the country (BBC news, 2014). Nevertheless, Nigeria is emerging as a significant potential market. With a population of about 158 million, Nigeria presents a vast amount of opportunities for various types of companies. In addition, many economists have started to pay attention to the country, for example Jim O’Neill has brought up a concept of the “MINT” countries as the next “big thing” just as the BRIC countries have been during the past few years. The MINT countries comprehend Mexico, Indonesia, Nigeria and Turkey and the estimated growth in average income in all these countries is projected to “boom”. Nigeria is projected to grow from (USD thousands) 1,4 in 2012 to 12,6 in 2050. The country has been experiencing growth reaching 6-7% over the past few years (BBC News Magazine, 2014).
The Nigerian economy is emerging, which is visible in practice as well as theory. In fact, having visited Nigeria several times in the past few years I have taken note of the various business opportunities in the country. I also noted that there appears to be an increasing demand for quality goods as the consumers are becoming more educated. Furthermore, the top exports of the country include; machinery, pipes, welding equipment, wood, ships etc. which are all products that Finnish companies have
These facts mentioned previously about the importance of globalization, potential in the Nigerian market and the lack of Finnish presence in the country have led to the questions of why this is the case, if there is a good and fact based reason for this and whether anything can or even should be done about it.
1.1 Research objectives and questions
The foremost objective of this study is to investigate what are the reasons behind the lack of Finnish presence in Nigeria and abundance of presence in Sweden, i.e. to identify the barriers to internationalization. The research will put emphasis on separating the barriers that companies have in reality, i.e. the fact based barriers and the ones they perceive to have, i.e. the perceived barriers and to investigate the validity of these perceptions. A comparison shall be drawn between the barriers to Sweden as opposed to barriers to Nigeria.
The main goal of this research is to find out whether Finnish companies are lacking presence in Nigeria due to valid reasons and whether there is undiscovered potential for the Finnish companies to enter the Nigerian market if the perceived barriers can be demolished or at least lowered. This research should help companies that are looking into internationalization to recognize the basis on which they do their decisions. This recognition should in turn help companies identify alternative options in their internationalization process.
The research questions are divided into primary and secondary research questions. The primary research questions are ones that the study aims to answer foremost and the secondary research questions are ones that may be answered once the answers to the primary research questions have been unveiled.
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