PECB UNIVERSITY

INTERNATIONAL BUSINESS
MANAGEMENT

XXXX going international

Professor: Shpresim Vranovci Student: Taulanta Kryeziu/20537

April 2020
 XXXXX Going global
International Business Management class
PECB University 2020
Abstract
Considering the fast growth that the technology is facing, companies should always be looking
for opportunities to expand internationally.

. With the fast evolution of the technology and Internet, the telecommunication industry is
experiencing a fast and evolving growth and is taking making new turns as well. This case study
presents the international expansion plan analysis for the TechPea. The expressed analysis is
intended to look at Digiso’s future growth and expansion considering the issues such as
globalization, international strategies, technological capabilities, and competitive advantages.

The mode of expansion that Digiso is going to suggest using is the Strategic Alliance or
Partnership. The reason is very well said through a quote from the International Business book
by Czinkota, Ronkainen and Moffet:

The world is too large and the competition too strong for even the largest companies to do
everything independently. Technologies are converging and markets are becoming integrated,
thus making the costs and risks of both goods and market development ever greater.

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Table of Contents
Abstract............................................................................................................................................2
1. Introduction..............................................................................................................................4
2. Company profile.......................................................................................................................5
3. Literature review......................................................................................................................7
4. Cross-border expansion justification......................................................................................10
5. Cross–border expansion implementation...............................................................................11
5.1. Strategic international alliances..........................................................................................11
5.2. Launch the iPad with 4G new product................................................................................11
5.3. Competition and the new market shares.............................................................................12
6. Conclusion..............................................................................................................................13
References......................................................................................................................................14

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1. Introduction

The Digiso telecommunication company with the main offices in Tokyo, Japan has experienced
a number of successes in the domestic market. It is the main leader of the telecommunication
industry; therefore, it is now seeking to internationally expand the offering of its services. The
primary objective of this analysis is to examine Digiso’s latest achievements in the context of
globalization and international expansion issues that the company may face. Considering the
increased demand and the potential for future growth, the goal/objective of the expansion
strategy is to become one of the leading players in the global telecommunication industry.

On the other hand, as technology evolves, competition on the telecommunication industry is

becoming increasingly powerful. This competition has a huge impact on the prices, which then
squeeze profitability. Therefore, Digiso may face a sharp competition along with other types of
challenges which will be discussed during this case study. However, with the newest/latest
network infrastructure, a team of field experts and a detailed international expansion plan, Digiso
is ready to enter the U.S. market and gain the market share of this energetic environment
following the mode of Strategic Alliances.

The case study is organized as follows: First, the profile of the company, including a brief
history, its main services and the potential for international expansion; Second, the literature
review regarding the topic of the international expansions in telecommunications industry; Third,
the justification for the cross-border expansion; Fourth, the implementation of this expansion,
including the steps and the strategies to be followed; and finally a conclusion of the presented
analysis on Digiso’s international expansion plan.

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2. Company profile

Digiso is a telecommunication company that was found in 1990 in Tokyo, Japan. Initially,
Digiso served as a mobile service provider and then as a wireless operator also to its customers
within Tokyo. After two very successful years, Digiso expanded its business by offering its
services all over Japan. To keep up with this pace of growth, Digiso made a few strategic
partnerships with some big television networks including ArtTV. ArtTV started offering TV
content services to Digiso’s customers in IPTV format. The package included mobile, internet
and TV services for a fairly affordable price in comparison with Digiso’s competitors. Later on,
Digiso made some other partnerships with some major local sports channels, which also resulted
to be a very successful strategy. With the help of these strategies for domestic growth, Digiso
experienced a huge success, prosperous years ahead and possibility for future growth.

The company soon was composed of 40 subsidiaries and 9 affiliates. It became the main leader
in the telecommunication industry in Japan. By using the latest trends in technology and having
the most powerful network infrastructure in Japan, Digiso created a highly competitor market.
The CEO of the company, Mr. Lowell, conducted a lot of market research and in order to keep
up with the aggressive competition, he decided to focus on the quality of the services along with
the technology innovation. Digiso’s mission was to be an innovative company for its customers
in terms of the evolution of the technology. To achieve this mission, Digiso decided to become
the first operator that provides 4G services in Japan. At this point, Digiso would made a
significant contribution to the national business growth through major investments towards
offering this new service. This was also a new step to reach the goal of becoming a premium
quality brand. Expanding the coverage to 4G networks did also serve as a great method to gain
customers’ trust, contributing on the general reputation of the company. Digiso decided to invest
on their innovation as well, therefore were the first to bring a new very innovate product which
was iPad with 4G. This new product became one of the fastest growing products in Japan.

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As of September 2014, Digiso was the largest telecommunication company in Japan and
maintains over 30 million subscribers. Its main services include mobile, internet, TV services
and the iPad with 4G through various packages. In 2014, Digiso’s revenues reached 33.62 billion
€ with a profit of 2.87 billion €. Because of the company’s spectacular growth and the reason
that it was the first company to offer 4G services, it became an admired brand by the industry
analysis all other the world. Similar to all other innovative organizations, Digiso is very
committed to its customers and the Japanese market. Moreover, the organization is aware and
very well prepared for the changes of the customer demands in Japan, along with its competitive
position in the domestic market.

After establishing itself as the key player in the telecommunications industry, and expanding its
services all over Asia, Digiso is planning to expand its services globally. Considering that this
industry requires a lot of technical assistance to ensure smooth operations in another country, the
company’s strategy is to collaborate with other telecommunication operators that have
significant national and global visibility. This change on the core strategy of the company and
the detailed plan for the international expansion signifies its future growth in the
telecommunication industry.

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3. Literature review

There has been extensive literature on international expansion of Multinational Corporations

(MNCs) and the issues related to the entry mode. However, unlike the traditional
telecommunication industries, the nowadays industry is closely related with wireless provision
services and Internet revolution, therefore it is well positioned in the areas of fulfilling customer
needs with digital products and 4G services. The process of developing a new product/service is
completely different from the common manufacturing companies. This being said, the global
expansion in the modern telecommunication industry is also very different from the global
expansion of the common Multinational Corporations (MNC). Due to different factors such as
privatization and increase of the customer demand, telecommunication companies have more
opportunities available. They are able to avoid internationalization problems that are usually
faced by traditional MNCs. For example, because of the above-mentioned reasons, Vodafone
was able to internationally expand the business in more than 30 countries in a very short period
of time.

According to Sarkar, Aulakh and Cavusgil in the article “International Expansion of

Telecommunication Carriers: The Influence of Market Structure, Network Characteristics, and
Entry Imperfections” since 1990 telecommunication industry is enriched with a lot of
opportunities due to the global expansion, technological progress and changing markets. They
also emphasized that collaborative activities and logical alliances have become the norm due to
the industry-specific standards, reciprocity issues and deregulation markets. If we relate this
review to our case, we can conclude that similar factors can serve as a motivator for companies
like Digiso to expand their services globally.

Yigang Pan, Shaomin Li and David K. Tse in their article named “The Impact of Order and
Mode of Market Entry on Profitability and Market Share” talk about profitability
and market share issues by emphasizing that in the technological fields, the companies with the
first move always capture market share in the early stages resulting in economies of scale,
learning curve, and setting the industry standards. If we relate this latest review to our case, we

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can conclude that Digiso’s iPad with 4G product has helped the company gain most of the
market share and may help the company while internationally expanding this product as well.
According to Kashlak, Chandran, Benedetto in their article “Reciprocity in International
Business: A Study of Telecommunications Alliances and Contracts” by studying the international
long-distance sector of the telecommunications industry, the concept of reciprocity, may be
operationalized and investigated. In most countries, the telecommunication entity is a
government-owned or regulated firm with a monopoly position in terms of international long-
distance provision. As the telecommunication industry has become more competitive within the
United States, foreign partners have been slow to reciprocate regarding the sharing of revenues
derived from increased overseas calling. Globally, ILD is organized through a series of bilateral
country alliances formed to provide the mutual completion of telecom services between pairs of
countries. If we relate this latest review to our case, we can relate that similar to the research
conducted, Digiso is a monopoly in Japan as well. Considering the above-mentioned issues that
may be faced, Digiso will need further alliances in order to successfully expand its business in
countries where a monopoly currently exists.

According to the Wall Street Journal, averagely only 1 in 10 companies can reach a profitable
growth rate at the international level. Digiso falls into this category.

Based on the latest source (Wall Street Journal) in 2000, the Deutsche Telecom encountered
problems with the U.S. laws and regularity authorities. The FBI along with the U.S. congress had
proposed a legislation which blocked external/abroad companies from seeking U.S. telephone
licenses. Based on this fact and considering that Digiso is planning to expand its services in the
U.S., the company must pay a particular attention on this regards. Similarly, George Yip on the
book Total Global Strategy quotes:
Telecommunications have been regarded by governments as contributing to national security. As
a result, they have tended to rely on domestic suppliers. The world now faces a hodgepodge of
standards in telecommunications. In Europe, Spain has a three-second busy tone while Denmark
has a two-second one.

To conclude the literature review conducted on regards to Digiso’s international expansion, we

may conclude that:

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 The innovative product of the iPad with 4G has brought a number of opportunities in their
national expansion, therefore it will play a very important role on its international expansion
as well.
 The company has targeted the nice-oriented markets in Japan and owned most of the
Japanese market. However, the international expansion on this technological industry is
completely different from the common manufacturing industries. The concept of alliances
and other collaborative activities with various telecommunication companies must be
considered. The company has therefore made a number of alliances and partnerships with
companies that have high national and global visibility around the world.

When it comes to the cultural aspect of the expansion, I would refer to the George Yip on the
book Total Global Strategy when he cites:
As Japan increasingly becomes an innovator rather than an imitator in many industries,
American and European companies need to recognize the criticality of Japan as a lead country.
The culture when it comes to bringing new technological products is innovate in Japan, but not
much so in the U.S. This is one of the reasons why Digiso has a great advantage in
internationally expanding their iPad with 4G product in the U.S.
The International Business by Czinkota, Ronkainen and Moffet, emphasize the major elements
of culture as follows: Language, religion, values and attitudes, manners and customs, material
elements, aesthetics, education and social institutions. However, some of these elements are not
particularly important while offering technological services because technology is used by
different kind of ages, religions, personalities, occupations, genders, etc. Yet, Digiso needs to be
very careful on the language, since language provides access to local society and the staff must
be particularly careful the language is English and not Japanese, while creating new products,
making various ads and so on.

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4. Cross-border expansion justification

Considering the market leadership that Digiso currently possesses, in the modern technological
times, it is well-positioned to gain huge rewards if the market remains strong with not many
changes in the upcoming years. The chances to have a successful expansion were higher in other
part of Asia, but they are lower in other markets such as North America and Western Europe.
One of the reasons for this, is that Digiso is already known in other parts of Asia, due its
enormous successes in Japan, but on the other hand, the company is less known in other parts of
the world. The company has therefore made some long-term alliances in North America and is
planning the market expansion in this part of the whole international market. After gaining high
market shares in the United States, Digiso will plan its next steps of cross-border expansion in
Europe.

As the manager for International expansion, while presenting this cross-border expansion plan to
the top management, I would emphasize this timing as the best one to take this action due to two
reasons:

1. Digiso has already taken the lead in most of the Asian countries. The company has a stabile
profit for a few years now, and if the company continues with bringing innovations into these
markets, the profits won’t experience a drastic change. Contrarily, if the company is
successful into the expansion project, the profits would drastically change, along with its
reputation, the number of subsidiaries and employees, as well as the quality of the services.
2. Digiso’s newest product, iPad with 4G, has experienced an enormous popularity in Japan,
due to the quality of the Internet speed and the compatibility of the device. On the other
hand, according to the market analysis, a similar product was not yet famous in the United
States. This makes the perfect time for Digiso to announce and conduct a big marketing
campaign on this product in the U.S, in order for expansion plan to be successful.

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5. Cross–border expansion implementation
In order for a successful cross-border expansion to happen, there are a lot of technical steps to be
taken. The most important one is the establishment of the network, with the latest trend of
network infrastructure. While implementation, Digiso should pay a particular attention to the
regulations of U.S. states regarding the network. The company may face a number of critical
issues because it is not a household name in the U.S. and other Western countries. Digiso is very
well known in Japan but has limited clout in other parts of the world. In the U.S. and other
countries, the national security laws prohibit Digiso and other overseas telecommunication
operators to acquire local telecommunication companies.
The strategies for the international expansion plan to be followed include:
5.1. Strategic international alliances

Digiso has decided to become more aggressive when it comes to the international alliances. The
company is planning to announce a strategic alliance with HSE, which is a telecommunications
company in New York, U.S but interested to expand its business in Japan for the provision of
internet and mobile services. Digiso is planning to invest 85 million € to control 39% of the HSE
Japan. This strategic movement will be beneficial for both of the companies. The HSE would
find this as the best opportunity for their international expansion in Japan, since Digiso is the
Japan’s market leader. On the other hand, Digiso will use this strategic alliance to make itself
known in the U.S. since, as previously mentioned, Digiso has no popularity in the States.

After this strategic alliance, Digiso will announce the next step towards its own international
expansion in the U.S. It will sign an agreement with the leader of the U.S. telecommunication
market, GRC. The company is planning to invest 7.2 billion € in GRC in return for 14% stake in
its U.S. partner. A detailed plan for the alignment of the network infrastructure has been drafted
from the Digiso’s team of experts, in order to ensure that the Digiso’s technologies are
compatible with the U.S. network. Since, GRC needs to update its internet network infrastructure
from the third generation (3G) to the fourth one (4G) in a number of the rural parts of the U.S.,
they may find this as a very good opportunity as well.
5.2. Launch the iPad with 4G new product

The next step of the cross-border expansion is the launch of Digiso’s newest product which is the
iPad with the 4G internet. This is a very innovative technological product which will help all the

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internet users, but especially businessmen and students to use the internet services on their iPads
while on the go. The data transfer rates that the 4G network must offer is at least 100 megabits
per second for high mobility communication (users in cars, trains, etc.), and at least 1 Gigabit per
second for low mobility communication (pedestrians and stationary users). 4G network
deployments differ with one another. Some are faster and more widely deployed than others. The
most common deployments are LTE, WiMAX, and HSPA+, but LTE is undoubtedly the most
widely used. 4G LTE was commercially deployed in the U.S., but the concept of an iPad with
the 4G LTE services is still a new one for the Americans. Digiso will become the first brand to
actually offer a similar product.
5.3. Competition and the new market shares

In Japan, Digiso has two main competitors:

• VizMob
• Cesme
VizMob has proved to always be the toughest competitor of Digiso because of their customer
attraction strategies. However, Digiso is the main telecommunication company with 55% of the
share market, however, VizMob has become very successful company on the telecommunication
industry in Japan in the recent years. The other competitors are smaller ones, still offering their
services in just a few parts of Japan.

In the cross-border market, Digiso’s major competitor is NimDig, a major telecommunication

company in Europe which is also expanding internationally. NimDig is seeking an international
expansion faster than Digiso because in July 2015 it had 50 million subscribers in 30 different
countries and because it made a lot of strategic alliances worldwide.

If everything goes as planned, Digiso will expect to raise enough capital to accomplish its global
desires/objectives. It is planning to issue 7 billion € worth of new shares.

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6. Conclusion

Digiso has already experienced a sequence of successes with expanding its telecommunication
services from Japan, to most parts of Asia. Another success is regarding the new product that
Digiso has launched which is the iPad with 4G. Being a very innovative product, iPad with 4G
has seized the Japanese market, by also strengthening Digiso’s reputation and the leader place
with the most share of the market.

As the leader of the Asian telecommunication industry, Digiso should now seek for international
expansion, more precisely the U.S. market. Being an industry of a very sensitive field, and totally
different from other manufacturing companies, Digisio should follow the Strategic Alliance
International Business mode of entry. As the manager for international expansion of the
company, I will show the conducted literature review, market analysis and other
information/facts to the board of directors, in order to convince them to proceed with the
implementation of the plan.

All in all, Digiso’s long-term future goals is to reach globalization and become a global
telecommunication company.

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References

1. International Business 8th edition, by Michael R. Czinkota, Ikka A. Ronkainen, Michael H.

Moffett, 2010. Publisher: John Wiley and Sons
2. International Business: the challenges of globalization 6th edition, by John J. Wild &
Kenneth L. Wild, 2012. Publisher: Pearson
3. Total global strategy: Managing for Worldwide Competitive Advantage, by George S. Yip,
1995. Publisher: Prentice-Hall, Inc.
4. International Expansion of Telecommunication Carriers: The Influence of Market Structure,
Network Characteristics, and Entry Imperfections, by Sarkar, Cavusgil, Aulakh, 1999.
Publisher: Journal of International Business Studies
5. The Impact of Order and Mode of Market Entry on Profitability and Market Share, by
Yigang Pan, Shaomin Li and David K. Tse, 1999. Publisher: Journal of International
Business Studies
6. Reciprocity in International Business: A Study of Telecommunications Alliances and
Contracts, by Kashlak, Chandran, Benedetto, 1998. Publisher: Journal of International
Business Studies
7. The FBI raises security issues on NTT-Verio, by Glenn R. Simpson and David S. Cloud,
2000. Publisher: The Wall Street Journal.
8. Implementing IP and Ethernet on the 4G Mobile Network, by André Perez, 2017.
Publisher: ISTE Press Ltd.
9. 4G: LTE/LTE-Advanced for Mobile Broadband, by Erik Dahlman, Stefan Parkvall and
Johan Skold, 2011. Publisher: Elsevier.
10. Learning from Competing Partners: Outcomes and Durations of Scale and Link Alliances in
Europe, North America and Asia, by Pierre Dussauge, Bernard Garrette and Will Mitchell,
2000. Publisher: Strategic Management Journal

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