Introduction
Background
Poland is a country in the Eastern Europe that bonders Russia, Lithuania, Byelorussia, Ukraine, Slovakia, Czech Republic and Germany and with a national border of 3582 kilometers. The total area of the country is 312685 km2, making it the ninth biggest country in Europe (Nask). After communism fell, many companies have been established in Poland, some owned by Polish citizens while others are foreign. A greater part of the country’s economy has largely been contributed by small and medium businesses though a part is still controlled by large corporations. Some of the companies include Kompania Weglowa, Grupa LOTOS, PZU, Bank Pekao, PTC, PKP, Asseco, FSO and Fablok among others (Nask).
Bank Pekao S.A is headquartered in Warsaw in Poland and its part of Unicredit group. The bank was established in 1929 as a national bank by the ministry of Treasury. The main aim of the formation of the bank was to offer services to the people of Poland who were living abroad. The major activity conducted by the group is to provide banking services (retail and corporate) to both corporate and individual clients. The bank operates in corporate banking, retail banking and investment services operating in both Poland and abroad and using all major currencies (Wrightreports).
Internationalization can be described as the process of increasing participation by the enterprises in the global (international) markets (Wordnet). Internationalized companies have been seen as having the potential for growth and innovation which includes the increase in exports. Other forms of internationalization include direct investment, technology transfer, inter-SME cooperation and participation in international value chains ((Mintcheva ET all p. 8-9). Just like many other companies in Poland, Bank Pekao S.A has undergone internationalization.
Problem Statement
Researchers have concluded that companies that have been exposed to international markets and competition as a result of internationalization can survive longer that those that only operate in the domestic market. However, there are those companies that do not consider internationalization as one of their company goals. This becomes a great obstacle of growth especially when the domestic market decreases because the company would be forced to close. This study would enable such companies understand the significance of nationalization. The research should be able to answer the following questions.
- What prompted the company to consider internationalization?
- What was the course of internationalization for the bank?
- What were the main obstacles to internationalization?
- How far has the process reached and what are the benefits?
Importance of the Study
This study would be very significant especially to the small and medium enterprises that are trying to come up or considering starting the process of internationalization. As a result, they will have the skills required for the internationalization of their enterprises and thus be prepared to deal with obstacles that they may face in the process. For those that are reluctant to internationalize, they will learn the benefits of internationalization.
Hypothesis
Internationalization has been considered as being very beneficial to a company especially the small and medium enterprises. Also the process of internationalization has been stated as being very challenging and requires careful planning over a long period of time.
Theoretical Framework
One of the theories that are applicable in the study is Uppsala model that was developed by Jan Johansson and Jan-Erik Vahle to explain a firm’s internationalization. The conclusion made by the researchers showed that a firm that is striving to get long-term profits must “use a process of gradual acquisition and integration to foreign markets.” (Haapanen p.8). This means that internationalization of a company takes place in small paces “as a series of incremental decisions.” The level of market knowledge and the measured risks prior to the entry have an impact on the process of internationalization. The Uppsala model has both the change aspects and the state aspects. The aspects are further divided into two. The state aspects are market commitments (resources that are committed to foreign markets) and also the knowledge towards the foreign markets. On the other hand, the change aspects have both current activities and commitment decisions. The direct relation between the two aspects is; when the knowledge about the market is higher, the commitment is stronger (Haapanen p.8).
The other theory that may be practical in explaining the internationalization paradigm is the eclectic theory that was founded by John H. Dunning. It consists of OLI-model that stands for “Ownership, Location and Internationalization advantages” explaining the activity of a company done outside its national boundaries. Another term that Dunning introduces is “avenue” which is responsible for the growth of corporations (Verheul ET all p.2). In addition, stage theory uses five steps to conceptualize the process of internationalization: “domestic marketing stage, a pre-export stage, experimental involvement stage, an active involvement stage, and a committed involvement stage” (Snuif p.1).
Scope and limitations of the Study
The study will cover the headquarters of Bank Pekao S.A located in Warsaw, Poland and will be directed to the top management of the bank. The major limitation of the study is that the researcher will only concentrate his research in the bank headquarters and may not be able to visit any other branches that may not be within his or her reach. Also, the management of the bank may not be willing discuss the setbacks of nationalization and failures but rather stick to the benefits.
Review of the Literature
The banking sector has moved towards internationalization in the last two decades. The increase in financial integration has majorly been because of the change in the foreign participation in the markets of the banking systems. One of the regions that have experienced the increased presence of the international banking is Central and Eastern Europe. The banks have entered the economies either by setting investments in the host nations or by acquiring the domestic owned banks (Thi p.2).
Globalization is what has accelerated the speed at which small and medium enterprises are moving in the economic environment. Borders and barriers between nations are disappearing and thus exposing companies to the new markets and also to international competition. This is the reason why enterprises that do not have internationalization as part of their company goals limit themselves to the potential of surviving for long. Internationalization should be considered as part of the company and not a strategy that is to be enacted when local demand goes down. Researchers have realized that internationalization is a major engine for growth and competitiveness. The reasons that have been raised on why small and medium enterprises especially in Europe do not embrace globalization are; one, lack of enough financial resources and lack of skilled human capital that is vital for tackling internationalization (Mintcheva et all p. 5).
Pressures that are brought by the increased competition in the international trade can force a company to extend its business into international markets. The motive of such a venture is to improve cost efficiency as well as to seek an opportunity for expansion and growth. Many companies will in most cases start the process of exporting through an agent in the foreign country, then come up with a sales subsidiary and finally start production in that country (Kossut and Kaczmarek).
For the last few years, the government of Poland has realized the need for more internationalization of its companies. The country’s government alongside other from socialist nations has in many years placed control over internationalization development. Despite the attempts to bring economic reforms in Poland, integration is still lacking and the key elements of internationalization are still lacking. These limitations have become the hindrances to development, with export strategy still being unsuccessful (Fonfara and Collins).
Due to the enlargement of the European Union, great business opportunities have been created for the entrepreneurs in Poland. The enlargement resulted into the development of small and medium enterprises (Wach). Bank Polska Kasa Opieki SA began its operations in 1929 and currently it holds about twenty percent of the overall banking sector in Poland. The Bank has over eight hundred branches in the country and it is still developing the electronic distribution channels; and thus having a growing network of ATM, office banking, the first online banking division in the nation in addition to holding twenty four percent of the card market (Tiusanen p.86). In addition to providing corporate, retail and investment banking in Poland, it also has branches in France, Ukraine, Israel and the United States. Though it was initially founded to provide services for the poles in the foreign countries, it has in recent times been taken over by the UniCredit, an Italian Bank is holding fifty three percent of the shares. In 2008, Bank Pekao SA was awarded for being the best foreign exchange provider and also the best Trade Finance Provider in Poland by the Global Finance magazine in addition to other wards (Surecomp).
Methodology
Different research methods would be employed in collecting data on the internationalization process of Bank Pekao S.A. The first would be the survey method where interviews would be conducted to officials of Bank PKO Polski. Surveys have the following advantages; they are inexpensive, they allow the description of large population, surveys can be administered using emails, telephones or emails, large samples are feasible, the analyses are flexible and also data from groups are easily interpreted comparatively (Colorado State University, 2009). The researcher will also be required to use the secondary data from what other researchers have found regarding the internationalization process of Bank PKO Polski which can be sourced from the Bank’s libraries and the internet.
Data collection Methods (sampling)
Data will be conducted by interviewing selected people from the top management of Bank PKO Polski. The questions should be structured in a way that it has open ended questions for this would allow the researcher to get maximum information. Extra data will be obtained from materials that that have information on the internationalization process of the bank that may be obtained from, books, journals, reports, newspapers, magazines and data bases in the internet.
Data analysis
When analysing qualitative data from interviews, the speech must be coded into meaningful categories, which will enable the researcher to organize large amount of text and then come up with patterns that would have been difficult to detect if one listened to a tape or to a person. The initial coding should be conducted by first generating numerous category codes when one is reading the responses or listening to the tape and then label the data which is related. The researcher should write notes, list ideas, diagram any relationship that he or she notices, noting any vocabulary that was used by the respondents as this may indicate an important topic. Thirdly, focused coding should be used in order to eliminate, combine or subdivide coding categories looking for ideas that are repeated as well as themes that connect codes. The final codes should be limited to thirty to fifty and when coding has been developed a list should be made that assigns each code a description and abbreviation (The University of Texas). When analyzing the data, it is important for one to have in mind the research’s objective and analysis tools such as standard deviation, derivation of means, and factor analysis. Tables, graphs and charts are very important at this level (Williams).
Ethical Issues
In the process of conducting a research, some researchers have engaged in unethical practices in order to avoid the complex and tiresome tasks involved or because they begin the process with preconceived ideas on what the results will be and are not ready to take in any that seems contrary. Others engage in these unethical practices out of ignorance meaning that they may not have taken enough time to study the ethical practises that are necessary in researching. When ethics is not applied in such a research moral principles of human interaction may be violated and also the results will not be valid.
Information consent
While carrying out a research, a researcher should not take any data from any participants without their valid consents and should also make sure that practicable and reasonable steps have been taken so that they (or their representatives) have understood the research plus its nature and any consequences arising from it. Some of the misconducts (research) that contravenes the acts of integrity include fabrication, reviewing research or performing (Ttseaf p.2).
Integrity
Falsifications and fabrications of researches are some examples of misconducts that a researcher of integrity should avoid. This means that he or she should not at any time present research results that he or she did not during the period before he hands in the report. This calls for the researchers to maintain records of the data obtained. Any intentional destruction of such records or poor maintenance should be regarded as lack of integrity. Integrity means that conclusions for the researches should only be based on accurate observations and data with relevant observations reported. It is a breach of research integrity not to report any data that one feels does not support the reported conclusions or contradicts them (Office of research Integrity).
Conclusion
From the literature review done, it is clear that different researches have been conducted and different models and concepts have been presented that can help in the present research study. Also different writers have presented the information and data internationalization process. This study is therefore anticipated to bring a great impact on the area of internationalization and on how small and medium enterprises can work towards internationalization.
Work Cited
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Haapanen, Heta. To Lead or to Follow: A Case study of an internationalization Process. Uppsala University. 2009. Web.
Kossut and Kaczmarek. Internationalization Process of the Firm. Ekonomiska institutionen. Updated 2003. Web.
Mintcheva, ET all. “Supporting the Internationalization of SMEs.” Enterprise and Industry. Europe Commission. 2007. Web.
Nask. Information about Poland. Updated 2009. Web.
Office of Research Integrity. Guidelines for Responsible Conduct of Research. Updated 2007. Web.
Snuif, Henoch. “The Internationalization Process of Small and Medium-sized Enterprises: An Evaluation of Stage Theory.” Journal of Small Business Management 2000. Web.
Tauno, Tiusanen. Poland, the Largest New EU Country. Lappeenranta University of Technology.Updated 2004. Web.
The University of Texas. Analyzing interview data. 2009. Web.
Thi, Ngoc-Anh Vo. Banking Marketing and Bank Performance: The Role of Entry Modes. University of Paris. 2008. Web.
Ttseaf. Guidelines on Ethical Practice, Updated 2005. Web.
Verheul, Ingrid ET all. An Electric theory of entrepreneurship: policies, institutions and Culture. Tinbergen Institute Rotterdam.2001. Web.
Wach, Krzysztof. Impact of the Accession to the European Union on Polish Enterprises Developments. Cracow University of Economics. 2007. Web.
Williams, A. “How to Write and Analyze a questionnaire.” Journal of Orthodontics, 2003. Web.
WorldNet. Internationalization. 2009. Web.
Wrightreports. Bank Pekao S.A- Company Profile snapshot. Winthrop Corporation. 2008. Web.