Innovation and International Business

Introduction

While all the classic economic theories of growth gave more importance to the capital collection and finance based theories of the international investments including risk education, there are certain technological approaches built by the multinational enterprises and their international business (IB) networks.

Research on innovation and international business (IB) can be grouped under the following four listings. Firstly, the increasing aspects of technological change organised across borders. Secondly, while innovations have come to depend on the structure of international business (IB) networks, which have been in a major changing process, have tended to uplift more open international innovation systems.

This has led to an increase in the globalization of technology development within and across the global networks of multinational enterprises (MNEs). Third is the strategy and innovation structure that has led to focus on internal or location characteristics of clusters where international business (IB) is a primary medium for different locations. Lastly, change in the international business (IB) environment in the information age has been considered to be an underlying driver of development for innovation in its own right.

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(John Cantwell, 2017)

International Business In Innovation

The increasing appreciation of technological acceptance and learning within a multinational enterprise is the recent trend for the MNEs to flourish, extend and deepen their international networks. These networks have been divided into two kinds. First is the international production and international R&D facilities organized within the networks and owned by the MNEs. Second, are the inter-organizational networks in which the MNEs participate.

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With the shift towards international networks for technology creation, US MNEs are following many European MNEs which led to a steady increase in the internationalization of their R&D facilities. Also, the R&D of Japanese MNEs present in the US and Europe have been growing quite fast due to the team whose primary focus was tamping into the strongest areas of local expertise and skills. The strength of their historical inter-firm ties and high degree of organizational centralization in the international organizations have led the Japanese MNEs to establish open international networks for innovation. (John Cantwell, 2017)

Discussion On Innovation And Internationalization

Internationalization of a firm can be understood as an innovation decision process. A research also specifies that both internationalization and innovation are linked together in a more complicated way. (Azuayi R, 2016)

Young companies that develop a new platform are also involved with establishing and growing the firm, commercializing for potentially new markets and also developing internationalization in order to compete with the global industry. This requires originality, strategic vision, passion for the defining the proposition and delivering it to the customers through innovative development of business models.

For young new technology based companies, innovation and internationalization might be considered to be an integrated perspective due to their major involvement in the overall growth of the company. This process is initiated by exploring the global opportunity, strengthen local and international relationships, reward inward and outward business activities of every individual. These days, innovation and internationalization are considered to be the alternative options for growth, which are more likely to be instantaneous, fast and inter related. (Azuayi, 2016)

As a result, innovation and internationalization are deeply related. They pose novel changes and challenges for a firm’s success, survival and growth. Management of time, space and network relationships are the key variables for business model designs which represent a formal illustration on how the firm integrates its core activities with location, drawn together by its strategic and operational intentions. (Antonella Zuchella, 2012). To assist with this assessment, BMW and Mercedes Benz, which are leading in the automobile industry, have been used as an example.

The above mentioned companies are renowned leaders in supplying automobiles which have a history in providing technologically innovative cars for the past centenary. With the advancement in technology, BMW and Mercedes Benz have produced most promising, inspiring and well developed cars in order to meet the customer needs.

The BMW group specializes in providing a very high quality product. This in turn lets the group achieve higher revenues with each vehicle sold. Similarly, the Mercedes Benz group have attached their name in history as the manufacturers of luxury cars, which in turn have led to an increase in the dynamic models targeting the new markets. The biggest competitor of Mercedes has been BMW whose marketing strategies have been similar in the late 1990s. These luxury leaders from Germany have come up in the market with the latest technological advancements and also with different marketing strategies including new, luxurious, lower priced products.

History Of The German Luxury Leaders

Benz and Co. Rheinische Gasmotoren-Fabrik (renamed Benz & Cie. in 1899) was founded in the collaboration with businessman Max Kaspar Rose and sales representative Friedrich Wilhelm Essling by Carl Benz in October 1883 at Mannheim. (Resource: Official Website of Mercedes)

Two separate companies that is the association of Dailmer – Benz (Jiffynotes, 1996) whose founders were Carl Benz and Gottfried Daimler, came together to form a single company in the year 1926. One of the members of the Daimler board, Emile Jellinek was the person who suggested a design to build a car with its engine in the front which turned out to be a very useful marketing strategy. He also assured to purchase 36 of the racer cars designed by him and in return requested Daimler to name the car after his daughter, Mercedes.

The fastest car that was introduced in the year 1900 had a top speed of 30 miles per hour. In contrast, Mercedes could go much faster with a speed of 141 miles per hour with its latest production, Benz. During the World War I, Daimler and Benz companies joined the forces that was founded in the year 1926 and named as Daimler – Benz AG with a three pointed star logo which symbolized air, land and sea arenas where the engines dominated. With the advancement of World War II, the company associated itself with the Nazi regime and later after its end in 1950s established itself as a manufacturer of luxury sedans in Europe and America.

In 1993, Rosemarie Totzauer (Jiffynotes, 1996) reported in Brandweek, Mercedes is succeeded to reintroduce itself and evolve from a company long defined exclusively by its gas-guzzling luxury sedans and sports cars. The renewed Mercedes will offer a greater, more complete line of vehicles for the rapidly changing, more complex and higher risk luxury segment. Mercedes-Benz, therefore, has to think itself as a company known for value and a diversity of vehicle concepts rather than for the prestige of the three-pointed star.

The slogans created by McCaffrey and McCall have changed from the Engineered Like No Other Car in the World., to a new one Sacrifice Nothing, gave a statement of success of the company’s changed marketing policy. The target market had widened and hence the company further included C class, which replaced the 190 series as a product for the market. Benz, being the company known for luxury cars, launched an E class, a midsized luxury car and S class, a high end luxury car which comprised the previous sum of company’s product.

Moreover, as Fara Warner wrote in Brandweek in 1994, “Mercedes is considered an exclusive luxury car for white males which tried to broaden its appeal with value prices and new products”, has proved to be true in the later years with the launch of sports and luxury cars.

In contrast with Mercedes, BMW that is Bayerische Motoren Werke AG (Wikipedia) can trace back its roots to Karl Rapp and Gustav Otto, founded on 7th of March 1916. The company logo or emblem was displayed on each of their product from 1917 which made its first appearance in the year 1920, as a rotating propeller.

In their early years, BMW had produced mainly aircraft engines. It became an automobile manufacturer in 1928 by purchasing a car company named Fahrzeugfabrik Eisenach. First car was built in 1929. All the BMW cars were made in this plant until the II World War broke out.

After the World War, the BMW 501 came into picture which was built from 1952 onward, powered by an enhanced version of six cylinder engine. This restored the status of BMW to be manufacturers of high end quality cars. This was later followed by BMW 502 with a lightweight alloy V8 engine, BMW 507, a V8 propelled sports car produced in later years of 1950s. Due to the increase in the capital loss, 507 productions had to be stopped.

1960-1970 was the period where 3-tier sports sedan range consisting of the 3-series, 5-series and the 7-series was introduced. Between the period of 1970 and 1993 BMW automobile production and turnover increased tremendously by 1700%.

Innovation And Luxury Leaders

More than the detailed and perfect design and engineering, Mercedes Benz has been constantly defined by its innovation. From the year when the car had been invented (1886), Mercedes Benz has not only been recognised for its history of automobile industry, but also for its future. While there is a never ending record for new achievements, there is only one reason for Mercedes Benz to remain in its first position in innovation, stated by Carl Benz “The love of inventing never dies”.

With the innovation of first car in 1886, which was a rear mounted single cylinder engine, changed the way people move, whose spark of innovation continues till date. With the change in years and technology, more innovations came into picture like the Honeycomb Radiator in the year 1901, Electric Powered car in 1906, All Wheel Drive in 1907. 1910 saw an invention of the Multivalve Engine whose main purpose was to improve performance and fuel consumption. 1921 saw an invention of Supercharged engine, Four Wheel Independent Suspension in 1931, Crash Testing program which had to be performed outdoors in 1958, Anti Lock Breaking System in 1978, Air Bags in 1981 and Attention Assist which detects the signs of drowsiness and alerts the driver to take a break, came into picture in 2010.

Marketing Strategy

The marketing strategy of Mercedes Benz has been focused safety, luxury and design of its cars. A new strategy has been implemented which is more lifestyle oriented and is centred more towards approachable and energetic side of Mercedes Benz.

The expansion of the target market has been a major reason for the evolution of Mercedes Benz’s marketing strategy. Mercedes has spending a lot of capital on its advertising campaigns. The first printed advertisements featured E 300 BLUETEC that was launched in Germany in December 2007.

Dr. Klaus Maier, Executive Vice President of Mercedes said that “In our marketing campaign on sustainability we promote innovative technologies for environmentally sound mobility such as the BLUETEC emission treatment system, which Mercedes-Benz offers to its customers as the world’s cleanest diesel.”

Mercedes Benz has allocated almost 50% of budget into digital marketing. These details were given by Anders Jensen, VP for brand communications. Another action taken was the promotion of green cars that is hybrid, environment friendly cars.

REFERENCES

  • 1. Internationalization Strategies for Global Companies: A Case Study of Arla Foods, Denmark by Robert Azuayi, Volume 5, Issue 4, Journal of Accounting and Marketing, 2016
  • 2. John Cantwell (2017) Innovation and international business, Industry and Innovation, 24:1, 41-60, DOI: 10.1080/ 13662716.2016.1257422
  • 3. R&D internationalization and innovation performance, Chia-Wen Hsu, Yung-Chih Lien, Homin Chen, International Business Review, 2014,
  • 4. Internationalization in the information age: A new era for places, firms, and international business networks, Juan Alccer, Journal of International Business Studies (2016) 47, 49-512
  • 5. “Bmw vs Mercedes.” New York Essays, 6 Apr 2017, Accessed 14 Apr. 2019.
  • 6. BMW vs Mercedes. (2016, Feb 19). Retrieved from

Cite this page

Innovation and International Business. (2019, Dec 04). Retrieved from https://studymoose.com/introductionwhile-all-the-classic-economic-theories-of-growth-example-essay

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