Effective International Expansion Strate

Management Research Review
Ef f ect ive int ernat ional expansion st rat egies of emerging count ries: t he st rat egies t hat
helped Arçelik
Tanses Gülsoy Özlem Özkanlı Richard Lynch
Article information:
To cite this document:
Tanses Gülsoy Özlem Özkanlı Richard Lynch, (2012),"Effective international expansion strategies of
emerging countries: the strategies that helped Arçelik", Management Research Review, Vol. 36 Iss 1 pp. 4 -
32
Permanent link t o t his document :
http://dx.doi.org/10.1108/01409171311284567
Downloaded by Ankara University At 03:25 30 December 2016 (PT)
Downloaded on: 30 December 2016, At : 03: 25 (PT)

Ref erences: t his document cont ains ref erences t o 74 ot her document s.
To copy t his document : permissions@emeraldinsight . com
The f ullt ext of t his document has been downloaded 1704 t imes since 2012*
Users who downloaded this article also downloaded:
(2001),"Selecting international modes of entry and expansion", Marketing Intelligence & Planning, Vol.
19 Iss 3 pp. 153-161 http://dx.doi.org/10.1108/02634500110391690
(2007),"Market selection for international expansion: Assessing opportunities in emerging markets",
International Marketing Review, Vol. 24 Iss 2 pp. 208-238 http://dx.doi.org/10.1108/02651330710741820
Access t o t his document was grant ed t hrough an Emerald subscript ion provided by emerald-srm: 382310 [ ]
For Authors
If you would like t o writ e f or t his, or any ot her Emerald publicat ion, t hen please use our Emerald f or
Aut hors service inf ormat ion about how t o choose which publicat ion t o writ e f or and submission guidelines
are available f or all. Please visit www. emeraldinsight . com/ aut hors f or more inf ormat ion.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and pract ice t o t he benef it of societ y. The company
manages a port f olio of more t han 290 j ournals and over 2, 350 books and book series volumes, as well as
providing an ext ensive range of online product s and addit ional cust omer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee
on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.
*Relat ed cont ent and download inf ormat ion correct at t ime of download.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2040-8269.htm
MRR
36,1 Effective international expansion
strategies of emerging countries:
the strategies that helped Arçelik
4
Tanses Gülsoy
Beykent University, Istanbul, Turkey
Özlem Özkanlı
Ankara University, Ankara, Turkey, and
Richard Lynch
Middlesex University, London, UK
Abstract
Purpose – This paper aims to present the case study of Arçelik, which has become Turkey’s leading
manufacturer and exporter of home appliances, as a means of offering insight into why, how and with
what results companies from developing countries expand internationally.
Design/methodology/approach – Primary data have been drawn from in-depth interviews
conducted with senior executives and industry experts, and this has been based on a statistical
analysis of the export and international strategies of Turkish home appliance and television set industry.
Findings – The evidence indicates that international expansion may buffer a firm against
fluctuations of demand in its home market and provide opportunities for growth. Difficulties faced by
a later arrival from a developing country are greater than established rivals, and a developing country
firm will have to rely on different resources and different operational strategies in developed vs
developing markets.
Research limitations/implications – Even though one case cannot yield general conclusions, it
may indicate fruitful theoretical directions. This study raises issues worthy of further investigation.
On the outset, it would be useful to apply the four propositions to more Turkish MNEs in order to test
the robustness of the conclusions.
Practical implications – The study has important implications for companies from developing
countries. First, international expansion appears to be a viable means of offsetting home-market volatility
for emerging-country firms. Second, international expansion is still predicated on significant investments
in firm-specific advantages and their development may shorten the internationalization process.
Originality/value – The report contributes to knowledge in the area of international expansion of
companies from developing countries by providing evidence on how one company has achieved a world
position in a highly competitive market through selective use of quality, innovation, and branding based
on the competitive position that is available in each of its chosen markets. In particular, it contributes to
the limited evidence on the international expansion of Turkish companies at the present time.
Keywords Developing country strategy, Turkey, International expansion, Developing countries,
Manufacturing industries
Paper type Case study
The authors would like to express their sincere appreciation for the kind participation of Arçelik
Management Research Review
Vol. 36 No. 1, 2013 and former as well as current Koç Group executives and the two industry experts in the study.
pp. 4-32 The authors would also like to acknowledge the Editor of the Management Research Review,
q Emerald Group Publishing Limited
2040-8269
Professor Joseph Sarkis, and the two anonymous reviewers of MRR for their guidance and
DOI 10.1108/01409171311284567 insightful comments.
Introduction International
Over the last 20 years, Turkey has significantly increased its international trade in expansion
manufactured products. It is possible that this has been built on the basis of its
lower labor costs compared with those of developed countries. While the basic strategies
evidence of Turkish trade development is clear, there has been only limited research on
the business logic behind such growth, the reasons for choosing particular forms
of expansion and the outcomes of such strategies at the present time for Turkish 5
companies.
In order to explore these issues, we have undertaken a study of the Turkish
manufacture and export of home appliances companies, focusing in particular on the
market leader Arçelik. We have chosen this company because of its successful
international expansion in terms of sales and profitability, especially in Europe. We
acknowledge that two Harvard case studies were developed on this company (Root and
Quelch, 1997; Ghemawat, 2008) and a working paper (Bonaglia et al., 2008), but it has
changed substantially since that time. It is possible that our research may provide some
assistance both to individual companies and to national policy makers on future export
development. However, our primary purpose is to shed further light on the content and
process by which companies from developing countries pursue effective international
expansion strategies. Specifically, from a Turkish perspective, we investigate what
motivates an emerging market firm to diversify into a developed market, given that it
operates with resource disadvantages, and how, given its relative resource
disadvantages, it is able to compete successfully against better-endowed and more
established rivals. The purpose of this paper is to contribute to the understanding of the
why and how of international expansion of emerging market multinationals into
developed countries. Specifically, it contributes to the limited literature on Turkish
companies at the present time.
The paper is structured as follows: following this introduction section, we review
the literature and present our propositions. Next, we describe our research
methodology. Using the empirical data plus archival research, we then examine our
propositions. We conclude the paper with discussion of our findings, implications, and
an exploration of future research considerations.
Literature review and research framework

Although the literature in international business research is extensive and continues to
grow (Werner, 2002), and research in emerging markets and MNEs has been popular
especially over the last decade (Pillania and Fetscherin, 2009), Axinn and Matthyssens
(2002) have argued that most theories on international strategies focus on explaining
the behaviour of large firms from developed countries. They do not provide the same
insights into the behaviour of firms from developing nations in the international
marketplace. Given the emergence of companies from new international trading
nations like India, China, and Turkey, the authors argue that it is imperative to look at
new empirical evidence, rather than rely on existing theories of international trade. The
existing theories such as the Uppsala model ( Johanson and Vahlne, 1977) and the
eclectic paradigm (Dunning and Lundan, 2008) have been criticized for failing to
account for various aspects of the internationalization of companies from emerging
economies (Li, 2003; Mathews, 2006). Equally, Buckley (2002) commented that the
entry of developing countries as major players in the global economy may give new
MRR impetus to such research. This is echoed by other scholars’ calls for research into
36,1 strategies for firms from emerging economies (Peng, 2005).
The existing research on the internationalization of companies from developing
countries focuses on how these companies overcame the multiple challenges of the
liability of foreignness and the liability of being a latecomer (Condo, 2000; Li, 2003), as
well as the push and pull factors of internationalization for those firms (UNCTAD,
6 2006; Amighini et al., 2010). A number of studies have examined the choice of country,
choice of entry mode, and the sequence and timing of entry (Delios and Henisz, 2003;
Cuervo-Cazurra and Genc, 2008; Sun, 2009).
The preferred mode of empirical research appears to be the case study (Duysters et al.,
2009; Liu and Buck, 2009; Sun, 2009; Pillania, 2009) because it offers important insights
into the complex internationalization process of companies from developing countries.
In this stream of research some attention has also been devoted to Turkish
international strategy, including routes to development (Batra et al., 2010; Anıl and
Özkasap, 2010; Gülsoy et al., 2009; Ghemawat, 2008; Bonaglia et al., 2007, 2008;
Bonaglia and Goldstein, 2007; Karabatı and Tan, 2005; Erdilek, 2003, 2008). However,
the research is essentially incomplete and needs further empirical evidence. It largely
remains to be explored, for example, how Turkish companies, operating with resource
disadvantages against developed market companies in a mature industry, are able to
expand internationally (in other words, whether they possess certain capabilities that
enable them to compete with their more established rivals), their reasons for going
overseas, why they have made their particular choices in terms of geographic market
and market segment, timing of entry, and mode of entry, and with what consequences.
The above issues can be explored under the topics of the benefits and difficulties for
developing country firms as they attempt to internationalize and the learning and
adaptation processes they go through as they compete with their established rivals.
Zhu et al. (2011) propose a model focusing on these four elements of the
internationalization process of emerging-country firms: benefits, difficulties, learning,
and adaptation. Their model suggests that developing country firms stand to gain a range
of benefits from going global though these may be different from the ones experienced by
their established rivals, and they face greater difficulties than their established rivals. The
model also suggests that developing country firms may experience a shorter learning
process because they both have the benefit of the example of their forerunners from
developed countries and they may utilize the emerging new technologies and globalization
to leapfrog some of the stages experienced by those forerunners. Furthermore, the model
proposes that latecomers will need to adapt innovatively to the market environment, and
this adaptation process will be shorter in other developing countries.
This paper examines the above issues using evidence from Turkey’s home
appliances industry and the market leader Arçelik. Specifically, we look at how home
market conditions affected international expansion strategy. We chose to study Arçelik
because it has made international expansion part of its corporate strategy over a period
of nearly ten years. We used personal interviews, company document analysis and
archive research to collect the data.
In the following section we examine the four propositions taken from Zhu et al. (2011)
model regarding international expansion strategies for companies from developing
countries.
The benefits of a global strategy for later arrivals International
One of the main reasons for internationalization has been identified as diversifying expansion
economic and sometimes political risks (Ghoshal, 1987). Empirical work suggests that
a recession in the domestic market acts as a trigger for domestic firms to consider entry strategies
into overseas markets that are less affected by recession (Kizilbash and Maile, 1977;
Rao et al., 1983; Caruana et al., 1998; Erdilek, 2008; Çarkman, 2009).
Intensifying home market competition due to the entry of leading international 7
brands can also propel firms to seek market opportunities abroad (Child and Rodrigues,
2005). The degree of home industry competition has been shown to be a significant factor
in driving the internationalization of firms from emerging economies (Yiu et al., 2007).
Risk reduction has been shown to be a motive for companies from developing or
transition economies in their international expansion efforts (UNCTAD, 2006, p. 156). In
fact, in a study of Thai multinationals, Pananond asserts that in the face of an
intensifying global competition that is moving closer to the home market, “International
expansion has moved from an alternative to, perhaps, a key survival strategy”
(Pananond, 2009, p. 346).
Other benefits of a global strategy can be summarized as economies of scale and
scope, lower labor costs, location advantage, recovery of high research and development
costs across the maximum number of customers, loyalty derived from global brands,
and the ability to exploit home-country resources to deliver global competitive
advantage (Porter, 1986; Craig and Douglas, 2000; Fladmoe-Lindquist and Tallman
(1994) as cited in Zhu et al. (2011)). A benefit specifically pertinent to developing country
firms may be access to various kinds of resources that home countries or firms are
lacking (Mathews, 2006). Latecomers from emerging countries may exploit changing
consumer tastes and emerging new technologies, while skipping the lengthy
trial-and-error experience of the incumbents (Cho et al., 1998).
This leads us to our P1:
P1. Companies in developing countries can gain a range of benefits from going
global, which can be different from those of their established rivals.
The difficulties of a global strategy for later arrivals

While international expansion represents opportunity for firms from emerging
markets, it also presents significant challenges. These challenges come in the form
of inexperience, lack of resources and capabilities, the market dominance of
well-established rivals, and consumer loyalty to existing brands (Cuervo-Cazurra and
Genc, 2008). Research shows that few multinational enterprises can claim to be purely
global or local, making it difficult to fully benefit from an integrated global strategy
(Douglas and Wind, 1987; Birkinshaw and Morrison, 1995; Rugman and Oh, 2008).
Some of the other difficulties may be listed as differences in cultural, political,
geographic, and economic factors (Ghemawat, 2001); barriers to trade; complex and
costly knowledge transfer; and insufficient economies of scale (Ghemawat and
Ghadar, 2000).
For home appliances companies, brand loyalty may be one of the most difficult
challenges to overcome as it is a very important competitive factor in the industry
(Paba, 1986), and a new brand of white goods in an existing market may face a
significant barrier in the form of costs of advertising and other selling costs
(Baden-Fuller and Stopford, 1991). Initial negative quality associations among potential
MRR clients due to the products’ country-of-origin may be yet another formidable barrier as
36,1 negative country-of-origin effects lower consumer expectations of quality and
willingness to pay higher prices (Magnusson et al., 2008). The problems of branding
are further compounded by the lack of international marketing and managerial
experience of latecomers from developing countries. This leads us to our P2:
P2. Companies from developing countries will face greater difficulties than those
8 experienced by well-established existing firms, especially in technological
capability, and international marketing and managerial experience.
The learning process of later arrivals

Mathews (2006) argues that the learning process of a company from a developing
country is fundamentally different from that of a company from a developed country.
Cho et al. (1998) confirm the existence of the “born as latecomers” dilemma found in the
catching up process of the Korean semiconductor industry. Thus, the building of a

global strategy will have to be predicated on technological capabilities and
organizational structure change. However, it may be possible for late entrants to learn
from their established rivals and thereby overcome the difficulties faced earlier by them
(Mathews, 2006; Craig and Douglas, 2000). This leads us to our P3:
P3. Companies from developing countries may experience shorter learning
processes than their well-established rivals, but these need to be facilitiated by
advances in technology and progress in other aspects of globalization.
The adaptation process of later arrivals: emerging market vs developed market

The effects of globalization on companies may involve the adaptation of organizational
forms and practices, the adaptation of products and services, and the adaptation of
culture and custom (Tempel and Walgenbach, 2007; Calantone et al., 2004). We would
like to suggest that later arrivals are more likely to come from developing countries
and therefore have greater familiarity with the business opportunities and issues of
such countries. Therefore, later arrivals from developing countries will have shorter
adaptation processes in similar countries. This leads us to our P4:
P4. Companies from emerging countries that arrive later into an existing global
market will have a shorter adaptation process when they enter other emerging
countries than when they enter a developed country.
Research method
We have taken an eclectic approach to the gathering of data. Our approach has been to
examine the existing trade and company data in Turkey from an international
development perspective.
In addition to undertaking a statistical analysis of the Turkish home appliances
industry, we have also, on a historical basis, conducted 25 face-to-face interviews – two
with senior industry representatives, 19 with senior Arçelik executives, one with an
executive from the foreign trade company of the Koç Group, Ram, and one with the first
country manager of Beko UK, over a period of 35 months in order to gain a historical and
in-depth perspective on the trends in the industry. Two executives were interviewed
twice – the two interviews were separated by 15 months in one instance, and by
eight months in the other. The Arçelik executives included four assistant general
managers, the sales directors for the company’s two main home appliances brands International
Arçelik and Beko, the sales director for Europe, America, and Asia Pacific, the strategic expansion
planning director, production technologies director, supply chain director, human
resource director, and several managers of key departments. (Please see Table I for the strategies
full list of respondents.) Interviewees were selected on the basis of their position in the
company; however, we have taken care to select whenever possible those executives
with longer company tenure. 9
Order in the Arçelik or other Koç Group

interviewing Respondent’s title/position Company executive’s tenure at
sequence in the company Interview date Arçelik or the Koç Groupa
1 Manager – International Sales, April 3, 2009; June 20, Entered Arçelik in 1982
Africa Division 2011

2 Industry body representative December 10, 2009
3 Industry body representative January 29, 2010
4 Assistant General Manager/ March 2, 2010 Entered the Koç Group in 2002
Finance
5 Assistant General Manager/ January 24, 2011 Entered Arçelik in 2009
Marketing
6 Director – Strategic Planning January 24, 2011 Entered Arçelik in 2009
7 Assistant General Manager/ January 31, 2011 Entered Arçelik in 1986
Sales – Turkey, Middle East,
Africa and Turkic Republics
8 Director/Sales – Europe, February 11, 2011; Entered the Koç Group in 1992
America, Asia Pacific October 28, 2011
9 Arcelik Sales Director – June 13, 2011 Entered the Koç Group in 1990
Turkey
10 Beko Sales Director – Turkey June 20, 2011 Entered the Koç Group in 1988
11 R&D Director June 22, 2011 Entered Arçelik in 1992
12 Marketing Director – Turkey June 22, 2011 Entered the Koç Group in 1994
13 Assistant General Manager/ June 28, 2011 Entered Arçelik in 1980
Chief Operating Officer
14 Director – Production July 5, 2011 Entered Arçelik in 1991
Technologies
15 Manager – Energy and July 26, 2011 Entered Arçelik in 1992
Environment
16 Director – Supply Chain July 26, 2011 Entered the Koç Group in 1989
17 Manager – Central Quality August 9, 2011 Entered Arçelik in 1981
Assurance
18 Industrial Design Manager September 15, 2011 Entered the Koç Group in 1990
19 Human Resource Director September 22, 2011 Entered the Koç Group in 1994
20 Product Group Manager October 7, 2011 Entered Arçelik in 1996
21 R&D Innovation and System October 11, 2011 Entered Arçelik in 1992
Development Manager
22 Sales and Marketing Business February 24, 2012 Entered the Koç Group in 1988
Unit Manager, Ram
23 First Country Manager of Beko February 27, 2012 Entered the Koç Group in 1979
UK
Note: aThe tenure of some of the respondents has not been continuous, with some having left Arçelik Table I.
or the Koç Group for some time before returning again Respondents
MRR The interviews were also undertaken to develop an understanding of why various
36,1 strategies were adopted. For reasons of confidentiality, we do not identify the individual
managers (beyond references to their titles, company association and the length of their
tenure with the company or the Koç Group) and the senior industry representatives that
we interviewed. However, we are confident that the insights offered by these senior
Turkish figures throw new light on the international development strategies of the
10 Turkish domestic appliance industry. Prior to the interviews, we identified the relevant
senior executives and made appointments to see them. In most cases the interviews
lasted one-and-a-half to 2 hours each. (In one instance two respondents were interviewed
simultaneously.) 21 interviews were tape-recorded, and four interviews were
documented by written notes. For the tape-recorded interviews we hold the full
evidence and have used this in the research material after presenting the industry data.
Considering that most of the respondents interviewed belonged to the uppermost ranks
of a multinational company, sometimes interviews had to be scheduled months in
advance to accommodate the respondents’ busy schedules.

At the outset of our research, the main data sources have been developed under the
guidance of the Turkish Statistics Institute, the Export Promotion Center of Turkey
İGEME, the State Planning Organisation of Turkey DPT (Demir, 2001), and the Istanbul
Chamber of Commerce (Çeşmecioğlu, 2001). We have drawn heavily on these sources in
our initial examination of the issues. However, some of this data has been summarized in
reports prepared by the Turkish Government and other official organizations and may
therefore be subject to the opinions of those tasked with drawing up reports on Turkish
international performance. To ensure that our data is accurate and not subject to
interpretation bias, we have returned to the raw data from the relevant Turkish
Government offices in the compilation of our research rather than rely solely on the
finished reports. In addition to Turkish Government official statistics, we have used the
business press and other reports to develop as full a picture as possible of the Turkish
home appliances industry, its role and strategies in international trade development.
Though not all of the above-mentioned sources have been referred to in the following
analysis, they were largely responsible for informing it.
Brief history of the home appliances industry in Turkey

The Turkish home appliances industry has had its beginnings in the late 1950s. The
first washing machine was produced in 1959 by Arçelik, using a Belgian license, and
the first refrigerator was again produced by the same company in 1960, assembling the
parts supplied by an Israeli company (Buğra, 2000, p. 71). Until the 1980s the industry’s
development was arrested by a variety of factors: protected by import tariffs and
quotas, the few firms operating in the industry appeared content to manufacture
mainly for the home market, which, with its young population, continued to grow.
There was little foreign competition to encourage industry growth, which was also
hampered by dearth of qualified personnel, lack of advanced technology, and the low
purchasing power of the consumer (Çeşmecioğlu, 2001, p. 6). Product types and
technologies were considered outdated (Özbek, 2001, p. 5).
Following the introduction of a major stabilization program in January of 1980, aimed
at curbing inflation, overcoming the scarcities that hindered production, and reducing
the foreign trade deficit through the promotion of exports and trade liberalization
(Aktan, 1997, p. 174), the industry entered a period of rapid growth, speeding up its
efforts to modernize both its product range and its technologies (Özbek, 2001, p. 5). International
Export incentives helped the Turkish home appliances manufacturers take a big leap in expansion
their early internationalization efforts. The reduction of customs duties in 1989 also
facilitated industry growth as domestic manufacturers could now import needed strategies
components and raw materials with more ease.
It was during this period that foreign manufacturers began investing in the Turkish
market. The German company Bosch-Siemens Hausgeräte (BSH) was founded here in 1992 11
(“BSH plans new dishwasher plant in Turkey”, 2006), and in 1994 the Italian company
Indesit (then Merloni) established a production plant (“Indesit confident in Turkey”, 2010).
The entry of foreign competitors increased competition. The end result was the availability
of better quality product choices for the consumer (Çeşmecioğlu, 2001, p. 6).
Today the status reached by Turkey’s home appliances industry belies its modest
beginnings. Turkey is the world’s fourth biggest exporter of home appliances
(considering the four major categories of refrigerators, washing machines, dishwashers,
and ovens and cookers) (Trade Map, 2010). More than half of all production is exported,
and exports of the four major categories account for nearly 2 percent of Turkey’s entire
exports in value. Furthermore, Turkish manufacturers are held up as models for other
companies from emerging economies to emulate. How has this happened? This question
has formed the starting point of this paper, the rest of which will be devoted to exploring
the reasons behind.
Research results
In this part we analyze the four research propositions identified earlier, using evidence
from our interviews as well as from our background research. We now use the evidence
from our research interviews (Table I).
Company profile
Arçelik is the leading manufacturer in Turkey’s home appliances market with over a
50 percent market share. In 2010 the company had sales of 3.49 billion euros
(Arçelik Annual Report 2010), reaffirming its leadership position in Turkey’s consumer
durables. White goods accounted for the bulk of net sales by 63.32 percent. In addition to
home appliances, the company manufactures consumer electronics and built-in
products. Arçelik’s main product group includes refrigerators, washing machines,
ovens, dishwashers, and dryers. Refrigerators account for around 38.8 percent of unit
sales in the five main categories of white goods, followed by washing machines
(29.1 percent), ovens (14.6 percent), dishwashers (13.6 percent), and dryers (3.9 percent)
(interview note). The company’s two main brands of Arçelik and Beko together hold
nearly 50 percent of the home market and together have accounted for the biggest
market share for decades. A third brand, Altus, is positioned as a “value brand” (Arçelik
Annual Report 2010, p. 25). Grundig home appliances are a recent addition to the
company’s home market offerings. Arçelik also manufactures air conditioners in a joint
venture with LG (Arçelik-LG).
Founded in 1955, Arçelik produced Turkey’s first washing machine (1959) and
first refrigerator (1960). Today it is the flagship of the Koç Group of Companies,
Turkey’s largest conglomerate and among the 100 largest publicly traded companies in
Europe, which owns 57.2 percent of Arçelik (Koç Holding – 40.51 percent, other
Koç Group – 16.69 percent). The Burla Group controls 17.6 percent of shares while
MRR 25.2 percent of shares are traded publicly on the Istanbul Stock Exchange
36,1 (Arçelik Annual Report, 2010, p. 17). The company was Turkey’s sixth largest
industrial organization in 2010 (Istanbul Chamber of Industry, 2011).
Arçelik is Europe’s third largest manufacturer of home appliances, commanding the
leadership position in the Romanian market and the number two position in the UK
market (Arçelik Annual Report 2010, p. 26). The company has 11 production plants in
12 four different countries (these include besides Turkey, Romania, Russia, and China),
a sales and marketing organization in 19 different countries, and sells its products and
services in more than 100 countries (Arçelik Annual Report 2010, pp. 22-3). The company
has 19,000 employees around the world, with nearly 23 percent located outside of
Turkey in the company’s subsidiaries (Arçelik Annual Report 2010, p. 60). In July 2011
the company agreed to purchase Defy Appliances in South Africa from Franke Holding
AG (“Arçelik, Franke’nin elinden”, 2011), which added three more production plants and
brought the total number of employees up to 21,500 (note from short telephone interview
with the company’s corporate communications director in February 2012).
Arçelik’s international expansion

Enjoying the largest share of a growing domestic market for decades, Arçelik could
perhaps be thought of as a company that did not need to expand beyond national
borders. Apparently, so did Arçelik – until about the 1990s. The story of Arçelik’s
international expansion has important implications for other companies from emerging
markets. (See Table II for a summary of the company’s internationalization venture).
Phase I of Arçelik’s international expansion – until the 1990s

The founder of the Koç Group of Companies, Mr Vehbi Koç (1901-1996) ardently
believed in the benefits of exportation and foreign partnerships. In his memoirs he
narrates that he set up a canned foods company with exporting as his aim from the start
(Koç, 1983, p. 79). In the 1940s Mr Koç became a sales agent for US Rubber, Oliver,
Burroughs, York, and Ford (Dündar, 2006, pp. 286, 288), and in 1948 he laid the
groundwork for a factory to manufacture light bulbs with General Electric (Dündar,
2006, p. 288).
Exportation of Arçelik production began in 1967 on a limited and sporadic basis,
mostly as a response to government incentives. In the words of one Arçelik executive,
the attitude towards exportation was “selling abroad what was left over after domestic
demand was met” (Mamulattan Markaya, 2001, p. 309). Exporting was looked upon as a
way of raising foreign currency to finance the company’s importation, and as such it was
a “necessity” (Mamulattan Markaya, 2001, p. 244). Thus, the late 1960s and the 1970s
turned out to be the period of Arçelik’s “exportation experiments,” as the company
learned about upgrading product quality, packaging and shipment (Mamulattan
Markaya, 2001, p. 310).
A serious decline in home demand in the early 1980s caused the company to
reexamine its product-oriented strategy, and Arçelik reorganized in 1983 to be more
consumer-oriented (Mamulattan Markaya, 2001, pp. 265-7). In 1983 an export
department was established (Mamulattan Markaya, 2001, p. 320), which engaged a
series of original equipment manufacturing (OEM) contracts in the 1980s and 1990s to
American and European manufacturers (Table II). By 1996, 50 percent of washing
International
1967 The company exports for the first time
1970 The trading company Ram, Turkey’s first foreign trade company, is established expansion
1975 General Electric technology licenses received for white goods strategies
1983 An export department established
1985 Washing machine technology licensed from Bosch-Siemens
1988 Turkey agrees to a schedule of phased tariff reductions with the EU
1988 Arçelik starts OEM exporting to the USA for Sears Roebuck 13
1991 The company’s R&D Center set up
1996 Turkey enters the Customs Union with the European Union
1997 Start of OEM exporting to Europe: a contract with Whirlpool signed for dishwashers
1997 All manufacturing plants receive ISO 14001 certification
1998 Six-Sigma quality program introduced
Reorganization of the household appliances division of Koç Holding begins
1999 Joint venture with LG of Korea to set up Turkey’s first air conditioner manufacturing facility
2001 Turkey enters one of the most severe economic recessions in its history
2001 The marketing and sales activities for products bearing the Beko brand name, formerly carried
out by Beko Ticaret, are taken over by Arçelik
2002 After an unsuccessful bid for France’s Brandt the previous year, Arçelik buys Blomberg
(a subsidiary of Brandt in Germany), Elektra Bregenz (Austria) with its brands Elektra Bregenz
and Tirolia, the British home appliances brands Leisure (cookers) and Flavel (appliances and
TV sets), and the Romanian refrigerator producer Arctic
2004 Joint acquisition of Grundig brand of televisions with the British Alba Plc
2005 A greenfield plant is launched in Russia (Fedorovskoe Village, Kirzhach Region) to manufacture
washing machines and refrigerators, with production beginning in 2006
2006 Reorganization of Arçelik and Beko Elektronik in Turkey, with Arçelik becoming the majority
shareholder in Beko
2007 A washing machine factory (Changzhou Casa-Shinco) in China acquired, with production
beginning later the same year
2007 Beko Elektronik acquires the remaining shares of Grundig, thereby becoming the sole owner
of the company and brand
2009 Grundig Elektronik merged with Arçelik
2011 Agreement to acquire Defy Appliances in South Africa from Franke Holding AG.
The acquisition is finalized by the end of 2011 (Kara, 2011, p. 19)
Notes: Brands: Arçelik, Beko, Blomberg, Elektra Bregenz, Arctic, Leisure, Flavel, Altus, Grundig Table II.
(Arçelik Annual Report 2010 and www.arcelikas.com) Milestones in
Source: Arçelik and Koç Holding annual reports, Arçelik web site www.arcelikas.com; Mamulattan Arçelik’s international
Markaya (2001), Ghemawat (2008), Bonaglia et al. (2007) and Root and Quelch (1997) expansion strategy
machine exports and 30 percent of refrigerators’ were under OEM contracts (Bonaglia
and Goldstein, 2007, p. 22).
From its OEM experience, Arçelik appears to have gained significant benefits. These
include learning the standards of production to be achieved so as to be competitive in
foreign markets, the packaging, and the logistics of volume exporting, as well as the ability
to leverage this knowledge in its home market (Mamulattan Markaya, 2001, p. 310).
Until the 1990s Arçelik appears to be building its technology and improving the
quality of its processes and products through strategic alliances with foreign companies.
But, the focus was decidedly on the home market. The preceding decades appear to have
been a period of learning for the company. The primary benefits to be gained from
international expansion at the time were seen to be opportunity provided by large-scale
sales to neighboring markets, desire to compensate for foreign currency shortages, and
MRR through OEM contracts, access to more advanced technology and market knowledge,
36,1 both of which could be leveraged to the company’s advantage in the home market. Thus,
these were different from such benefits as economies of scale, lower labor costs, or access
to natural resources that are traditionally associated with international expansion.
Phase II: the challenge of the Customs Union – the 1990s

14 The 1994 annual report of the Koç Group included the following warning:
The prospect of Customs Union with the European Union from 1996 means that over time we
may see some erosion of the impressive dominance that we have had in all major household
products (p. 21).
The Customs Union with the EU that went into effect in 1996 signalled an important
turning point for Turkish manufacturers. The removal of protective barriers meant
that Turkish goods would now be exposed to more intensive competition from import
brands. The Customs Union could, therefore, be considered a litmus test of a brand’s
competitiveness.
One executive who has been with Arçelik since 1994 recalled:
The Customs Union was a turning point. It caused important changes in the company. “If [the
customs barriers] are going down, then we will persevere, and in fact, be better than
they.”[. . .] We never lost our confidence (Respondent 16).
This was a challenge Arçelik had been preparing for since the 1980s by upgrading
quality and productivity (Mamulattan Markaya, 2001, pp. 282-8). In fact, the Koç Group
appears to be one of the first Turkish companies to adopt such total quality
management practices as quality circles in 1983 (Muluk et al., 2000). By 1995 all Arçelik
plants had received ISO 9001 quality certification. Using just-in-time and flexible
manufacturing systems, productivity was improved (Root and Quelch, 1997, p. 4). The
company chose to focus on increasing productivity because competing on price would
have been more difficult as Arçelik had to source some of its inputs from abroad
(Mamulattan Markaya, 2001, p. 336).
Earlier the company had licensed technology from GE and Bosch-Siemens in order
to maintain its market leadership at home (interview note). After the Customs Union,
however, producing its own technology became an imperative for Arçelik because
onetime partners in the protected Turkish market would now become rivals unwilling
to share technology (Mamulattan Markaya, 2001, p. 344).
To get around the restrictions accompanying licensed technology and to be able to
compete against would be rivals in the home market post-Customs Union (interview
note), Arçelik established a Research and Development Center in 1991. Today around
700 people work there, and nearly half of all international patent applications from
Turkey are made by Arçelik, which, in 2008, was the only Turkish company in the WIPO
list of the world’s top 500 patent league. Annual R&D budget is around 2 percent of
annual revenues (interview note).
At the beginning of 1995 a major reorganization throughout the company, which
resulted in a more horizontal structure, was aimed at facilitating product development
and launch as well as increasing communication and initiative (Arçelik Annual Report
1994, p. 13). At that time a separate R&D tier was formed at the individual factory level.
While the central R&D department would focus on basic research activities, the “product
R&D” departments were going to carry out product development. An executive who has International
been with the company since 1991 remembered: expansion
At that time responsibility and authority was expanded to lower levels in the company, and strategies
teams were formed. These teams were enabled to conduct the functions of production and
product development. [. . .] Product research and development was given to the factory, which
means the factory was empowered (Respondent 14).
15
Again in the mid-1990s total productive maintenance was adopted – a management
approach aimed at eliminating line stoppages and the concomitant losses by
maintaining all systems and equipment continually and promptly all of the time, with
machine operators doing most of the work (Goetsch and Davis, 2006). The director of
production technologies explained the consequences of the implementation of total
productive maintenance principles from the perspective of the individual machine
operator:
Before I was simply pressing the start-and-stop button. Now I begin to check whether the
machine is leaking oil. [. . .] I begin calling the station my own. Before I would call
maintenance people if there was a problem. Now I am preventing those problems from
occurring, or when they occur, I fix them. Consequently, first of all, I feel more important, and
secondly, I own up my job. When you look at it, this is an important change (Respondent 14).
The initial total quality management and research and development efforts were
mainly targeted at bolstering the company’s position in its home market and were not
in and of themselves a preparation for eventual internationalization. Explained an
executive who, in 1986, started out at Beko Ticaret, the distribution firm for Beko
products, and later passed on to Arçelik:
In those days I don’t think large-scale exporting was the intention. In fact, consider that none
of our manufacturing plants is located near ports, but inland (Respondent 7).
Nonetheless, as production capacity grew, exportation came to be seen as a necessity.
Recalled another executive who also started out at Beko Ticaret in 1988 to
subsequently join Arçelik:
The production numbers did not meet costs. Either we were going to grow or we were going
to quit (Respondent 10).
Another challenge came in the form of a steep devaluation of the Turkish lira in 1994.
Exports were important also to counter the increase in imports. In December of 1995, an
executive meeting reached the decision to open up to markets beyond Turkey
(Mamulattan Markaya, 2001, pp. 325-6).
Despite these strategic goals, however, even in the year 2000, foreign sales accounted
for only about 16 percent of Arçelik’s annual net sales (Table III). Part of the reason may
have been management indecisiveness regarding the balance of domestic vs
international focus, owing to the complacency nourished by an already large
and growing home market that delivered a higher unit profit margin (Root and
Quelch, 1997, p. 12).
In summary, the 1990s were a period of upgrading quality, laying the groundword
for technology production, and organizational restructuring in preparation for the
impending arrival of powerful foreign competitors post-Customs Union. This was also
the beginning of developing an international strategy, based on the desire to take
MRR
Share of net international
36,1 Net sales Net domestic sales Net international sales sales in total net sales
Year (million euros) (million euros) (million euros) (%)
2000 1,564 1,317 247 15.79

2001 1,295 823 472 36.45
16 2002 1,900 944 956 50.32
2003 2,082 1,082 1,000 48.03
2004 2,686 1,516 1,170 43.56
2005 3,741 1,876 1,865 49.85
2006 3,873 2,005 1,867 48.21
2007 3,725 1,928 1,797 48.24
Table III. 2008 3,574 1,804 1,770 49.52
Distribution of net sales 2009 3,065 1,474 1,591 51.91
between domestic and 2010 3,487 1,718 1,769 50.73
international markets,
2000-2010 Source: Company annual reports
advantage of growth opportunities, economies of scale, and the ability to develop

technology. While the impetus behind Arçelik’s drive to develop its own technology
was the desire to overcome licensing restrictions in the home market, the leverage that
capability provided for the company in foreign markets soon became apparent as will
be discussed in the section on “Capability upgrading and organizational restructuring.”
This suggests that any emerging-country firm attempting to become a player in the
international arena must first develop some firm-specific advantages.
Phase III: recession of 2001 and after

In 2001 Turkey experienced a severe recession with the GNP falling in real terms by
9.4 percent (Öniş, 2003, p. 15). The subsequent rise in unemployment contributed to a
38 percent reduction in domestic demand for household appliances in the four major
categories (TÜRKBESD, 2010), and the company revised its strategy. Two critical
decisions were made: to turn westward and to accelerate growth through acquisitions.
Remembered one longtime-serving executive:
One of the most important reasons for our expanding abroad was the contraction of the home
market. Turkey was a widely fluctuating market. Inflation was very high. There were days
we could not see as far as the next day. How realistically can you do annual planning [under
those circumstances]? 2001 was the most critical turning point (Respondent 10).
Another executive explained the impact of the 2001 economic crisis:
The 2000-2001 crisis was a crisis that affected the management’s outlook. The crisis
apparently showed management that the company had to increase its presence in foreign
markets. 2001 showed that a single-market growth strategy was not a sustainable growth
strategy. What happened after 2001? The company did what it had to do in international
markets: chose to grow through acquisitions (Respondent 4).
In 2002 Arçelik acquired a number of well-known brands in Europe one after another
(Table II), thereby increasing its revenues and market share in Europe (Arçelik Annual
Report 2004). Between 2001 and 2002, international sales increased by 146 percent
(Arçelik Annual Report 2002, p. 7).
This was also the time when the company decided to concentrate on Western International
markets. Explained Respondent 7: expansion
The question was should we go to Europe or to other countries? In 2001 we turned our face strategies
to Europe. We chose the UK because we had had an operation there for ten years. The
groundwork of those ten years was a big asset to us.
The same respondent also emphasized that in 2001 the company realized international 17
expansion was an imperative for growth.
In 2004 the Koç Group of Companies announced that to compensate for signs
of contraction detected in the domestic market for 2005, the target would be to
derive half of Group revenues from international sales (Koç Holding Annual Report
2004, p. 7). In 2005 Arçelik invested in a production plant in Russia; in 2007 it
bought a factory in China (Table II). Acquisitions look likely to continue; in July
of 2011, Arçelik agreed to acquire the South African home appliances manufacturer
Defy.
Between 2002 and 2006, the company nearly doubled its net sales (Arçelik Annual
Report 2006). In 2009, a global recessionary year, the company achieved the highest
profitability level in its history, and in a contracting European market, managed to
increase its sales by 15 percent. By 2011 Arçelik was drawing 51 percent of its annual
net sales from international sales (Arçelik Annual Report 2010).
The 2001 recession appears to have provided the main impetus behind Arçelik’s
accelerated internationalization efforts in the 2000s. Diversification of risk through
diversification of geographical markets was the main benefit realized from the strategy
vigorously pursued in the years following 2001. Reaping the benefits of international
expansion, however, was predicated on decades-long investments in quality upgrading,
human resources, and technology development, as to be outlined in the following two
sections.
Choice and succession of foreign markets: benefits, difficulties, learning, and adaptation
In the early years of its internationalization effort, the company was mainly exporting to
the countries of Middle East and North Africa. The main reasons were the constraints
imposed by the technical standards of Western markets (Mamulattan Markaya, 2001,
p. 315), and proximity and logistics.
Thus, Western markets were shied away from due to concerns regarding standards
rather than cultural distance or dearth of ethnic communities there. Apart from the
unfamiliar standards, an issue in some European markets was the image of poor
quality associated with Turkish products. Consequently, exporting to the markets of
Western Europe appears to have become an ideal, and its achievement was regarded a
significant accomplishment.
The markets of the Middle East and Africa, by contrast, had compatible standards
and similar ways of conducting business. But, they presented challenges as well. These
challenges came in the form of institutional constraints such as the legal framework,
protectionist import regimes, transportation costs, problems in banking transactions,
and the necessity of training the after-sales personnel; as well as small markets and
a myriad different product types (interview note). In some of these markets political
instability was also a problem. These difficulties were apparently surmounted
by the resourcefulness of the company’s managers. The cultural affinity, the similarity
MRR of the markets – or in some cases the sense of having passed through the very same
36,1 stages earlier – were helpful in taking a hold in these markets.
The markets of Western Europe became more attractive as the Customs Union
approached. The company regarded those markets as an opportunity to learn its would
be competitors in the home market and a testing ground of its capabilities in preparation
for defending its domestic market share post-Customs Union (Root and Quelch, 1997, p. 8).
18 The regime changes in Eastern Europe in the late 1980s gave Arçelik a unique
business opportunity. The company took advantage of a rise in prices in East European
countries to move in the UK market to meet demand for table-top refrigerators
(Mamulattan Markaya, 2001, p. 316; Çarkman, 2009, p. 141). Choosing the UK market
because it was price-sensitive and not dominated by domestic brands (Root and Quelch,
1997, p. 9) and had minimal customs duties (interview note), the company emphasized
brand sales from the beginning and built a successful business selling Beko-branded
table-top refrigerators.
Arçelik chose not to concentrate on a niche market in the UK, in contrast to some
developing country multinationals who enter developed countries through niche
markets (Khanna and Palepu, 2006; Child and Rodrigues, 2005). Explained Respondent 1,
who started out at the foreign trade company Ram in 1982 and was one of the closest
witnesses of the company’s internationalization venture at the time by being personally
involved in sales (though in different markets):
We did not begin as a niche [player], no. Our vision was to be one of the top ten brands in the
world with Beko by 2010. This cannot be done as a niche player.
In the UK the product had begun to be regarded as a commodity, and therefore a new
brand did not face a disadvantage; the consumer was open to trying it if you gave the
requisite service, explained Respondent 12. Hence, it appears as though being a late
entrant provided the company an advantage in a mature industry and a mature market
that is different from the benefits enjoyed by early movers. Today the UK is the
company’s biggest market after Turkey. In time the company upgraded its product
range to include larger home appliances with more distinctive features. In fact,
the widening of the model range, necessitated by the decision to enter the UK market
with the Beko brand, served to increase the company’s export markets in Europe in the
1990s, noted Respondent 23, who also credited the Beko brand’s growth in its home
market partially to its success in the UK.
Some of the problems encountered in European markets, apart from negative
country-of-origin associations, were the many different competitive brands already
established in those markets and the different channels of distribution, which included
chain stores, hypermarkets, kitchen channels, and wholesalers (interview note).
Its OEM production in the 1980s and 1990s helped the company in countering some of
these challenges when it increasingly emphasized branded growth in the 2000s: the
channels were familiar with the company, and the fact that it had manufactured for
some of the world’s best-known brands served as a reference (interview note).
The ways in which Arçelik has countered the challenges regarding its branded
products are detailed in the next section; these can be summed up as investments in
quality and research and development, flexible production planning, and innovative
channel management. But, the difficulties encountered are not minimized by company
executives. “A new battle is won every day,” remarked Respondent 6.
By 1992, Arçelik was accounting for 60 percent of Turkey’s entire refrigerator exports International
(Mamulattan Markaya, 2001, p. 344), and in 1993 the company had already become one of expansion
Europe’s top ten manufacturers, with 40 percent of refrigerator production and
20 percent of dishwashers exported to Western Europe (Mamulattan Markaya, 2001, strategies
p. 357). In 1995, when Arçelik’s internationalization could still be considered in its
infancy (the entire export volume totaled 40 million dollars), the company had already
started looking westward, and within three-and-a-half years, exports nearly quadrupled 19
to 150 million dollars (Mamulattan Markaya, 2001, p. 320).
A big part of the reason for taking on the European market was the
existence there of a market with a higher purchasing power (interview note).
Working initially with local importers and distributors in Europe, the company learned
to deal with both local and international competition (Mamulattan Markaya, 2001,
p. 320).
The former Eastern bloc countries also offered an advantage: the absence of
latecomer liability. Arçelik entered these markets around the same time as the big
global players. Additional advantages may have been the low brand loyalty to global
brands and, concomitantly, the absence of prejudice against brands of developing
countries (interview note). In fact, in some of these markets, the company’s products
were more advanced than the available local brands, which facilitated their adoption
by the consumer.
Furthermore, the chain stores commonly used for the distribution of home appliances
in West European markets were often nonexistent in the former Soviet bloc countries,
and Arçelik could capitalize on its decades-old experience of setting up an exclusive
distributor network (through main distributors), which proved to be a competitive
advantage especially in some of the East European markets (such as Serbia and
Bosnia and Herzegovina) and the Turkic Republics (interview note). For instance,
of the 500 exclusive Beko dealerships the company has overseas, 150 of them are in
Azerbaijan. That skill, which the company had painstakingly built over the years
(Buğra, 2000), helped Arçelik gain a competitive advantage over its foreign rivals also in
its home market.
In the countries of the Middle East and Africa, “made in Turkey” holds a lot of
prestige, noted Respondent 7, as do the names of Arçelik and Koç. Since the main
competitor brands in each market are different, the brand has to be positioned anew
market by market. The company uses different product mixes for its different markets.
For instance, the appliances for some of the markets in the Middle East and Africa
have to be designed to withstand voltage fluctuations.
The end result was that in 2010 the majority of overseas sales in monetary terms were
accounted for by Western Europe (27.96 percent), followed by CIS and Eastern Europe
(14.17 percent), with Africa and the Middle East constituting 7.02 percent – a small but
growing share (in 2008 this region of the world represented only a 5.15 percent share)
(company records). Today, Arçelik is active in 13 Middle Eastern countries, 19 African
countries, and all of the Turkic Republics.
In short, Arçelik’s international expansion followed a traditional trajectory. The
company first began exporting to developing countries, and then with growing capacity
and increasing capabilities, entered developed countries.
Around the same time, the company also entered the countries of Eastern Europe and
the Turkic Republics, with the regime changes of the 1990s. While the developed
MRR countries presented some challenges that would require the company to emphasize
36,1 capability upgrading, the developing countries threw up other challenges, which would
necessitate drawing on such home-grown resources as distribution network building. In
short, the company faced greater difficulties in technological capability and
international marketing and managerial experience than its well-established rivals.
But, these difficulties appear to have become more easily surmountable as the company
20 increased its capabilities and changed its organizational structure for greater integration
and improved market orientation.
Capability upgrading and organizational restructuring

Arçelik seems to have originally invested in capability upgrading in order to be able to
stand against the challenges represented in its home market by the Customs Union, as
explained earlier. The strategic alliances forged with foreign manufacturers in the form
of licensing and OEM manufacturing were largely aimed at bolstering the company’s
standing in the home market. “Licensed manufacturing began as technology transfer,”

noted Respondent 7.
Then the impending Customs Union with the European Union in 1996 triggered the
establishment of the company’s Research and Development Center in 1991. Recalled
the R&D Director, who entered the company in 1992 and has been with the R&D
Center since then:
Competitive shields would be removed following the Customs Union. After Arçelik
achieved a certain strength, licensing firms would either give old technology or ask for a high
price for their technology. To survive Arçelik decides to develop its own technology. [. . .]
Arçelik thinks “we can do this.” The starting point is the power of “we can do this”
(Respondent 11).
As important as the decision to develop its own technology was the decision regarding
which technology to develop. Recalled Respondent 11:
Because we entered the race a little late, we chose high technology for our infrastructure – to
be able to start from a more advanced position.
The director of production technologies, who has been with the company since 1991,
noted that it was not enough for Arçelik to be at the same technology level as its
competitors because the competitors had an established “brand name” – something
Arçelik lacked at the time. Therefore, Arçelik had to do more (Respondent 14).
Another important decision taken in the early days of the R&D Center (or “Central
R&D”, as it is referred to inside the company) was to meet not only Turkish
regulations, but “the world’s toughest regulations – the EU regulations”:
If we can sell to the EU, we can sell to any market [. . .] The EU regulations were much more
sensitive. The EU is environmentalist. We saw indications of that. This is what we built our
R&D programs on (Respondent 11).
In fact, in 1995, Arçelik was the first Turkish household appliances company to
produce refrigerators without ozone-depleting CFC gases, much earlier than 2006, the
deadline set for Turkey in the Montreal Protocol (Arçelik Annual Report 2010, p. 68).
Technology upgrading served to facilitate exports and to further international
expansion. Explained Beko Sales Director for Turkey, who started out at Beko Ticaret
in 1988:
After we started developing our own technology, we started advancing more quickly. [. . .] As International
our technology became more developed, our international sales opportunities increased.
As our international sales opportunities increased, so did our opportunities for international expansion
investment (Respondent 10). strategies
The Customs Union proved to be a litmus test for Arçelik: the company managed to
maintain its market share despite the entry of powerful competitors. Explained
Respondent 4: 21
[Arçelik] did not lose its leading player position in Turkey. Especially the entry of such a big
player [as Bosch-Siemens] showed Arçelik that it could be competitive.
Added Respondent 7:
In fact, the first two brands in the market are our brands: Arçelik commands the number-one
position and Beko the number-two position. [. . .] There is no other country where a similar
situation exists. [In any market] there is always an international brand in the top first or
second position.
These results are predicated on the earlier investments in technology and innovation:
If we had not invested in innovation and technology, I am not sure we could have maintained
this market share. We should look at it from the reverse. Yes, we have strong sales channels,
a strong service network, and powerful brands. These are some of the key factors for
our success in our home market. But, if you do not support these with technology, unique
products, and competitive products [. . .] you cannot sustain [your success]. [. . .] Our growth
in international markets is also a result of this to a certain extent. Without our products and
technology supporting it, we could not have achieved sustainable growth (Respondent 11).
Innovation is encouraged at all levels of the organization through idea banks and
annual celebration of invention days since 1999. Interchange among marketing,
research and development, product management, and manufacturing is reinforced
through regular meetings during the year. Similar meetings are held also with dealers
and sales channels.
This evidence suggests that to enjoy the benefits of new markets, growth
opportunities, and geographic diversification, with its concomitant benefit of risk
diversification that international expansion may provide, Arçelik first had to upgrade
the quality of its products and develop its own technology.
In 1999 Arçelik underwent another reorganization (following that of 1995): first, the
cooking and heating appliances manufacturer Ardem, an Arçelik subsidiary, was acquired.
Then three Koç companies, including the two marketing and sales companies for Arçelik
products, were merged with Arçelik. This reorganization was undertaken as a “necessity of
being an international company” and was expected to “realize productivity gains in
purchasing, finance, human resources, and sales and distribution” (Arçelik Annual Report
1999, p. 7). That same year the merger was attributed a 27 percent increase in Arçelik sales
and a 46 percent increase in the company’s profit (Arçelik Annual Report 1999, p. 7). In 2001,
the marketing and sales of Beko-branded products in the home market, formerly carried out
by Beko Ticaret was overtaken by Arçelik (Arçelik Annual Report 2001, p. 9). By 2001, the
company’s various manufacturing and distribution firms were brought together under the
rubric of Arçelik A.Ş.
The result was a faster organization. Explained the Arçelik Sales Director
for Turkey, who started out with Beko Ticaret in 1990 and has been with Arçelik
MRR since 2006: “We have been able to take decisions faster. [. . .] We have become more
36,1 competitive [as a result]” (Respondent 9).
Among the factors paving the way for a developing country firm to become a regional
player in the global market is also the company’s human resources. “Towards the end of
the 1980s and in the 1990s serious investments were made in human resources,” noted
Respondent 4. Drawing not only on its own name, but also on that of its parent company
22 Koç, Arçelik could and does attract some of the country’s best talent and invests in their
development. In 2010, for example, an average of 15 hours of training per employee was
offered (Annual Report 2010, p. 60). Explained Respondent 14:
We have been fortunate in that successful engineers from good universities have chosen us.
We have had the chance to work with some of Turkey’s best engineers. Our competitors in
Germany or in the Far East do not have the same [chances] because the industries rising to
the forefront with both their product technology and production technology are different in
those countries. [. . .] Here Arçelik offered this opportunity. That was our biggest difference.
As we had the chance to work with very good people, that helped us to catch up [. . .] and now
we have technical personnel who have been with us for twenty years. This is an advantage
compared to other companies.
The fact that some of the technical personnel have chosen to stay with the company for
20 years is partially an indication of employee satisfaction. Average seniority at the
company’s operation in Turkey is 7.5 years (Arçelik Annual Report 2010, p. 60).
Respondent 11 points out that the company values “those people it has cultivated –
people who have experienced every level at the company and have proven themselves
in different positions.”
Several of the executives interviewed have mentioned the important role played by
the international sales managers in the company’s successful international expansion.
Seasoned in domestic sales, Arçelik managers appeared to quickly adapt to the foreign
markets they were appointed to. “We saw that our home market sales-marketing
people were very successful abroad,” noted Respondent 10. Here geography does not
appear to make much of a difference. Arçelik managers were considered to be equally
successful in the Middle East, India, China, Russia, as well as European Union markets.
Consequently, for the past 15 years the company has made proficiency in English a
prerequisite of employee selection also for domestic sales positions (Respondent 10).
Group membership also yields benefits for Arçelik, one of which is the pool of
accumulated management skills (Bonaglia et al., 2008), evident from the representation
of other Koç company-originating roster of high-ranking executives interviewed for this
study. In fact, the company’s success in the UK market with its Beko brand is largely
credited to the groundwork of the 1990s, and that groundwork was painstakingly
established between 1990 and 2003 by a country manager who, before taking the helm of
Beko’s UK operation, had served for eight years as Ram’s general manager.
Another benefit of group membership is the prestige of the Koç name:
The trust inspired by the Koç name in some of our new markets can open up some doors more
quickly (Respondent 9).
That name is important also in attracting and maintaining partnerships with leading
global companies. Also an important factor in the company’s early export efforts was
the exporting arm of the Koç Group of Companies, Ram, which helped Arçelik gain a
foothold in international markets (Respondent 3). “It was Ram, which introduced [us]
to foreign markets” (Respondent 4). Ram entered Europe, for example, by establishing International
companies there, starting in 1986, explained a longtime-serving Ram executive expansion
(Respondent 22).
Meeting the challenge posed by powerful foreign competition in its home market strategies
seems to have increased the company’s confidence in its own capabilities. The
Marketing Director for Turkey, who started out at another Koç Group company in 1994
and has been with Arçelik since 1999, mentioned that the foreign competition in Turkey 23
taught the company how it could compete against global competitors, implying that this
confidence increased the company’s interest in international expansion:
If I can stand against powerful foreign competitors [. . .] in Turkey, I can do this also abroad
(Respondent 12).
We first started saying out loud around 1998 that “we are so effective in the Turkish market,
then why are we not opening up to the world?” (Respondent 10).
The series of acquisitions of European brands and companies in 2002 propelled Arçelik
to the league of multinationals. The reorganization initiatives undertaken after that
date bear the mark of a multinational with the resolve to integrate far-flung operations.
To facilitate brand management and globalization, in 2006 this time the consumer
electronics company of the Koç Group – Beko Elektronik – underwent a restructuring,
with Arçelik increasing its share in the company from 22.36 to 72.46 percent, before
completely merging under Arçelik in 2009 (Table II).
To speed up the process of branding in international markets, the marketing
organization was restructured in 2010, with marketing separated from sales. Now there
are an assistant general manager of marketing and two directors of marketing
reporting to the position, one responsible for the home market and the other for foreign
markets. Arçelik executives have commented that though this change is recent, they
have already begun seeing some benefits such as greater involvement of marketing in
product development and production (interview note), indicating a greater marketing
orientation. “Where product strategies and projects used to be led more by R&D, now
information and demands have begun flowing in from the market,” mentioned
Respondent 14.
Other initiatives include the establishment of a central supply chain directorate in the
late 2000s, which is credited by Arçelik executives with increasing the speed with which
the company is able to “take action and show reaction” by making the coordination
between the factory, sales, and marketing more efficient. In 2011 a production
technologies directorate was formed with the aim of determining the feasibility of new
Arçelik investments as well as following new production technologies. One of the
departments under the directorate is energy and environment, which is expected to
closely monitor environmental trends and standards worldwide. Another department is
central quality assurance, which monitors quality assurance activities throughout the
company.
Finally, in Arçelik’s international expansion venture leadership appears to have
played a key role. The company founder’s interest in forming strategic alliances with
leading foreign companies has already been noted earlier. The commitment of various
managers to the company’s internationalization has been mentioned by several of the
respondents interviewed. One former general manager is credited with giving the
company the mission of “we will export, and [those exports will be] branded exports”.
MRR Several former general managers as well as the current one have been mentioned
36,1 as making important contributions to the company’s international expansion efforts
through quality upgrading, technological capability building, and organizational
restructuring. Several of the respondents have also recognized the role played by the
owners of the company in this strategy. “These are such huge investments that the
shareholder’s support is a must.”
24 The above evidence suggests that important investments in learning and a process
of adaptation were imperative for Arçelik in its international expansion. On that route,
the company drew substantial support from the Koç Group.
A streak that runs through the interview evidence is the resolve to go further than
the most powerful competitors in order to catch up. That resolve is behind the strategic
decisions such as those concerning the choice of technology to develop, the choice of
markets to enter, and the choice of product standards to adopt. That sort of confidence
is probably predicated on strong financial and human resources, the support of a
conglomerate behind, and leadership commitment.
Analysis of propositions
Benefits of a global strategy for later arrivals
The above discussion shows that the main impetus behind Arçelik’s internationalization
efforts was the need to spread risk on account of the volatility of the home market owing
to recurrent economic recessions as well as intensifying competition at home following
the Customs Union with the EU in 1996. International expansion also provided
the opportunity for growth. In other words, the benefits sought from international
expansion were avoidance of over-reliance on the home market and growth
opportunities, and both of these benefits have been realized. Drawing 51 percent of its
net sales from international sales in 2010, the company has effectively buffered itself
against the negative impact of a sales decline in its domestic market. Second, Arçelik
was able to develop a portfolio of brands for global markets in addition to Beko. Other
benefits to be gained by a global strategy may not be evident as yet.
Hence, P1 is supported. There appears to be a range of benefits a developing
country firm can acquire from going global, which can be different from those of its
established rivals.
Difficulties of a global strategy for later arrivals

Arçelik appears to have encountered different difficulties in developed vs developing
markets. In developed markets, it faced the problem of gaining trade channel access
and winning brand loyalty, which were some of the factors (in addition to the principal
need to stand up to foreign competitors in the home market) that compelled the
company to significant investments in quality upgrading, technological capability,
efforts to meet environmental standards, branding and to organizational restructuring.
In developed markets the company’s biggest challenge continues to be brand building.
In developing markets Arçelik has faced a difficult institutional environment, which in
some cases it has managed to use to its benefit. Another challenge of some developing
markets has been the lack of established distribution networks, which the company
has had to painstakingly establish.
Based on the above evidence, P2 is partially supported. Latecomers from developing
countries face greater difficulties than their well-established rivals, especially in
technological capability and international marketing and managerial experience. International
Moreover, these difficulties will remain until significant organizational learning and expansion
transformation processes have taken place. However, a rival’s being a well-established
global brand does not necessarily mean that it is well-established in individual markets. strategies
As the case of the newly opening markets of Eastern Europe and the Turkic Republics
shows, some of the global brands entered these markets at the same time as Arçelik.
Therefore, the company did not have the problems of latecomer liability or negative 25
brand associations. In fact, in some of these markets the company’s home-country
experience proved to be more useful than its established global rivals’ international
marketing and managerial experience.
The learning process of later arrivals

Arçelik’s learning process appears to have taken the form of knowledge acquisition,
knowledge transfer, and organization structural change, similar to the case described by
Zhu et al. (2011). Deciding in the late 1980s that if it wanted to survive and grow, it had to
develop its own technology, Arçelik undertook several important initiatives: upgrading
quality, setting up a research and development department, and bringing the various
marketing and sales arms of the company under one roof to increase productivity in
purchasing, finance, human resources, and sales and distribution. In the late 2000s, this
time another important decision was made: to expand internationally and to grow with
the company’s own brands. This was followed by another reorganization as several
important departments were formed, among them supply chain directorate, production
technologies directorate, energy and environment department, and central quality
assurance department. On the marketing side, the position of an assistant manager of
marketing was established, and the horizontal linkages among marketing, research and
development, and product management were strengthened to reinforce the company’s
marketing orientation.
Based on the above evidence, P3 is also supported. We can conclude that Arçelik’s
internationalization process has been shorter than developed-country firms, but that
internationalization appears to have been predicated on some important capabilities
cultivated over a period of at least four decades in its home market: these are investments
in quality upgrading, human resources, a wide and loyal distribution network, and a
servicing system, not to mention the backing of Turkey’s biggest conglomerate. On top
of these investments, the company has restructured its organization to meet the
demands of a global operation.
The adaptation process of later arrivals: emerging market vs developing market

Our evidence suggests that Arçelik mobilized different resources to establish itself in
developing vs developed markets. In developed markets where the company decided to
grow with its own brand, significant investments were made in marketing. In some
European markets the company acquired leading brands to increase its market share.
In developing markets the company used its home-grown capability of establishing
distribution networks while benefiting from hindsight because of the recognition of the
similarity of the market development stages.
Based on the above evidence, P4 is also supported. But, it is important to note that
Arçelik was not really a late arrival in some of the developing markets as exports to those
markets had begun in the late 1960s and 1970s even if mostly not under the company’s
MRR own brands. As for some of the newly opening markets of Eastern Europe and the
36,1 Turkic Republics, the company entered them around the same time as some of its global
competitors.
Discussion
This paper has provided some insights into the internationalization of latecomer firms
26 from emerging markets through one case study. We set out to explore the drivers of
internationalization of an emerging market firm and how such a firm, faced with
intensifying competition and economic volatility at home, could propel itself to the
ranks of the important regional players in the home appliance industry.
When Arçelik entered foreign markets in the late 1960s, its main focus was decidedly
the Turkish market, and it remained to be so until the 1990s. During that period it was
the fluctuations of the home market and the need to finance the importation of inputs
needed for its production as well as government incentives for exportation that
occasionally nudged the company towards seeking new markets abroad. Even in the
early 1990s, with the Customs Union on the horizon, some of the interview evidence
suggests that such initiatives as quality upgrading and technology development were
aimed at defending the home turf against the impending arrival of foreign competitors.
As the company’s capabilities grew, however, so did its confidence in its ability to meet
its foreign rivals on their home turf.
Some of the critical elements of the company’s internationalization process have
been the strategic alliances forged with foreign competitors for licensing and OEM,
export experience first in developing and then in developed markets, and the backing
of the Koç Group. Furthermore, overseas acquisitions have helped increase the
company’s market share and add to its portfolio of global brands.
Overseas acquisitions can pose the challenge of integrating the new acquisitions
with the company’s existing operations. Major restructuring of the consumer durables
division of the Koç Group, which has merged most operations under the Arçelik roof,
has facilitated decision making. Such initiatives as the launch of a two-tier R&D
operation, a centralized supply chain directorate, and reorganization of the marketing
department have further served to facilitate international expansion. The adoption of a
single brand for global markets – Beko – has accelerated branding.
Today, although Turkey is still the main market for the company, its sales are
increasingly distributed globally.
Our findings suggest that Arçelik gained a number of benefits from international
expansion, one of which is avoidance of over-reliance on its home market. The main
difficulties lie in the gap in technological capability and brand building. We agree with
Zhu et al. (2011) that catching up for a developing country firm lies in important
investments in technological capability, marketing and managerial experience, and
organizational structuring.
Implications
For firms from developing countries this study has several managerial implications:
international expansion appears to be a viable means of offsetting home-country
volatility; however, it is predicated on important investments in technology, quality,
human resources, and branding. To catch up requires latecomers to develop
technological capabilities and international marketing and managerial experience.
This can be done in the home market by collaborating with others, including International
competitors. Our evidence suggests that the learning experiences gained in the expansion
domestic market can shorten the internationalization process.
The Arçelik case also suggests that latecomers need to focus on developing strategies
state-of-the-art and emerging technologies in order to catch up. Furthermore, innovation
should be encouraged through structural organization in the company. Another
managerial implication is the importance of attracting and maintaining qualified human 27
resources in order to be able to build a world-class company. Furthermore, emerging
market companies with membership in a conglomerate should leverage those resources
to develop some of the firm-specific advantages needed for successful international
expansion. Finally, the Arçelik case serves to show that leadership commitment is key
for any emerging-country firm in internationalization.
There are also some policy implications: export-inducing government policies can be
instrumental in urging companies to internationalize from an early stage. The
importance of technology and innovation also points to the need for governments to
encourage technology development through incentives. Incentives such as tax rebates
for research and development centers should be structured so as to enable smaller firms
also to benefit. The learning process sparked by collaboration with developed-country
companies underlines the importance of such collaborations, which warrant promoting
by developing country governments. The Arçelik case also shows how the introduction
of new competitive pressures as a result of the Customs Union with the EU provided one
of the drivers of Arçelik’s successful international expansion. Another point to note is
that the quality of the human resources the company has relied on has been partially
a fruit of Turkey’s educational system (especially the engineering schools),
demonstrating the importance of the state’s investment in human capital through
education.
Finally, the Arçelik case serves to illustrate the critical impact of the adoption of
environmental standards by governments. Setting itself the target of selling to Europe,
Arçelik not only conformed to some European environmental standards in its
production, but to gain a competitive advantage against its rivals aimed for raising
those standards. The result appears to be more energy-efficient products for the
consumer and contribution to sustainable development.
Conclusion and future research directions

Even though one case cannot yield general conclusions, it may indicate fruitful
theoretical directions. The Arçelik case shows that building firm-specific assets in the
home market is a prerequisite of internationalization, and as such it conforms to
the traditional outward foreign direct investment theory. The difference appears to be in
the accelerated expansion route followed by the company especially after 2001. This
bears similarities to some Chinese companies (Liu and Buck, 2009; Zhu et al., 2011). Our
evidence demonstrates that an emerging-country firm may gain some benefits from
international expansion, which may be different from those of their established rivals. In
addition, emerging-country firms may have some advantages compared to
developed-country firms, and some of these may be sourced from their home market
environments. The difficulties emerging-country firms face are greater than those of
established rivals, but the learning process is shorter. The Arçelik case suggests that the
rapid internationalization of the 2000s is predicated on the company’s strong financial
MRR resources, its membership in Turkey’s largest conglomerate, and decades-long
36,1 capability building. Our analysis underlines the importance of the home-country context
in the internationalization of emerging-country multinationals, and as such may serve to
“bring context more comprehensively and explicitly into international business theory”,
as recommended by Ramamurti (2009, p. 420) and others.
While the study of a market leader such as Arçelik yields important theoretical
28 implications, the catchup process for companies not as well endowed in financial,
human, and technological resources may be different, and they too may reveal
important insights to guide theory building.
In another aspect, we observe that the evidence in this paper does not support the
view that Arçelik is a niche entrepreneur, but instead a world-stage aspirant (Luo and
Tung, 2007; Mirza et al., 2011).
Moreover, this study raises issues worthy of further investigation. On the outset, it
would be useful to apply the four propositions to more Turkish multinational
enterprises in order to test the robustness of our conclusions. The answers may have
critical implications for Turkish exporters in a variety of markets.
Finally, we observe this in-depth study of the international expansion strategies of
one of Turkey’s leading companies addresses the “data deficit” of evidence on the
expansion strategies of emerging market multinational enterprises (Brennan, 2011).
References
Aktan, C.C. (1997), “Turkey: from etatism to a more liberal economy”, The Journal of Social,
Political, and Economic Studies, Vol. 22 No. 2, pp. 165-84.
Amighini, A., Rabellotti, R. and Sanfilippo, M. (2010), “Outward FDI from developing country
MNEs as a channel for technological catch-up”, Seoul Journal of Economics, Vol. 23 No. 2,
pp. 239-61.
Anıl, İ. and Özkasap, G. (2010), “A study on the entry strategies of Turkish companies to the
developing economies: case of Romania”, in Eren, E. (Ed.), The Proceedings of the Sixth
International Strategic Management Conference, St Petersburg, Russia, July 8-10,
pp. 425-34.
“Arçelik Franke’nin elinden Güney Afrikalı Defy’yi aldı” (2011), Milliyet, July 22, p. 14.
Axinn, C.N. and Matthyssens, P. (2002), “Limits of internationalization theories in an unlimited
world”, International Marketing Review, Vol. 19 No. 5, pp. 436-49.
Baden-Fuller, C.W.F. and Stopford, J.M. (1991), “Globalization frustrated: the case of white
goods”, Strategic Management Journal, Vol. 12, pp. 493-507.
Batra, R., Chattopadhyay, A. and Özsomer, A. (2010), “Building global brands from emerging
markets”, paper presented at Global Branding Conference, Istanbul, June 20-22.
Birkinshaw, J.M. and Morrison, A.J. (1995), “Configurations of strategy and structure in
subsidiaries of multinational corporations”, Journal of International Business Studies,
Vol. 26 No. 4, pp. 773-95.
Bonaglia, F. and Goldstein, A. (2007), “Strengthening productive capacities in emerging
economies through internationalisation: evidence from the appliance industry”,
Working Paper No. 262, OECD Development Centre, Paris.
Bonaglia, F., Coplan, A.M. and Goldstein, A. (2008), “Industrial upgrading in the white goods
global value chain: the case of Arçelik”, Working Paper Series 08-04, Institute for
Technology, Enterprise and Competitiveness, Kyoto.
Bonaglia, F., Goldstein, A. and Mathews, J.A. (2007), “Accelerated internationalization by International
emerging markets’ multinationals: the case of the white goods sector”, Journal of World
Business, No. 42. expansion
Brennan, L. (2011), The Emergence of Southern Multinationals: Their Impact on Europe, Chapter strategies
20, Palgrave Macmillan, Basingstoke, p. 377.
“BSH plans new dishwasher plant in Turkey” (2006), Hürriyet Daily News and Economic Review,
January 2, available at: www.hurriyetdailynews.com (accessed April 5, 2010). 29
Buckley, P.J. (2002), “Is the international business research agenda running out of steam?”,
Journal of International Business Studies, Vol. 33 No. 2, pp. 365-73.
Buğra, A. (2000), “Piyasa Oluşturmanın Piyasa Dışı Mekanizmaları: Türkiye’de Dayanıklı
Tüketim Malları Sektörünün Gelişimi” (“Non-market mechanisms of market formation:
development of the consumer durables industry in Turkey”), Devlet-Piyasa Karşıtlığının
Ötesinde: İhtiyaçlar ve Tüketim Üzerine Yazılar, İletişim Yayınları, Istanbul, pp. 63-96.
Calantone, R., Cavusgil, S.T., Schmidt, J. and Shin, G. (2004), “Internationalization and the
dynamics of product adaptation: an empirical investigation”, Journal of Product
Innovation Management, Vol. 21 No. 3, pp. 185-98.
Çarkman, A.E. (2009), “Examining the underlying reasons behind the outward foreign direct
investment: the case of Arçelik”, unpublished Master’s thesis, Koç University, Istanbul.
Caruana, A., Ramaseshan, B. and Ewing, M.T. (1998), “Economic recession and export market
entry: some empirical results”, American Marketing Association Conference Proceedings,
Vol. 9, pp. 182-3.
Çeşmecioğlu, S. (2001), Beyaz Eşya Sektörü Araştırması (Research Study of the [Turkish] White
Goods Industry), The Istanbul Chamber of Commerce, Istanbul.
Child, J. and Rodrigues, S.B. (2005), “The internationalization of Chinese firms: a case for
theoretical extension?”, Management and Organization Review, Vol. 1 No. 3, pp. 381-410.
Cho, D., Kim, D. and Rhee, D. (1998), “Latecomer strategies: evidence from the semiconductor
industry in Japan and Korea”, Organization Science, Vol. 9 No. 4, pp. 489-505.
Condo, A. (2000), “Internationalization of firms based in developing economies”, unpublished
doctoral dissertation, UMI 800-521-0600, Harvard University, Boston, MA.
Craig, S.C. and Douglas, S.P. (2000), “Configural advantage in global markets”, Journal of
International Marketing, Vol. 8 No. 1, pp. 6-26.
Cuervo-Cazurra, A. and Genc, M. (2008), “Transforming disadvantages into advantages:
developing-country MNEs in the least developed countries”, Journal of International
Business Studies, Vol. 39, pp. 957-79.
Delios, A. and Henisz, W.J. (2003), “Policy uncertainty and the sequence of entry by Japanese
firms 1980-1998”, Journal of International Business Studies, Vol. 34 No. 3, pp. 227-41.
Demir, İ. (2001), Türkiye Beyaz Eşya Sanayinin Rekabet Gücü ve Geleceği (Report on the
Competitive Power and Future of Turkey’s White Goods Industry), State Planning
Organization of Turkey, Ankara.
Douglas, S. and Wind, Y. (1987), “The myth of globalization”, Columbia Journal of World
Business, Vol. 22 No. 2, pp. 19-29.
Dündar, C. (Ed.) (2006), Özel Arşivinden Belgeler ve Anılarıyla Vehbi Koç I (1901-1960), 4th ed.,
Doğan Kitap, Istanbul.
Dunning, J.H. and Lundan, S.M. (2008), Multinational Enterprises and the Global Economy,
2nd ed., Edward Elgar, Cheltenham.
MRR Duysters, G., Jacob, J., Lemmens, C. and Jintian, Y. (2009), “Internationalization and technological
catching up of emerging multinationals: a comparative case study of China’s Haier group”,
36,1 Industrial and Corporate Change, Vol. 18 No. 2, pp. 325-49.
Erdilek, A. (2003), “A comparative analysis of inward and outward FDI in Turkey”,
Transnational Corporations, Vol. 12 No. 3, pp. 79-106, available at: scholar.google.com
(accessed August 29, 2010).
30 Erdilek, A. (2008), “Internationalization of Turkish MNEs”, Journal of Management
Development, Vol. 27 No. 7, pp. 744-60.
Ghemawat, P. (2001), “Distance still matters: the hard reality of global expansion”,
Harvard Business Review, Vol. 79 No. 8, pp. 137-47.
Ghemawat, P. (2008), Arçelik Home Appliances: International Expansion Strategy,
Case No. 9-705-477, Harvard Business School, Boston, MA.
Ghemawat, P. and Ghadar, F. (2000), “The dubious logic of global megamergers”,
Harvard Business Review, Vol. 78 No. 4, pp. 65-72.

Ghoshal, S. (1987), “Global strategy: an organizing framework”, Strategic Management Journal,
Vol. 8 No. 5, pp. 425-40.
Goetsch, D.L. and Davis, S.B. (2006), Quality Management: Introduction to Total Quality
Management for Production, Processing, and Services, Pearson Prentice-Hall, Upper
Saddle River, NJ.
Gülsoy, T., Özkanlı, Ö. and Lynch, R. (2009), “Effective international expansion strategies of
developing countries: some preliminary evidence from the Turkish manufacture and
export of television sets”, Journal of Global Strategic Management, Vol. 3 No. 2, pp. 28-51.
“Indesit confident in Turkey” (2010), Hürriyet Daily News and Economic Review, March 21,
available at: www.hurriyetdailynews.com (accessed April 5).
Istanbul Chamber of Industry (2011), Turkey’s 500 Largest Industrial Companies 2010, available
at: www.iso.org.tr (accessed September).
Johanson, J. and Vahlne, E. (1977), “The internationalization process of the firm – a model of
knowledge development and increasing market commitments”, Journal of International
Business Studies, Vol. 8 No. 1, pp. 23-32.
Kara, M. (2011), “Afrika’da Defy’yi aldı, küresel ısınmaya karşı Klimanjaro’ya tırmandı”,
Hürriyet, December 18, p. 19.
Karabatı, S. and Tan, B. (2005), “Vestel electronics: transition into the leading European TV
manufacturer”, Case No. 605-015-1, Koç University Graduate School of Business, Istanbul.
Khanna, T. and Palepu, K. (2006), “Emerging giants: building world-class companies in
developing countries”, Harvard Business Review, Vol. 84 No. 10, pp. 60-9.
Kizilbash, A.H. and Maile, C.A. (1977), “Export marketing in a changing economic environment”,
Journal of Small Business Management, Vol. 15, January, pp. 1-6.
Koç, V. (1983), Hayat Hikâyem (My Life Story), Otokoç, Istanbul.
Li, P.P. (2003), “Toward a geocentric theory of multinational evolution: the implications from the
Asian MNEs as latecomers”, Asia Pacific Journal of Management, Vol. 20, pp. 217-42.
Liu, X. and Buck, T. (2009), “The internationalisation strategies of Chinese firms: lenovo and
BOE”, Journal of Chinese Economic and Business Studies, Vol. 7 No. 2, pp. 167-81.
Luo, Y. and Tung, R.L. (2007), “International expansion of emerging market enterprises:
a springboard perspective”, Journal of International Business Studies, Vol. 38 No. 4,
pp. 481-98.
Magnusson, P., Haas, S.M. and Zhao, H. (2008), “A branding strategy for emerging market firms International
entering developed markets”, Journal of International Consumer Marketing, Vol. 20
Nos 3/4, pp. 95-107. expansion
Mamulattan Markaya (2001), Arçelik Kurum Tarihi 1955-2000 (Arçelik Company History strategies
1955-2000), VTR Araştırma Yapım Yönetim, Istanbul.
Mathews, J.A. (2006), “Dragon multinationals: new players in 21st century globalization”,
Asia Pacific Journal of Management, Vol. 23, pp. 5-27. 31
Mirza, H., Giroud, A. and Wee, K.H. (2011), “The rise of TNCs from the south”, in Brennan, L. (Ed.),
The Emergence of Southern Multinationals: Their Impact on Europe, Palgrave Macmillan,
Basingstoke.
Muluk, F.Z., Burcu, E. and Danacıoğlu, N. (2000), Türkiye’de Kalite Olgusunun Gelişimi
(Development of the Quality Concept in Turkey), KalDer (Quality Association of Turkey),
Istanbul.
Öniş, Z. (2003), “Domestic politics versus global dynamics: towards a political economy of the
2000 and 2001 financial crises in Turkey”, Turkish Studies, Vol. 4 No. 2, pp. 1-30.
Özbek, O. (2001), Teknoloji ve Pazarlama Yapıları Değişirken Beyaz Eşya Sektörü (Report on the
Turkish White Goods Industry), The Izmir Chamber of Commerce, Izmir.
Paba, S. (1986), “‘Brand-naming’ as an entry strategy in the European white goods industry”,
Cambridge Journal of Economics, Vol. 10, pp. 305-18.
Pananond, P. (2009), “Thai multinationals: entering the big league”, in Ramamurti, R. and
Singh, J.V. (Eds), Emerging Multinationals in Emerging Markets, Cambridge University
Press, Cambridge, pp. 312-51.
Peng, M.W. (2005), “Perspectives – from China strategy to global strategy”, Asia Pacific Journal
of Management, Vol. 22, pp. 123-41.
Pillania, R.K. (2009), “Internationalisation of Propack Ltd (EPL)”, Management Research News,
Vol. 32 No. 2, pp. 158-68.
Pillania, R.K. and Fetscherin, M. (2009), “The state of research on multinationals and emerging
markets”, Multinational Business Review, Vol. 172 No. 2, pp. 1-11.
Porter, M.E. (1986), “Changing patterns of global competition”, California Management Review,
Vol. 28 No. 2, pp. 9-40.
Ramamurti, R. (2009), “What have we learned about emerging-market MNEs?”, in Ramamurti, R.
and Singh, J.V. (Eds), Emerging Multinationals in Emerging Markets,
Cambridge University Press, Cambridge, pp. 399-426.
Rao, C.P., Kreighbaum, M.A. and Hawes, J.M. (1983), “International market involvement and the
business cycle”, Journal of Small Business Management, Vol. 21, October, pp. 31-7.
Root, R. and Quelch, J. (1997), “Koç holding: Arçelik white goods”, Harvard Business School Case
No. 9-598-033.
Rugman, A. and Oh, C. (2008), “Friedman’s follies: insights on the globalization/regionalization
debate”, Business & Politics, Vol. 10 No. 2, pp. 1-14.
Sun, S.L. (2009), “Internationalization strategy of MNEs from emerging economies: the case of
Huawei”, Multinational Business Review, Vol. 17 No. 2, pp. 129-55.
Tempel, A. and Walgenbach, P. (2007), “Global standardization of organizational forms and
management practices? What new institutionalism and the business-systems approach
can learn from each other”, Journal of Management Studies, Vol. 44 No. 1, pp. 1-24.
Trade Map (2010), available at: www.trademap.org (accessed February).
MRR TÜRKBESD (2010), Home Appliances Production, Domestic Sales, Exports, Imports 1986-2004,
Türkiye Beyaz Eşya Sanayicileri Derneği, White Goods Manufacturers Association of
36,1 Turkey, Istanbul (Data file).
UNCTAD (2006), World Investment Report 2006: FDI from Developing and Transition
Economies: Implications for Development, United Nations, Geneva.
Werner, S. (2002), “Recent developments in international management research: a review of 20 top
32 management journals”, Journal of Management, Vol. 28 No. 3, pp. 277-305.
Yiu, D.W., Lau, C.-M. and Bruton, G.D. (2007), “International venturing by emerging economy
firms: the effects of firm capabilities, home country networks, and corporate
entrepreneurship”, Journal of International Business Studies, Vol. 38 No. 4, pp. 519-40.
Zhu, Y., Lynch, R. and Jin, Z. (2011), “Playing the game of catching-up: global strategy building
in a Chinese company”, Asia Pacific Business Review, Vol. 17 No. 4, pp. 511-33.
About the authors

Tanses Gülsoy, PhD, is an Assistant Professor at Beykent University in Istanbul, Turkey. She has
held a Harry Frank Guggenheim Foundation Fellowship at New York University and a Pomona
College Honnold Scholarship for Graduate Study. Before joining the academia, she worked for the
Istanbul office of the advertising agency J. Walter Thompson and holds an honors award from
Turkey’s Association of Advertising Creatives. She is the author of a dictionary of advertising, and
several book chapters and academic papers. Her research interests include global branding, the
global strategies of emerging-country MNEs, and services marketing. Tanses Gülsoy is the
corresponding author and can be contacted at: tansesgulsoy@beykent.edu.tr
Özlem Özkanlı is Professor and the Head of Management and Organization Chair in the
Faculty of Political Sciences at Ankara University, Ankara, Turkey. She worked at the Turkish
National Productivity Center as a specialist between 1988-1996 and has led a number of
training/consulting/research missions in public and private sector enterprises. She is the author
of four books and many academic articles. She has received research scholarships from the
World Bank, the Turkish Academy of Sciences, and the Turkish Higher Education Institution.
She was a Visiting Professor at Curtin University Graduate School of Business, Perth, Australia,
in 2006; at Aalborg University College of Business, Aalborg, Denmark, in 2008, and at
Valparaiso University College of Business Administration, Valparaiso, USA in 2011. In the
2012-2013 academic year, she has held a visiting professorship at Northern Illinois University
College of Business, DeKalb, USA.
Richard Lynch is Emeritus Professor of Strategic Management at Middlesex University,
London, UK. He has university degrees from the Universities of Manchester, Leeds and London,
including an MBA from the London Business School. Before entering academia, he spent nearly
20 years in business. He has authored/co-authored numerous refereed research and conference
papers. He has written five books with one text, Strategic Management, selling over 90,000 copies
around the world through five editions. His current research interests include: the global
strategies of companies from developing countries; global branding and country of origin issues;
green strategy development and implementation.
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints
This article has been cited by:
1. Thomas C. JacksonInternal HR Security Compliance and Risk Management Systems in a Major

International Bank in a North African Country 260-276. [CrossRef]

Effective International Expansion Strate

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Effective International Expansion Strate

Uploaded by

Copyright:

Available Formats

Management Research Review

Downloaded on: 30 December 2016, At : 03: 25 (PT)

Literature review and research framework

The difficulties of a global strategy for later arrivals

The learning process of later arrivals

catching up process of the Korean semiconductor industry. Thus, the building of a

The adaptation process of later arrivals: emerging market vs developed market

Order in the Arçelik or other Koç Group

Africa Division 2011

advance to accommodate the respondents’ busy schedules.

Brief history of the home appliances industry in Turkey

with the company’s corporate communications director in February 2012).

Arçelik’s international expansion

Phase I of Arçelik’s international expansion – until the 1990s

Phase II: the challenge of the Customs Union – the 1990s

2000 1,564 1,317 247 15.79

advantage of growth opportunities, economies of scale, and the ability to develop

Phase III: recession of 2001 and after

Capability upgrading and organizational restructuring

standing in the home market. “Licensed manufacturing began as technology transfer,”

conglomerate behind, and leadership commitment.

Difficulties of a global strategy for later arrivals

The learning process of later arrivals

The adaptation process of later arrivals: emerging market vs developing market

Conclusion and future research directions

Harvard Business Review, Vol. 78 No. 4, pp. 65-72.

About the authors

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

1. Thomas C. JacksonInternal HR Security Compliance and Risk Management Systems in a Major

You might also like