Globalizing internationals: business portfolio
and marketing strategies in the ICT field
P. Gabrielsson, M. Gabrielsson*
International Business, Helsinki School of Economics, P.O. Box 1210 (Lapuanankatu b),
FIN-00101 Helsinki, Finland
Abstract
The Information and Communication Technology (ICT) companies originating from small and
open economies (SMOPEC), such as Finland, face the tremendous challenge of moving from the
international to the global arena and developing global marketing strategies. Earlier studies have
merely recognized the phenomena and postulated preliminary assumptions about the behavior of
globalizing internationals. In the ICT field, all the major globalization drivers—be they changes in the
macro environment, industry globalization, or pressure for increased internal efficiency—point in only
one direction: globalize or die. Limited managerial and financial resources are often the challenge for
companies originating from small and open economies. The study received preliminary empirical
support from the ICT field that globalizing internationals select only one or at most a few of a large
number of unrelated international businesses for globalization. As globalization matures, they further
seek growth through related diversification. Implementation at the business unit level seems to require
a change in marketing strategies; both the broadness of the marketing offering and the degree of
standardization were found to evolve as globalization proceeds. At the beginning of the globalization
process, a more focused marketing strategy was selected, which was then broadened as globalization
proceeded. Moreover, the marketing strategy was increasingly standardized in respect to products, but
also to a certain extent for brands and channels. The article develops a framework and propositions that
are examined with the multiple case-study method. It also suggests further empirical testing with a
survey study. Finally, it draws both theoretical and managerial conclusions that are expected to be
particularly useful for ICT companies from SMOPEC countries, but interestingly also for the US
companies that are competing fiercely against globalizing internationals.
q 2004 Elsevier Ltd. All rights reserved.
Keywords: Globalizing internationals; Business portfolio; Marketing strategies
International Business Review 13 (2004) 661–684
www.elsevier.com/locate/ibusrev
0969-5931/$ - see front matter q 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.ibusrev.2004.10.001
* Corresponding author. Tel.: C358 9 431 38 670; fax: C358 9 431 38 880.
E-mail address: [email protected] (M. Gabrielsson).
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684662
1. Introduction
In the information and communication technology (ICT) industry, the pressure to
globalize existing international business is great. The information and communication
technology cluster consists of a large number of different companies, ranging
from manufacturers to service providers. The focus in this research is on the ICT
equipment manufacturers, including network infrastructure, mobile phones, and
component manufacturers. In these sectors, all the major globalization drivers—be they
changes in the macro environment, industry globalization or pressure for increased
internal efficiency—point in only one direction: globalize or die. Both huge benefits and
risks are involved (Yip, 1989).
As ‘globalizing international’ is a relatively new concept describing a particular
globalization approach, we will first define it. A globalizing international is a company
that has first internationalized its businesses within home continent after the domestic
period and only then started to globalize outside its home continent (Luostarinen &
Gabrielsson, 2002, pp. 5–6). Although, globalizing internationals account for only a rather
small proportion of the ICT companies, their importance for the SMOPEC from which
they often originate is huge. The term SMOPEC (small and open economy) refers to
countries like Finland or Sweden, Denmark, Norway, and Austria. Take for instance the
Finnish company Nokia, which in 10 years has developed from a European challenger into
a globally leading telecommunications terminal and infrastructure manufacturer with net
sales of over 31 billion euros in 2001, out of which over half is derived outside its home
continent of Europe from over 130 countries. The impact of Nokia on the Finnish economy
is huge, as it represents one-fifth of the Finnish economy’s total exports (Ali-Yrkko, Paija,
Reilly, & Yla-Anttila, 2000, p. 10). Or then the telecommunications infrastructure
manufacturer Ericsson, which is very important for the Swedish economy. Both of these
companies first developed several international businesses and then focused on
telecommunications in the 1990s. For academicians, practitioners and government
policy-makers it would be valuable to better understand the factors behind their
transformation from international to global status and whether another company from the
same or another country could possibly replicate their achievement. This understanding is
also expected to be useful for companies from larger countries, such as the USA, when
planning their strategies against globalizing internationals.
The internationalization process of companies has been widely studied (Johanson &
Vahlne, 1977; Luostarinen, 1979). The prevailing knowledge of internationalization as a
process focuses on firms in the early phases of internationalization (Melin, 1992, p. 104).
Research has also focused on both multinationals and existing global companies.
Recently, the globalization process of small and medium-sized companies in particular has
become of interest to researchers. Oviatt and McDougall (1994) have suggested that some
companies may be international from inception, without proceeding through the
conventional phases. These companies, which are often referred to as ‘born globals’
deviate from the ‘globalizing internationals’ examined here, which have first
internationalized their business and only then entered the globalization stage (Luostarinen
& Gabrielsson, 2002, pp. 5–6). Surprisingly, little research has been done on the
globalizing internationals, except for a few studies (see Gabrielsson & Gabrielsson,
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 663
2003a). Globalizing internationals need a well planned global strategy to be able to
leverage their potential fully. The managerial challenges to these companies are huge.
Although they may have adequate resources, they are often distributed between many
international business portfolios. The challenge lies in divesting many of the current
businesses, selecting the right businesses to be globalized, and then developing the
marketing programme to meet the new global customer requirements.
In the above discussion, one area where little research has been conducted was
identified. It can be stated in the form of the research problem as follows: How can
international ICT companies from small and open economies meet the huge globalization
challenge of moving from the international to the global arena and developing global
marketing strategies? After the research problem has been defined, the research questions
may be formulated as a partial solution to the research problem as follows: (1) How is the
business portfolio developing during globalization? (2) How do the marketing strategies
change while international ICT companies globalize?
The main objective of this research is to examine the development of corporate and
business level strategies during the transformation of the ICT companies from
international to global. The article focuses on the business portfolio selection, the level
of broadness of the marketing strategies (products, brands, channels), and their degree of
standardization for globalizing internationals in the ICT equipment-manufacturing field.
Pricing is not examined in this study, although it is an equally important marketing
parameter, because it was difficult to obtain the necessary empirical data. The paper first
develops a theoretical framework and propositions based on an analysis of existing
literature. Then it progresses to an empirical examination of Finnish ICT companies and
uses multiple case study methods to analyze them. Theoretical contributions, managerial
implications and future research suggestions will also be drawn.
2. Theoretical review section
2.1. International business development towards global
Many ICT companies originating from Finland and other SMOPEC countries have
internationalized their activities at an early stage and are now in the process of globalizing
or have recently globalized their company. During internationalization, these companies
often developed a diversified business portfolio. At that stage, the major concern was
related to the structure of their business portfolio. When globalization started at the end of
the 1980s and in the 1990s, these companies often selected one or a few strategic
businesses to be globalized (see Luostarinen, 2001, p. 33). Next, the theoretical literature
related to this development from international to global is reviewed.
The development of the internationalization process has been thoroughly examined by
Johanson and Vahlne (1977) and Luostarinen (1979) who depict it as a stepwise process
where companies proceed towards higher foreign market involvement. These models
describe the internationalization process as a gradual development taking place in specific
stages over a relatively long time. Moreover, they are similar in that they are based on the
theory of the growth of the firm (Penrose, 1959) and the behavioral theory of the firm
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684664
(Aharoni, 1966; Cyert & March, 1963). In addition, several researchers have focused on
the early stages of internationalization or specific industries (Bilkey & Tesar, 1977;
Cavusgil, 1984; Hansen, 1981; Johanson & Wiedersheim-Paul, 1975). However, due to
the focus on globalizing internationals these early models will not be discussed further in
this work.
There has also been presented criticism of the stepwise orderly development of
internationalization (Andersen, 1993; Leonidou & Katsikeas, 1996; Turnbull, 1987). In
this context it is important to distinguish between target country level and company level
internationalization pattern. The company level can be seen as a sum of the target country
patterns. The evidence from the SMOPEC countries demonstrates that at the company
level the mainstream pattern of internationalization can be found (see e.g. Luostarinen,
1979). However, it can be questioned whether the target country pattern is similar in each
country as companies do learn from operations in other countries (see e.g. Andersen, 1993,
pp. 220–223).
The globalization process, however, has been studied less. A pioneer in reviewing the
development of different kind of MNCs was Perlmutter (1969), who argued that the
management attitudes or orientation toward foreign country operations are crucial. Bartlett
and Ghoshal (1987) have found that multinational companies face a need for new
multidimensional strategic capabilities and suggested that many companies in the ICT
field seek simultaneous global efficiency, national responsiveness, and worldwide
learning. Yip (1989, pp. 29–30) has argued that globalization proceeds in three stages,
which are development of the core strategy, internationalization of the strategy, and
globalization of the strategy. Also, Craig and Douglas (1996) have found that global
market expansion develops in three phases in addition to the domestic phase; these are
initial market entry, local market expansion, and global rationalization. When examining
the development of globalizing internationals this latter model becomes particularly
suitable. However, in order to avoid negative associations with the word ‘global
rationalization’, we prefer to use the word ‘global alignment’.
The process starts with the international market entry phase (1), in which the
company’s strategic thrust is to expand geographically to the international markets to
achieve scale advantages. In the following phase (2), which is called the international
market penetration stage, the company starts to look for new growth potential and
expansion in countries where a base has already been established. The idea is to build on
existing structure and assets established in each market to achieve scope advantages by
spreading administrative overheads (Douglas & Craig, 1989, pp. 51–55). Product lines and
variants may be developed to meet local market requirements and marketing strategies
may be adapted to the local environment. This also enables penetration into new customer
segments that were not reached earlier.
The global alignment phase (3) is characterized by the adoption of a global orientation
in strategy development and implementation. Global expansion and worldwide integration
become a key principle in strategy formulation. Attention focuses on global efficiency
without losing local responsiveness. The strategic thrust of the company is to find
synergies from operating on a global scale and to take maximum advantage of the
multinational nature of its operations. Global alignment includes improving efficiency in
its worldwide operations and also developing a global strategy that identifies the market
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 665
segments and customers to be targeted in world markets. Opportunities in identifying
segments that are regional or even global become interesting (Douglas & Craig, 1989,
pp. 55–57). The global strategy offers an opportunity to serve better these selected
customers and to further utilize scope advantages in extending the product offering into
higher value-added activities and to leverage both global brands and channels more
effectively (Yip, 1989, pp. 32–34).
The conversion of a business from international to global takes place in several stages
and a distinctive strategy is applied in each stage. It is important to understand the relation
between geographical market expansion towards global (see Ayal & Zif, 1979;
Luostarinen, 2001) and the above-described phases of global market development
strategies (Douglas & Craig, 1989). The measures based on geographical market
expansion have been found particularly useful in studies conducted in Finland and other
SMOPEC countries. Hereby, globalizing internationals, often established before 1985, can
be considered global when over 50% of their sales are derived outside their home
continent from many foreign countries (Luostarinen & Gabrielsson, 2002, pp. 5–6). These
measures can always be criticized for being too simplistic. However, this is also their
strength when we used them merely for selection of the case companies and not for
purposes of case comparison or performance measurement. See Fig. 1.
2.2. Development of the marketing offering scope
The globalizing internationals need to consider the implications of globalization for the
scope of their specific marketing mix strategies, for instance their product, channel and
branding strategies. It seems obvious that these strategies are under pressure to change for
at least two reasons. First, as the ICT companies in their international phase have entered
and penetrated their target markets, both geographically and with respect to customer
segments (Ayal & Zif, 1979), in the global phase they need to turn their attention to
achievement of global integration benefits across countries (Yip, 1989). Second, as their
Fig. 1. Stages in the globalization of ICT companies. Source: Gabrielsson, 2004, p. 21.
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684666
product portfolio is under considerable pressure to change from many international
businesses toward those selected for globalization, the product development and
marketing resources need to be reallocated. We will therefore turn later in this article to
an examination of the proposed change in the narrowness or broadness of the marketing
scope (Porter, 1985, pp. 53–55), with particular focus on the number of products and
brands offered and channels used.
The research related to use of narrow versus broad scope in marketing strategies has
been relatively limited (see e.g. Porter, 1985, pp. 53–55). It has mainly centered on the
concept of using simultaneously different product strategies (Gabrielsson, 2004, p. 49),
branding strategies (Chen & Paliwoda, 2002) or channel strategies (Gabrielsson,
Kirpalani, & Luostarinen, 2002). This has brought important results indicating that the
multiple use of strategies usually increases during internationalization. In these earlier
studies, standardized and adapted products have been found to co-exist, corporate and
product brands have been combined to reinforce each other, and direct and indirect
channels have been used in parallel. Moreover, it is important to understand the broadness
of product assortment, brand architecture, and channel coverage.
2.3. Standardization versus adaptation debate
The debate concerning whether to standardize or to adapt the product and marketing
mix elements has gone on for a long time and does not seem to be close to any conclusive
theory or practice. The earlier work goes back to the 1960s when Buzzell (1968) studied
the standardization of international marketing strategies and the obstacles associated with
them and Keegan (1969) the product and communication strategy. Most of the articles that
have appeared since 1960 have been of a purely theoretical nature and empirical evidence
is rare except for a few works, mainly on MNCs operating in developing countries (see,
e.g. Boddewyn, Soehl, & Picard, 1986; Chang, 1995; Hill & Still, 1984; Ozsomer, Bodur,
& Cavusgil, 1991) and studies focusing on consumer preferences and segmentation (see,
e.g. Keillor, Hausknecht, & Parker, 2001; Verhage, Dahringer, & Cundiff, 1989).
Also, the issue of whether standardization is feasible still seems to be unresolved. The
most far-reaching interpretations have been presented by Levitt (1983), who has argued
that emerging global markets provide opportunities to market standardized products
across the globe, ignoring regional or national differences. Although increased use of
especially product standardization has been supported in the literature (Boddewyn et al.,
1986; Ozsomer et al., 1991; Sorenson & Wiechmann, 1975; Walters, 1986; Whitelock &
Pimblett, 1997), the empirical evidence is scarce except for a few studies mainly on MNCs
(Sorenson & Wiechmann, 1975). The proponents of the adapted approach to global
marketing contend that as customer and institutional characteristics differ significantly by
area, some geographic adjustment is needed for successful competition (Simmonds,
1985). An important distinction should be made between standardization of marketing
programs, emphasized by earlier literature, and standardization of managerial processes,
put forward by some more recent studies. The focus in process standardization is on the
marketing philosophy, principles, and technology applied in the planning and preparing
of marketing programs. The conclusion in many of the studies is that it is far
easier to standardize the marketing planning process than the content of the program
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 667
(Walters, 1986). Recent studies on large companies have indicated that standardization of
marketing strategies may have performance implications (Zou & Cavusgil, 2002), which
therefore increase the importance of this dimension.
3. Theoretical framework and propositions explaining business portfolioand marketing strategies
We now turn our attention to examine what factors affect global product and marketing
strategies when an ICT Company globalizes its activities. This is triggered by a number of
drivers that cause the company to change its strategies on corporate, business and
functional levels. In Fig. 2, we present a framework explaining the development of
business portfolios and marketing strategies.
3.1. Macro environment and ICT industry-related globalization drivers
A number of macro and industry environment-related factors are driving the ICT
companies to globalize. The small size, openness and peripheric location of the domestic
market is expected to push Finnish and other companies originating in SMOPEC to
globalize their business. On the other hand, the large size and openness of the global target
markets appear to pull companies to globalize their activities (Luostarinen, Korhonen,
Pelkonen, & Jokinen, 1994, p. 14). The large global target markets are especially
important for the ICT companies. Due to the often-high R&D costs, it is of the utmost
importance to spread these over a large number of markets, as the home continent is
increasingly too small and companies need to market the products globally on all
continents (see also Govindarajan & Gupta, 2000, pp. 277–279). The ongoing global trade
liberation and regional integration into different trading blocks around the world
is expected to further decrease trade and investment-related restrictions (Doz, 1991,
pp. 18–23; Yip, 1989, p. 38). Moreover, technological advances are expected to drive
globalization (Levitt, 1983, p. 92).
Fig. 2. Conceptual framework. Source: Adapted from Gabrielsson, 2004, p. 124.
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684668
In the high technology industry in general and in the ICT companies in particular, it
may be assumed that the globalization drivers are especially strong for a number of
reasons. Firstly, the market need is becoming more similar across countries, and global or
at least regional customers and channels are often present (see also Alahuhta, 1990,
pp. 9–19). Secondly, in high technology and in the ICT field in particular, competition is
very intense and companies often operate on a worldwide scale. Thirdly, the increasing
technical standardization in the industry speeds up the globalization process in the
telecommunications industry (Haikio, 2001, pp. 72–73). Moreover, the latest development
in the ICT industry has meant that global competition has increased both vertically and
horizontally. This has increased the importance of co-operation in the horizontal direction
(see Gabrielsson & Gabrielsson, 2003b, p. 131).
The Finnish globalizing internationals have often first internationalized within the
European market. It was only in the late 1980s and particularly in the 1990s, that the macro
and ICT industry started to change and the globalization drivers forced them to focus their
business portfolio and make their marketing strategies increasingly global.
3.2. The global strategic levers and resources
Strategic levers can be identified as the source of competitive advantage in the global
market. Douglas and Craig (1989) introduce economies of scale, economies of scope and
synergies as important levers.
In the international entry stage, economy of scale is an important source of competitive
advantage. A company often leverages its domestic production base and in this way
reduces average unit costs thanks to increasing production volumes. When the company is
in the international penetration stage, it expands within the selected geographic markets
through an adaptive product and marketing strategy and by introducing new product lines.
The emphasis shifts at this stage to achieving economies of scope by leveraging the
established contacts and knowledge of local markets. New products can often be
introduced via the same sales channels, thereby bringing huge cost benefits (Douglas &
Craig, 1989, pp. 51–55).
In the global alignment phase, the company starts to co-ordinate and rationalize its
operations on a global basis to achieve benefits from synergies. Skills or assets that are
transferable, such as management competence, brands, and product knowledge, may be
leveraged globally (Douglas & Craig, 1989, pp. 55–57). Global and regional level of co-
ordination of product- and marketing-related requirements becomes important. These
competencies and processes may bring a more sustainable competitive advantage
than market-related advantages like economies of scale and/or scope. Recent
findings, however, indicate that process and competence-related advantages are also
vulnerable and may result in obsolete knowledge due to change in the underlining factors
(Christensen, 2001).
Improved co-ordination and a more integrated product and marketing strategy will
often lead to economies of scale. Centralized product development, production, and
marketing will eliminate duplication and increase efficiency. In ICT companies,
investment on R&D and product development is often high and it is therefore extremely
important to spread the development cost over the maximum volume of sales from global
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 669
markets. From the product point of view, this often means decreasing the number of
product lines and country variants. Hence, limited resources can be put into developing
key products. Global brand dominance has been seen as especially important in fighting
global competition. Also, it has often been found that the cost advantages are less durable
compared to the brand and distribution advantages (Hamel & Prahalad, 1985).
The resources and capabilities are also expected to affect global marketing strategies
(see, e.g. Wernerfelt, 1984). For example, it may be assumed that companies with
resources related to global product development skills, modular product platform
understanding, mass manufacturing capabilities, and global co-ordination capabilities of
different national product requirements will select a highly standardized product strategy
when justified by the external environment.
3.3. Corporate and business level strategies
An international ICT company needs to answer the following questions on corporate
level in the context of determining its globalization strategy: What businesses to select for
global market expansion? How diversified/related should the business portfolio be during
globalization?
Earlier research has developed the dimensions of corporate strategy (Ansoff, 1987, pp
109–110) and strategic alternatives for global companies (Luostarinen, 2001, p. 33). Based
on this research, the following business portfolio strategies for globalizing internationals
may be proposed: (1) Global Focus Strategy; global geographical expansion in a single or
dominant business area with current product technology and market segment, (2) Global-
Related Diversification Strategy; (2a) Global geographical expansion in a related market
segment but with a new product technology and (2b) Global geographical expansion in a
related product technology area but offering this to new market segment(s), (3) Global
Unrelated Diversification Strategy; Global geographical expansion to unrelated market
segments and utilizing unrelated product technology.
Geographical market expansion outside the home continent changes the way ICT
companies plan their marketing strategies at the business unit level. In addition to home
continent, they must also take into consideration the requirements of the global markets.
Most of the sales come from outside the home continent at the global stage, and therefore
cannot be ignored. Another important aspect to consider is the phase of global market
development. The strategic thrust in the international market entry and penetration stages
is to adapt the offering to the local country demands, while the focus shifts in the global
alignment phase to seeking global integration benefits, while satisfying minimum local
market requirements.
3.4. Propositions development
Having first examined the macro environment and ICT industry globalization drivers,
the strategic levers and resources, and the corporate and business level strategies of the
ICT companies originating from SMOPEC countries, it is time to examine the evolution of
the business portfolios and marketing strategies closer and postulate propositions
regarding development during globalization.
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684670
In the framework, three strategies for globalizing internationals on the corporate level
were developed: the global focus strategy, the global-related diversification strategy,
and the global-unrelated diversification strategy (see Ansoff, 1987, pp. 109–110;
Luostarinen, 2001, pp. 33). The business portfolio is expected to develop during
globalization in the ICT companies. It may be assumed that a global-unrelated
diversification strategy (alternative 3) as a growth strategy is difficult for ICT companies
from SMOPECs to pursue, as resources, be they financial or managerial, are often limited.
Also, the global-related diversification strategy (alternative 2) demands considerable
financial and managerial resources, yet less than alternative 3. Moreover, a recent study of
20 large Swedish multinational companies found a strong pattern of product focusing in
the process of diversifying into a large number of markets (Bengtsson, 2000). Hence, it
may be assumed that ICT companies will select a global focus strategy (alternative 1) as
the primary corporate level globalization strategy. The product businesses requiring low
adaptation and having high-expected benefits from globalization are the most attractive
product businesses to be initially globalized (Gupta & Govindarajan, 2000, pp. 46–47).
However, as growth slows down in the ICT industry, global-related diversification is most
likely to be used increasingly to sustain growth. The following proposition may be
postulated (see also Luostarinen, 2001, p. 33).
Proposition 1. Globalizing internationals select one or a few from a large number of
unrelated international businesses for globalization. As the globalization matures, they
often seek further growth through related diversification.
The scope of the marketing offering is expected to develop during globalization in the
strategic business units selected for globalization. Next, development of the scope will be
examined for product, brand, and channel strategies. The marketing literature provides us
with a good framework for closer examination of the scope of the product strategy. Kotler
(1984, p. 471) has introduced two concepts that are of importance for this study when
describing the broadness of product strategies: (A) the width of product assortment (or
number of product lines) and (B) the length of product lines (or number of product items in
a line). The international ICT companies can be expected to first broaden the total number
of their products as they penetrate the markets in the international stage and then focus on
selected products as they enter the global alignment stage (Douglas & Craig, 1989,
pp. 54–57). However, as globalization matures, it is expected that a broader related
product assortment will be developed (Gabrielsson, 2004, p. 312).
Turning to the scope of branding, Aaker and Joachimsthaler (2001) have suggested that
there are basically two alternatives for global branding: a house of brands or then a
branded house. In a house of brands an independent set of product brands are used, each
maximizing the impact on the market. In contrast, in a branded house alternative, a single
master brand is used to span a set of offerings. In addition, descriptive sub-brands may be
used to offer some flexibility to market requirements. International ICT companies may be
expected to increase the number of brands during the entry and penetration stage and then
coordinate the branding strategy when entering the globalization stage more tightly
(Douglas & Craig, 1989). In the mature phase of globalization they can again be expected
to start broadening their branding scope, as resource constraints are withdrawn. Further,
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 671
they are expected to continue strengthening their brand recognition and to introduce sub-
brands under their master brands if product–market diversity so requires.
The scope of the channel strategies may be mapped by the broadness of different channel
strategies, e.g. direct and indirect, and sub-alternatives: direct personal selling, direct
e-commerce, indirect distributors, resellers and retailers. However, the intensity/ selectivity
(or channel depth) of the number of outlets per each channel type should be also considered
(Mallen, 1977, pp. 71–87). In dynamic markets, such as ICT, usage of multiple channel
alternatives may be called for (Anderson, Day, & Rangan, 1997, pp. 63–67). It can be
expected that international ICT companies when entering and in particular penetrating
target countries’ customer segments increase their channel coverage by both broadening
their channel strategies to include multiple ones, for instance, indirect and direct channel
strategies, and also by intensifying their channel coverage by increasing the different sub-
types and number of channel outlets used (see also Gabrielsson et al., 2002, pp. 76–78).
While, in the early part of the global alignment stage due to resource constraints, they need
to focus on selected channel types that provide fast geographic expansion. Hence, it is easier
for the manufacturer to have completely satisfactory relationships with a few middlemen
than with many in a given area (Mallen, 1977, p. 83). It is expected that during the maturing
of the global phase a broader channel coverage is called for in order to sustain growth. At an
earlier stage, this increase in channel intensity could harm channel goodwill, but when the
manufacturer gains global power and brand recognition along with general growth of the
market size, this becomes a minor concern (see e.g. Gabrielsson et al., 2002, pp. 81, 88).
The examination of the scope of the marketing strategy may be summarized as follows.
In the international phase, the ICT companies often develop a diversified marketing
offering. When starting globalization, the companies are expected to select a
focused/narrow product assortment, and then later develop a broader product assortment,
broader channel coverage and broader brand architecture as globalization matures. The
following proposition may be stipulated.
Proposition 2. Globalizing internationals will develop from a diversified marketing
offering in the international stage to a focused marketing offering when starting
globalization and then develop a broader marketing offering (product assortment, brand
architecture and channel coverage) towards the global stage.
We now turn to an examination of the influence of the globalization of ICT companies
on marketing strategy standardization. In the international penetration stage, the
globalizing internationals penetrate deeper into the existing international market base
by utilizing adaptive product and marketing programs and developing country-specific
product lines and variants. Hence, they achieve considerable economies of scope by
leveraging existing customer and country-related capabilities. Also, the process
standardization is relatively low, as specialized processes are needed to meet the
country-specific product and customer requirements. On the other hand, in the global
alignment stage the marketing programs are coordinated on a global or regional scale and
global segments are addressed with standardized products, brands and channels.
Furthermore, the product management processes, brand, and channel management
processes are standardized and yield considerable global benefits (Gabrielsson &
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684672
Gabrielsson, 2003a). This is expected to be the case with many companies in the ICT-field
originating from a SMOPEC.
The globalizing internationals may standardize the product to some extent at all of the
product levels: core benefit of the product or service, tangible product and augmented
product (Kotler, 1984, pp. 462–464). In the ICT area, the core product benefit includes
issues like performance, technology, and the main functional features. These kinds of
benefits are standardized in a high technology area by developing a common product
platform that is then adapted to market requirements through modularity and interchange-
ability of certain parts. The importance of understanding the product platform level
strategies in the high technology area has been emphasized by many authors (McGrath,
1995, p. 39; Sawhney, 1998). The tangible product is what the customer sees and
experiences, including hardware, software, features, design, packaging, and brand label.
The tangible product is often increasingly standardized in many ICT companies. This is
common in for example electronic component manufacturers. Moreover, the augmented
product includes warranty, delivery, installation and other services that may also offer
opportunities for standardization. It is rare that all these levels are standardized, but due to
the free movement of goods and travel, there is, for example, considerable pressure to
standardize warranty terms. Also, the product management processes may be standardized
(Gabrielsson & Gabrielsson, 2003a, p. 114). We may identify a number of different product
management processes that may benefit from standardization in globalizing internationals,
including for instance, customer input for new product requirements, the interlinked R&D
centers and their product development process, the product launch process and product
positioning processes (see e.g. Yip, 1992, pp. 85–88, 122–125).
Branding strategy is a key element for globalizing internationals and an essential part of
communication. Keegan (1969) suggests that standardization of the communication
decision is related to the similarity of the need satisfied. We may identify the following
approaches for the globalizing international. First, when the product need is similar in both
the domestic and international markets, standardization of the content of the
communication is a feasible alternative. Second, if the product function or need satisfied
differs, adaptations to the communication will be required. Thirdly, if the conditions of
product use also differ, then the product itself may have to be adapted. In the international
penetration stage, the company adapts communication and the brand to the market to
expand effectively to local markets (Douglas & Craig, 1989, pp. 51–55). As the ICT
Company starts to globalize its operations, it may often find that it has to rationalize its
brand portfolio consisting of multi-domestic brands and develop or expand the selected
strong international brands into global ones (Gabrielsson & Gabrielsson, 2003a,
pp. 111–112). Also, the standardization of the brand management processes across
countries, regions, or the whole globe should be considered. This would allow for the
globalizing company to benefit from brand management systems or brand leadership
(Aaker & Joachimsthaler, 1999) when the local circumstances require adaptation to
respond to individual needs.
The channel strategy is important for globalizing companies. It has also been regarded as
one of the most difficult marketing mix elements to standardize. Earlier research has found
the division into channel design (content) and management (process) useful in dealing with
this aspect (Rosenbloom, Larsen, & Mehta, 1997, p. 53–56). The following conditions offer
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 673
opportunities for standardization. First, when the distribution functions performed are
similar across countries the channel design can be standardized. Second, when the business
culture is similar, standardization of channel management processes is feasible. The
management processes offer more opportunities for standardization than channel design
alone (Rosenbloom et al., 1997, pp. 53–54). To conclude, the globalizing internationals may
harmonize the channel programs across markets and respond to the increase in global
distributors and resellers. This usually includes channel member selection procedure, terms
and conditions and global management of large chains or customers. On the basis of the
above examination, the following proposition may be developed.
Proposition 3. Globalizing internationals evolve within the strategic business unit from
utilizing adaptive marketing (product, brand, channel) strategies in the international stage
towards highly standardized strategies as they globalize.
We will next turn to the empirical analysis and examination of the above three
propositions with respect to selected Finnish ICT companies that fulfilled the criteria set,
that is first developing into an international company before eventually globalizing their
activities.
4. Empirical research, data gathering and analysis
4.1. Research methodology
To examine the above-developed propositions, case research methodology was
selected. The overall research process utilizes many of the techniques of multiple case
study design, data collection and analysis proposed by Yin (1994). However, it also uses
principles presented by Eisenhardt (1989) regarding the process of building theories from
case study research, the techniques used in processual analysis (Pettigrew, 1997), and
snow ball sampling (Patton, 2002, p. 237).
The following four Finnish ICT equipment companies were selected for this study:
Nokia Mobile Phones (NMP), Nokia Networks (NET), Salcomp and Tecnomen.
Altogether 14 interviewees participated in the study, so that 3–4 executives were
interviewed from each case company, most of them several times during the years 2002–
2003. Typically, the interviewees were CEOs, managing directors or senior vice presidents
of marketing, and the interviews lasted from two to four hours. One of the case companies
(NMP) globalized starting from the mid 1980s, before the others. In contrast, the other
three cases (NET, Tecnomen, Salcomp) globalized during the 1990s and at the beginning
of the current century. In Table 1, the selected case companies are presented together with
some key criteria for the selection.
4.2. Case description and analysis
4.2.1. Corporate strategies of globalizing internationals
The corporate strategies and their development during globalization will next be
examined. NMP and NET case companies both belong to Nokia Group, the business
Table 1
Case companies and selection criteria
Company/
strategic
business unit
Field Established Globalization
degree% in
2001a
Nokia Mobile
Phones
End user terminals
manufacturer
Nokia established in 1885. Terminal
production started in 1963
52b
Nokia
Networks
Telecommunication
infrastructure
manufacturer
Nokia established in 1885. First telecom
equipment deals in 1965
49c
Salcomp Mobile charger
manufacturer
Salcomp established in 1973. Manufacturing
of power supplies started in 1982
68
Tecnomen Telecommunication
systems manufacturer
Kyro established 130 years ago. Tecnomen
established in 1978 and became part of Kyro in
the mid 1980s. In 2001 Tecnomen demerged
52
Source. Annual reports and information provided by case companies.a The globalization degree is the share of sales outside home continent.b The actual globalization degree is bigger for NMP because European sales also include sales in Africa and the
Middle East in Nokia’s annual reporting.c The actual globalization degree is bigger because European sales also include sales in Africa and Middle East
in Nokia’s annual reporting.
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684674
portfolio selections of which are next examined. Nokia Group had 12 unrelated businesses
in 1989 including consumer electronics, cables, machinery, electrical wholesale, rubber,
chemicals, paper, power, floorings, information systems, mobile phones, and telecommu-
nications. The strategy had been to grow aggressively in European markets through
business diversification, which was believed to offer protection against economic
fluctuations. By the end of the 1980s, the company was struggling to maintain growth in
these areas and was highly resource-constrained. It decided to focus on the
telecommunication area as this was seen as an attractive segment due to its global growth
potential. The vision stated by the CEO and President Jorma Ollila in 1992 included four
elements: telecom, global, focused, and high added value. The non-core businesses not in
line with this vision were divested from its business portfolio during the 1990s. The Nokia
Mobile Phones and Nokia Networks were selected for global expansion. Towards the end
of the 1990s, it established the Nokia venture organization, which was to diversify into
related fields within the mobile communication area. Recently, Nokia established two new
strategic business units called the Nokia Enterprise Solutions Group that focuses on
corporate solutions and the Multimedia Group that will focus on bringing multimedia to
consumers. This can be seen as further diversification into related fields.
The Salcomp case company was established in 1973 by Salora. Later, in the early
1980s, Nokia acquired Salora including Salcomp. Salora consisted of a number of business
fields including TVs, monitors, TV/satellite receiver components, power supplies, and
chargers. All these businesses had entered international markets. As Salcomp started to
globalize, the other businesses were sold or discontinued. As Nokia focused on
telecommunication, Salcomp was then further divested from Nokia and it became part
of a private equity group, EQT in Sweden. EQT holds more than 20 companies in a variety
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 675
of industries, such as telecommunications, engineering, medical devices, service
outsourcing, and technology and consumer products.
Tecnomen was established in 1978 and it became part of Kyro Corporation in the mid
1980s through acquisition. When internationalizing Kyro had diversified to a number of
unrelated fields, including paper and board, sawmill operations, energy production, safety
glass machines, tempered glass, and telecommunications (Tecnomen). It decided on a
focused strategy in the mid 1990s and first divested the paper-related businesses. Later,
towards the end of 1990s and early in this decade, Kyro narrowed its focus to safety glass
machines and divested all but the safety glass and power businesses from its portfolio. In
this process, Tecnomen was also separated from Kyro Corporation in 2001, when it
became an independent company listed on the Helsinki Stock exchange.
Based on the above case descriptions and examination of the corporate level portfolio
strategies, we now turn our attention to Proposition 1 (presented in Section 3.4). Indeed,
globalization required focusing on one or a few strategic business units that had the highest
global growth potential. Also, it could be seen that in the mature stage of globalization, the
companies also started to seek global growth through related diversification. It can be
concluded that Proposition 1 was supported. This was especially evident for Nokia Mobile
Phones and Nokia Networks. An interesting additional finding was that the divested
strategic business units, such as Salcomp, also developed into global businesses under new
ownership. So also did our fourth case company Tecnomen after its divestment from Kyro.
Also, early signs of efforts by them to seek further growth through diversification into
closely related fields were noted.
4.2.2. Development of the marketing scope
The development of the scope of the product, brand, and channel strategies during their
globalization will next be described.
NMP had a number of separate terminal product lines targeted at different standards in
the world and it also produced network equipments, private mobile radio systems, and
pagers. At the end of 1980s, NMP focused entirely on terminal manufacturing and the
unrelated lines were transferred to NET. Moreover, in the early 1990s, the terminal-related
product lines were brought together under centralized functional management. As the
company globalized further, the number of product lines was increased and the scope
broadened, first from business users to consumers and then in the late 1990s from voice
centric telephony to new areas like games, music, and imaging. In addition to own brands,
NMP was a private label and OEM manufacturer 10 years ago. For example, in 1993,
NMP still sold the phones under Nokia, Technophone, Mobira, and numerous Original
Equipment Manufacturer (OEM) brands. To increase brand recognition, Nokia decided to
focus on a single branding strategy, Nokia. Now Nokia is among the leading brands in the
world. Lately, Nokia has introduced a luxury brand called Versus, which is targeted to rich
persons. NMP has used indirect sales channels from the beginning. Due to the fast growth,
it would not have been possible to build a sales channel to consumers of their own. NMP’s
direct customers are operators and distributors that then sell the product further to point of
sales outlets. The first such channel members were the telecommunications specialists.
Later, consumer electronic chains and mass retailers have also started to sell the products
to end-users. Although NMP does not own or directly participate in sales to the end users,
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684676
they actively support the point of sales by providing support to the retail outlets. According
to the executives interviewed the big change in channel development is the widening of
channel coverage during globalization. NMP has achieved a wide coverage in all the major
retailers, including telecommunications specialists, consumer electronics shops, mass
retailers, and car radio/office equipment shops.
NET’s global entry was made by focusing on the GSM standard in the early 1990s and
providing core elements for these systems such as switches, base stations, and
transmission equipment. As it globalized, it gradually expanded from conventional
network-infrastructure-related product lines to providing packet data networks, appli-
cation servers, multimedia platforms, content machines, and service-enabling equipment,
to mention only a few areas. NET has also used the Nokia brand during globalization,
although it has mainly been the responsibility of NMP to build the brand. As stated by an
executive in an interview: ‘The Nokia brand is a tremendous strength when selling
infrastructure in 2003 compared with the situation in the early 1990s when such a brand
was not established.’ NET sells the infrastructure equipment directly to operators. The
consolidation and globalization development of NET’s customers is a big change. There
have emerged 3–5 major operators that operate on a global scale. The direct channel was
used until recently when a dual channels strategy was introduced, in which for example
wireless LAN products are sold indirectly while other core products are sold directly.
Also, ‘hybrid channels’ are used in some cases in which the sales promotion is direct, but
delivery is handled by a local partner in the country (see Gabrielsson et al., 2002, p. 78).
Also, Salcomp had a large number of product lines at the end of the 1980s, ranging from
power supplies for industrial solutions to office solutions, mobile phone chargers, and
different types of subcontracting. It focused on switch mode mobile phone chargers and
entered the global markets with these. Later, in the globalization process, it expanded first
to linear chargers and then also to other personal handheld device chargers. Salcomp has
used the Salcomp name all the time in the type label of the products, but accepts the brands
of mobile phone manufacturers on the plastic housing of the chargers. Over the years, the
Salcomp brand has developed into a well-known brand for their customers, i.e. mobile
phone manufacturers. In the early days, Salcomp used indirect channels to deliver its
products to international markets. Later, when expanding to the global markets, the switch
mode chargers were sold directly to mobile telephone manufacturers. This customer base
has developed gradually from one mobile phone manufacturer to include almost all
leading mobile phone manufacturers in the world. Recently, the customer base has also
been widened by targeting other personal handheld device manufactures (cordless
telephones, handheld computers, shavers).
Tecnomen had a number of product lines at the end of the 1980s in telecommunica-
tions, industrial automation, and data collection systems. It decided to focus on
telecommunication in the early 1990s and then gradually expanded the number of
product lines to five when globalization intensified. Tecnomen has consistently used the
same brand, Tecnomen, for its customers. It has also developed sub-brands for services
such as voice zone, mail zone, fun zone and time zone. This approach was implemented
when the numbers of products increased at the end of the 1990s. In end user interfaces,
Tecnomen’s brand is not visible as these are branded according to operator requirements.
Tecnomen in turn used one domestic customer (Tamglass) and other indirect sales channel
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 677
partners to enter the international markets and then shifted into building a direct sales
presence when globalizing the business. Recently, in addition to direct sales to operators,
indirect channel partners (e.g. Siemens and Nokia) market the products as part of their
total network deals. Also, increasingly hybrid channels are used in which the partner
performs some functions and Tecnomen performs others directly.
Cross-case analysis shows that the case companies had a large number of diversified
product lines in their international phase. A few were selected for global expansion. As
globalization advanced, the number of product lines and products in each line were
increased. However, these were highly related, offering synergies across product lines. All
case companies developed their branding strategies during globalization. The emphasis
was, however, on increasing the brand recognition among their customers instead of on
developing the number of brands used. The main pattern seen in the development of
channels during globalization is the widening of the channel coverage. On the basis of the
above description and examination, it can be concluded that the companies have
developed from a diversified marketing offering in the international stage into a focused
one as globalization began. The further the globalization proceeded, the broader the
product assortment and the broader the channel coverage became. Hence, it can be
concluded that Proposition 2 (presented in Section 3.4) was partially supported. It received
strong support in connection with product and channel dimensions. Branding strategies
deviate from this development. The scope of the brand architecture did not expand to
include multiple master brands, except in case of the luxury brand Versus of Nokia Mobile
Phones. Instead of diversifying resources into development of multiple brands, the global
companies from Finland continue to focus on development of brand recognition for their
master brand. Parallel master brands or sub-brands are used only in exceptional cases,
when the increased product market diversity so requires. Furthermore, it was noted that the
importance of increasing brand recognition was especially apparent in NMP, which
developed products for consumers.
4.2.3. Standardization of marketing strategies
NMP products have become more standardized across countries as the company has
progressed from the international entry and penetration stages towards the global
alignment stage. The most important change was the introduction of common product
platforms at the beginning of the 1990s for all digital standards: GSM, TDMA, and
CDMA. The products have also become very similar with respect to design across
countries. Nevertheless, small adaptations are made in the colors and user interfaces of the
phones to meet national language requirements. It was found that the company has
evolved from a localized product strategy approach during the 1980s (region specific
platforms and products) first to a modified one (global product platforms) and then towards
a standardized product strategy (product platforms, product lines, and individual products
very similar globally). In the international stage, three different brands were use. The case
company aligned these at the beginning of the 1990s and developed the Nokia brand into
one with worldwide-recognition. With respect to channels, the company has consistently
used the indirect channel strategy. Consolidation and globalization of operators have
meant that the channels have also to certain extent become more global and thus more
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684678
standardized. Nevertheless, country specific differences still force the company to adapt
their particular channels on the basis of local conditions and available members.
Nokia networks entered and penetrated Europe in the 1980s with the NMT standard.
The spread of GSM enabled Nokia networks to expand to Asia in the beginning of the
1990s and also to the USA at the end of the 1990s. The company’s focus on GSM and now
recently on the 3G standard has enabled it to align strategies worldwide since the
beginning of the 1990s. The products have become very similar across countries using the
DX 200 platforms and in future the new IP-based platforms as well. The product strategy
has evolved from a localized one towards a globally standardized one with similar product
platforms, product lines, and individual products across countries. The Nokia brand has
been used worldwide all the time. NET’s focus when entering the international markets
was on the newly established local operators, but this has now shifted to large
regional/global operators, which have emerged as the result of consolidation development
in the field. The globalization of operators has had a big impact on NET, which has aligned
its organization to serve global customers by establishing teams that deal with the major
global customers and channels.
Tecnomen entered and penetrated the international markets at the end of the 1980s and
the early 1990s. It used a localized product strategy in which it tailored industrial
automation systems to its customers. During the 1990s, it has realized that a more
standardized approach is beneficial and as a result a modified product strategy has been
implemented that uses globally standardized product platforms and modularity to a great
extent. Adaptations are still made for customers and countries in many of the deliveries.
They use the Tecnomen brand for their products worldwide, but since their operator
customers provide the service under their private label in their marketing, the end user
interface varies from country to country in some products. Tecnomen brand is
standardized at business-to-business level, but final services are sold under operator
brand to end-users. The channel strategy was local-operator driven in the early 1990s, but
became more standardized as global partners were increasingly used to deliver
Tecnomen’s products to various customers around the world. These channel practices
vary from country to country to some extent. However, the use of global partners can be
seen as a development towards more standardized channels as products are spread through
these to a number of countries.
Salcomp entered the international markets with a highly adapted product strategy
making fully localized electronic modules for its customers. At the end of the 1980s and
the early 1990s, it developed mobile phone chargers and evolved towards standardized
product platforms in its products. The products are still customized to some extent as to the
enclosure and also part of the electronics, but these are developed from standard platforms.
Hence, it can be seen that Salcomp has shifted from a localized product strategy to a
modified one. Global product platforms are used, but other levels of the product are
adapted. Salcomp brand is visible in the manufacturer type label, but customer private
labels are often used in the enclosures/type labels, and branding is thus modified based on
customers. Salcomp has consistently targeted leading mobile phone manufacturers with a
standardized channel strategy. As these business customers have become global also the
channels used by Salcomp are increasingly uniform across the globe.
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 679
Turning to the cross-case analysis, one can conclude that the product strategies have
evolved towards more standardized ones. One case company had developed from a
localized to a modified strategy and three cases had developed from a localized to
a standardized product strategy. Also, with respect to brands, the development is towards
more standardized brands across countries, except for Salcomp, in which the brand is
modified to customer requirements. In channels, standardization is often limited to
processes and actual channel members are local or regional players. Nevertheless, the
emergence of global operators and other industrial channels has offered an opportunity to
standardize the channel to a certain extent. Similarly, the use of co-operation partners to
distribute the products provides scope for channel standardization. On the basis of the
cross-case analysis, it can be concluded that standardized products are increasingly used
during globalization. Also, to a certain extent, standardized brands are used, but not
consistently from market to market. The channels are the least standardized element,
although some indicators of early development towards more standardized channels across
countries were found. Proposition 3 (presented in Section 3.4) therefore received only
partial support, which was derived from the product dimension in which the evidence from
all case companies supported the respective part of the proposition.
4.3. Synthesis and discussion of the results
The above empirical data, analysis and results are next synthesized, and then their
quality and generalizability are examined.
The cases have been examined with respect to the evolution of the businesses portfolio
strategies, and development of marketing scope and standardization of the strategic
business units during globalization. It was found that the companies select one or a few
from a large number of unrelated strategic business units for global market expansion. As
globalization matures the companies increasingly diversify into related fields. Thus,
Proposition 1 was supported. The examination of the evolution of the marketing scope in
strategic business units resulted in the realization that they develop from a diversified
marketing offering to a focused one when globalization began, but that the marketing
offering broadened again as globalization proceeds. The branding strategy was found to be
less disposed to this development and ICT companies from Finland were found to stick
with a single global brand if possible. Proposition 2 was only partially supported, since
evidence was found for product and channel dimensions, but not related to branding.
Furthermore, the standardization of the marketing offering was seen to increase, especially
for product strategies, but also to some extent with regards to brands and channels during
globalization. The standardization of brand and channels was, however, considerably less
than for products across countries. As a consequence, it was concluded that Proposition 3
received only partial support, which derived from the product dimension.
We now turn to an examination of the quality of the research. The multiple case study
research design and replication logic proposed by Yin (1994, pp. 44–50) were followed to
enhance the validity and reliability of the results. For instance, the transcribed interview
summary was circulated to the interviewees for comments and in most cases they were met
in person a second time to verify that no mistakes had occurred. A second person
always crosschecked the interpretation, analysis and in particular the ‘chain of logic’ for
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684680
the evidence. Furthermore, key informants and industry experts commented on case drafts
and preliminary findings to enhance reliability and validity, to mention just a few of the
techniques utilized.
Next, the generalizability of such results is examined. Yin (1994, p. 36) has proposed
that the purpose of case studies is ‘analytic generalization’, in which the results are
generalized back to some broader theory, contrary to statistical generalization to
population. Furthermore, Stake (2000) argues that the purpose of case studies is
‘naturalistic generalization’. By acquiring a full and thorough knowledge of the particular,
and as readers recognize essential similarities to cases of interest to them, they can use the
results in the context of their interest as applicable. In this research, we followed the
multiple case study research design and the replication logic proposed by Yin (1994,
pp. 44–50) to enable generalization of the results mainly back to theory. In addition, we
provided the reader with a detailed description of the cases in order to enhance their
understanding of them and enable management to compare the case companies and
circumstances in which they operate with their own.
Moreover, due to the fact that this study was limited to the globalizing internationals in
the Finnish ICT equipment-manufacturing field and since the studied companies represent
about two-thirds of the Finnish ICT equipment exports (Ali-Yrkko et al., 2000, p. 48), the
results are expected to be particularly useful in understanding the development in this
sector. However, a potential flaw may inherit from the significant role Nokia plays in the
Finnish ICT-industry. The generalizability may be reduced due to the fact that Nokia is the
owner of two of the case companies and one case company is a former Nokia owned. Yet,
further analyses showed that no major differences existed between those cases with Nokia
background or without this background. In addition, the study results are expected to be
most relevant for companies originating from SMOPEC countries. To the extent that the
conditions are similar in other industries and countries, the results may be generalizable
beyond the companies studied. However, despite this conclusion, one should be cautious
about generalization beyond the above-presented industry and country of origin scope. It is
up to future research to prove whether such generalization is possible.
5. Conclusions
The internationalization process of firms has been studied extensively during the past
three decades by the Scandinavian researchers (Johanson & Vahlne, 1977; Luostarinen,
1979), whereas globalization has gained less attention. Research has often been conducted
on multinationals originating in the USA and on existing global companies. An unanswered
question has been that of how can international companies from small and open economies
meet the huge globalization challenge of shifting from international to global and
developing global marketing strategies? This study, which focuses on Finnish ICT
companies, seeks to shed some light on this by suggesting that business portfolio strategies
and business level marketing strategies need to be changed during globalization. The study
has several theoretical and managerial implications for academic researchers, business
practitioners, and policy-makers and it opens up a possible stream for future research.
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684 681
Four theoretical contributions were identified. First, this research is among the first
studies to empirically examine globalizing internationals, i.e. companies that first
internationalize and then globalize. Earlier studies have merely recognized the phenomena
and postulated early assumptions of their behavior (Gabrielsson & Gabrielsson, 2003a;
Luostarinen, 2001). Second, the study received preliminary empirical support from the
ICT field that the globalizing internationals will select one or a few from a large number of
unrelated international businesses for globalization, which earlier conceptual literature
had suggested (see Luostarinen, 2001). The selection process was based on an evaluation
of the globalization potential of the various business units as suggested by earlier research
(Gupta & Govindarajan, 2000, pp. 46–47). As globalization matures, the globalizing
internationals seek further growth through related diversification. Also, an interesting new
finding was that the divested units often developed into global businesses. Third, research
related to use of a narrow versus a broad scope in marketing strategies has been relatively
limited (Porter, 1985, pp. 54–55). This study has supported and brought important new
results indicating that marketing strategies change during globalization (Chen & Paliwoda,
2002; Gabrielsson, 2004; Gabrielsson et al., 2002). The business unit level marketing
scope of the globalizing internationals developed from a diversified marketing offering to
a focused one when globalization began, but the marketing offering broadened again as
globalization proceeded. In contrast, the branding strategy was found to be less disposed to
this development and ICT companies from Finland were found to stick with a single brand
if possible. Fourth, recognizing that the product strategies become more standardized
across countries during globalization of the company is important (see Douglas & Craig,
1989; Yip, 1989). With respect to brands, the results were somewhat incoherent as some
cases moved towards more standardized brands across countries while others continued
using customer brands, which then resulted in country-based variation. Furthermore, it
was noted in line with earlier research that channel strategies are among the most difficult
marketing parameters to be standardized (Rosenbloom et al., 1997).
Based on the above theoretical findings, four major managerial implications can also be
drawn. First, the study suggests that globalizing companies must first identify the frame of
their business environment, resources, and strategic levers. Based on an external and
internal analysis, the implications of the globalization approach for the business portfolio
and marketing strategy should be considered. This study provides a framework and
propositions for transformation of international businesses into global ones. Second, the
globalization of a strategic business unit is so demanding in respect of required managerial
and financial resources that the implication for corporate level management is that only
one or a few strategic business units may be selected for global entry. As total sales are
derived increasingly from one or a few strategic businesses during globalization, the
importance of strategic business unit level decision-making seems to be increasing. As a
result, the corporate and strategic business unit decision-making also becomes highly
interlinked. Third, the marketing strategy dimensions that were important for the
globalizing internationals were identified: scope and standardization of the marketing
programme. The study pinpoints that the need for broadening of the marketing scope
during globalization is related merely to product assortment and channel coverage.
Furthermore, the standardization of the marketing mix was found to be the most vital with
respect to products.
P. Gabrielsson, M. Gabrielsson / International Business Review 13 (2004) 661–684682
The study also provides a fruitful starting point for four interesting future study areas.
First, it would be interesting to test the developed propositions in a large international
survey in ICT or some other similar field. The survey methodology would allow increased
generalizability of the results presented in this research. Second, it would be interesting to
compare the results of the marketing strategies of globalizing internationals found in this
study with the research on born globals (see, e.g. Luostarinen & Gabrielsson, 2004; Oviatt
& McDougall, 1994). This might yield interesting findings on differences in marketing
strategies of these two globalization approaches (Gabrielsson & Gabrielsson, 2003b).
Third, the framework developed is also expected to be useful for studying the development
of business operation modes and strategies of globalizing internationals in depth. Finally, a
deeper understanding of co-operation with different value network members could bring
interesting findings. For example, how co-operation partners could be used for adapting
products and the marketing offering based on country and customer needs, while the
producer could focus on a relatively standardized offering.
Acknowledgements
The authors acknowledge the Jenny and Antti Wihuri foundation for their financial
support.
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