The Uppsala model is one of the most well known models of internationalization. The Uppsala model is a four staged model that argues that firms pass through four stages in order to go international. From absence of regular exports to overseas production firms go through all these stages according to the Uppsala model. The model is based on how firms learn and how they incorporate what they learn in their investment decisions in foreign markets (Johanson & Vahlne, 1977).
Through the stages of model the firm gains more and more knowledge about the foreign markets and their market commitment, all assets of a firm in a particular geographical market, increase gradually as their experience increases. Knowledge and learning is the main component of the Uppsala model. Model also suggests that initially firms invest in countries that are culturally close to the firm’s native country.
The model is of great importance to the marketers as it provides a great framework for them to initiate operations in foreign markets. The emphasis of the model is on learning and knowledge and this is a very objective approach. The importance of foreign knowledge and culture is very important for marketers in order to prosper in the foreign markets.
Uppsala model also identifies the differences that exist between and local and foreign environment. These differences are important for marketers as one strategy in a local setting may bear great benefit but the same strategy can lead to a disaster. ...Show more