The impact of the niche strategy on the success of the business and its internationalization

Details

Supervisors

Christophe Lejeune

Faculty

Louvain School of Management

Degree label

Master [120] en ingénieur de gestion

Abstract

Entrepreneurship is a domain that attracts more and more ambitious people who are looking to be independent and successful. Indeed, being a student in a management school, you hear a lot about success stories of different entrepreneurs who got great ideas. However, entrepreneurship isn’t always easy, many businesses fail. The reasons for these failures will be studied more in debt in this paper. In the meantime, internationalization becomes easier thanks to globalization. The classic internationalization theories are more and more challenged by new types of firms called “born global” or “international new ventures” who internationalize very rapidly and at an early stage. These types of firms have been the topic of extended research while very few attention has been drawn to an increasing successful type of firm, namely niche market leaders. Indeed, due to globalization, competition increased and it might be a better strategy to focus on one part of the market to differentiate from competitors. In this way, niches are markets with huge potential thanks to the few competitors and the specific target audience. Indeed, some Global leaders like Facebook, Amazon or Airbnb used a niche to enter the market before becoming global leaders. That’s why, the research question of this paper is “What is this effect of the niche strategy on the success of the business and its internationalization?” I will answer this question by doing a literature review and analysing different case studies of start-ups internationalizing at the moment. The main learnings are that a niche strategy enhances the success chances because starting in a big market makes it harder to make yourself a place while in a niche you don’t have many competitors. Moreover, with a niche you have a better understanding of your market and it avoids to make classic mistakes that lead to failure. Besides, a niche clearly facilitates the internationalization, it is even a logical consequence since the market is too small to stay national. So the only option to grow is to internationalize. In addition, niches often need to internationalize fast to benefit from the first mover advantage. Finally, niches consider the world as their entire market. For these reasons, niches appear to be an optimal solution to start a successful international business even if many other factors can contribute to the success or failure of a business. This will be explained more in detail in this paper.