Part A
Vestergaard-Frandsen began in 1957 with the sole purpose of venturing into the uniform manufacturing business. However, increased growth of the global market forces negatively affected the company’s ability to generate revenue. Instead of going out of business as other companies would have done, the company diversified its production and begun producing innovative humanitarian products. The company started manufacturing mosquito-nets for malaria stricken regions. However, the company founders wanted to remain innovative and ensure that even though malaria stopped being a crisis, the firm would still operate. Innovative did the company become, and this has seen the firm launching its signature project the Life Straw.
A majority of Vestergaard-Frandsen products target complex emergency responses and diseases in various regions across the globe. However, despite some of its products being too expensive for the intended users such as the Life Straw, the company decided to give it away and still can generate revenue. In most cases, according to Adam Smith's " Wealth of Nations ," almost every business aims to make profits (Boutillier & Uzunidis, 2014). This indicates that the current business environment is more focused on capitalism, whereby the owners of economic resources focus on making profits. This suggests that they run their business intending to generate revenues for themselves. This makes their profits to lack some form of purpose.
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However, this is not the case for Vestergaard-Frandsen, whose profits have purpose. In most cases, large businesses that produce chemicals or medical products might provide mosquito nets with the main of boosting their corporate social responsibility efforts (Redfield, 2016). Corporate social responsibility is treated as a means through which a company can gain a competitive advantage in its operational market. By helping the needy people in society, these large companies have turned the poor people and victims into a resource of increasing and boosting their public image. These large companies are thus treated as being victims instead of consumers.
According to McNeil (2009), this is not the case for Vestergaard-Frandsen, which treats all its end users as being consumers rather than victims or patients. The company ensures that all the products it manufactures for its end-users can adapt to the operational environment, even without having the necessary support infrastructure (Redfield, 2016). Vestergaard-Frandsen focuses more on user experience while developing its products. As the company manufactured its mosquito nets, it carried out research to determine the material type, size, and color, among other preferences for each target population (Redfield, 2016). This is very different from what other humanitarian agencies would have done. Most of the products shipped to needy populations are not based on the population’s preferences, but rather the main focus is helping them as they are viewed as being needy/victims.
In the case of Vestergaard-Frandsen, it has more liberal care for its target customers. Its efforts to help the end-users is not a marketing or public relations strategy but rather a social concern that has become its business plan’s cornerstone. The long-term goal of the company is to ensure that in the coming future fundamental human rights will be accessible to all humanity. This is through a new form of entrepreneurship that creates both social and financial value. Financial pursuit is no longer a sole concern for the company. Vestergaard-Frandsen has become one of the leading vehicles of humanitarian entrepreneurship across the world. The foundation of this entrepreneurship is amalgamating social entrepreneurship and innovation (Sandvik, 2017). Through social innovation, a company can resolve any existing environmental, economic, cultural, and social difficulties. On the other hand, social entrepreneurship refers to the principles of amalgamating financial return and social justice.
The real mission of Vestergaard-Frandsen is not to make money and survive. This is very different from other companies whose core operational principle is making profits. A majority of these companies have formulated corporate social responsibility strategies which they aim to help people in need, whether those stricken by environmental disasters or plagued by diseases. However, the aim of this assistance is that they tend to view the people they are helping as being victims or patients. As witnessed from the case of Vestergaard-Frandsen, it is ventured into humanitarian entrepreneurship. This aims at ensuring that it helps people who are marred by environmental and disease disasters but still can make a profit. Before delivering goods and services to affected communities, Vestergaard-Frandsen carries out market research to determine what the end-users would like the various products to look like. The firm would like to ensure that despite helping the victims, they still qualify as being its customers in the long-run.
Part B
Social Factors
Business network capitalization is a vital process for any business seeking to engage in an internationalization process. When making an internationalization decision, one should regard a partner firm as being a potential network partner instead of a competitor (Colombo et al., 2018). According to the Uppsala and network model of internationalization, it has clearly outlined why network affiliation is vital for a business (Ratajczak-Mrozek & Mielcarek, 2016). The foreign market and model selection are heavily reliant on having good relationships with other companies. It is through these affiliations that the internationalization process begins. In the case of Vestergaard-Frandsen, having operated across the world on various emergency stricken countries, one can argue that it has been able to build useful networks. However, this does not mean that the firm will not require some valuable business network. In some of the countries, Vestergaard-Frandsen does not any pre-existing business networks and also has minimal experience. It is in such new international markets that the firm requires building positive business networks.
Moreover, there is a need to ensure that the relationships formed between the partners will bring about social bonding. The main types of relationships include personal, business friends, or business. Business can switch from one type of relationship to the other
There are various components of social variables, customer satisfaction, trust, commitments, communication, and interpersonal contacts (Ratajczak-Mrozek & Mielcarek, 2016). Out of all the factors, the essential variable is trust. Through trust, a business can engage other partners, and this will lead to success in changing and new environments. Despite negotiations and economic benefits being the main factors used in forming business relationships, the propelling factors are mostly found in social affiliation. This is where trust is crucial. During the first signing of a business agreement, there must be proof of professionalism and trust between the two or more partners (Colombo et al., 2018).
Nonetheless, one crucial element about trusts is that it, at times, takes a long time to build. This is based on the two sides’ ability to showcase integrity and reliability in their operations. In case a business completes any given transaction, and it brings about positive impacts on both sides, the trust continues to increase. Therefore, Vestergaard-Frandsen should ensure that it has an awareness of the role of social factors with regards to its expansion plans. This is by determining which social variables are vital, and in this case, trust is more important.
Political factors
From the 1960s, the impacts of political risks have become a significant issue of study among many scholars following the significant losses that were received by USA based multinationals due to expropriations (Toksoz, 2014). The impacts of political risk on internationalization are vital and are determined basing on the various stages of internationalization, such as pre-entry and post entry. For Vestergaard-Frandsen to understand the impacts of political risk on its internationalization process, it should be based on two dimensions; the host and home country environment.
Vestergaard-Frandsen's home political environment can significantly affect its internationalization abilities (Hollensen, 2014). Moreover, this can substantially affect the company’s ability to move into other countries. A perfect example of this is seen in the case whereby there is an emergence of triple-threat political issues (Hollensen, 2014). In case a home and host country does not have any form of the political problems, a company can still face significant problem in third markets In case of businesses that do not have any negative relationships with a home country’s government, people can boycott their products in another country that’s problems with the home country government
It is evident in the case whereby the USA has negative relationships with Cuba; however, European countries will maintain trade relationships with Cuba. In the USA, European companies are facing significant problems due to their business dealings with Cuba. Therefore, Vestergaard-Frandsen should ensure that it determines the relationship of its home country with other countries before internationalizing.
In the case of the host country government, Vestergaard-Frandsen will be forced to laws to keep up with any set policies and regulations. Any political changes in the host country can negatively affect its entire business operations (Chang et al., 2018). The significant factors from the host government that can affect the firm include trade barriers. Most of the developing nations impose trade barriers intending to generate revenue and protect local industries. Moreover, a host country can impose an embargo on some of the goods or services offered by a firm. The aim of this to accomplish political goals (Hollensen, 2014). Therefore, before Vestergaard-Frandsen moves its business operations into another country, it must have an in-depth awareness of this government's political history.
Global Market Research
According to Layman’s language, "Information is power.” Without information, one cannot make various crucial decisions. When planning for any internationalization undertaking, information is a fundamental ingredient for Vestergaard-Frandsen. The company must ensure that it has in-depth familiarity with its customers, market environments, and competitors (Hollensen, 2014). The main aim of engaging in an internationalization undertaking is to be able to reach a much broader consumer market. Therefore, by not having information on what customers want or what needs they would want to be met, selling will not be an easy activity for any business. When conduction global market research, a company must ensure that it gathers secondary and primary data. Primary data involves sending representatives to host nations to gather first-hand information about the country and its customers. Secondary information is collected from the internet or any other source that provides data that has been previously collected.
International Selection Process
Before engaging in any form of internationalization, Vestergaard-Frandsen should carry out an international market selection. This involves ensuring that the business identifies the right market to enter. International market selection is essential as it will determine the failure or success of the company during the initial stages of the internationalization process (Hollensen, 2014). The internationalization market selection process should involve an iterative process. This is to make sure that the information gathered is used in soliciting feedback from other critical business players within the same industry or customers. According to Hollensen (2014), the various characteristics that Vestergaard-Frandsen can use in carrying out an international market selection include language, geographic, political factors, customer demography, economy, technological advancement, industrial structure, education, and cultural values and norms.
References
Boutillier, S., & Uzunidis, D. (2014). The theory of the entrepreneur: from heroic to socialized entrepreneurship. Journal of Innovation Economics Management , (2), 9-40.
Chang, T., Deng, X., Hwang, B. G., & Zhao, X. (2018). Political risk paths in international construction projects: a case study from Chinese construction enterprises. Advances in Civil Engineering , 2018 .
Colombo, G., Vătămănescu, E. M., Alexandru, V. A., & Gazzola, P. (2018). The influence of internationalization process-based factors on international performance in the case of SMEs. Economia Aziendale Online , 9 (3), 319-332.
Hollensen, S. (2014). Global marketing . Harlow, England: Pearson
Ratajczak-Mrozek, M., & Mielcarek, P. (2016). The importance of social factors for the rapid internationalization-the case of a high-tech company. Studia Ekonomiczne , 271 , 115-125.
Redfield, P. (2016). Fluid technologies: The Bush Pump, the LifeStraw, and the micro worlds of humanitarian design. Social studies of science , 46 (2), 159-183.
Sandvik, K. B. (2017). Now is the time to deliver: looking for humanitarian innovation’s theory of change. Journal of International Humanitarian Action , 2 (1), 1-11.
Tokso ̈ z, M. (2014). The Economist Guide to Country Risk . London: Profile Books.
