Born Global Firms Essay Example | Topics and Well Written Essays - 2500 words

Born Global Firms - Essay Example These firms are established to go global from the first day with a general view that the world is a single market and not an extension of the domestic market. Currently, there is a rapid increase in these firms, most of which have their origin from developed economies. Most of these firms are technological in nature and take advantage of the high technology developments in these countries. However, the firms are not limited to technology but are distributed across other areas as well. This report seeks to understand born global firms to details regarding their formation and the mode of operation. Born Global Firms Introduction Born global firms are business entities that are formed with the single purpose of doing business internationally. From its formation, a born global firm has the main objective of attaining a competitive advantage from harnessing resources and selling its products in many countries, and in most cases, these firms go global within their three years of inception. Multinationals are usually referred to as global firms, though there are major differences between multinationals and born global firms. ... Therefore, the main differentiating factor in these firms is that they have a borderless worldview and all their strategies are geared towards achieving a global presence. In this report, born global firms will be investigated in detail to understand the reasons behind the rapid increase in such firms in the recent past, how the companies undertake their operations, their features and the challenges that these firms face in their operations. The aim of this paper is to derive a better understanding of born global firms, the mode of operations in the global market and their differences from the conventional multinational organizations. Background study Michael Rennie coined the born global tag name in 1993 after studying a new concept of new firms that were established with the single purpose of competing on a global scale to harness resources in a number of countries at the same time (Jones et al., 2011). The interesting aspect of these firms is in the way a small firm is established with the single intention of meeting the varying needs of customers on a global scale. Such an approach requires a new focus in understanding the concept behind internationalization of firms and the need to attain a global status today. The new concept of a born global is to satisfy the need of customers on a global scale from its first day of inception, in that the firms are internationalized by design and not by emergence (Jones et al, 2011). In international trade models, a firm wishing to go global has to outlay the initial investment and make the entry costs before it commences operating globally.