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Foreign entry strategy

16 important questions on Foreign entry strategy

Of the resource dimension, we have built new factories and offices from scratch called greenfield operations what are the 3 advantages

1) allows investors to create a new operation from scratch according to their own designs and thus to match it with their global organization
2) a greenfield WOS gives an MNE complete equity and management control
3) greenfield investments may be designed to be small initially, and to grow with the market development

When we transfer of the control of operation and management from one firm to anther the former becoming a unit of latter what doe we call it Acquisition what are the 2 most important advantages

1) adding no new capacity to the industry
2) faster entry speed.

When we talk about joint venture it has three principal forms what are those forms?

Minority JV (the local firm holds less than 50%)
50/50 JV
majority JV (more than 50%)

A joint venture is a new corporate entity created and jointly owned by two or more parent companies what are 3 advantages

1) MNE shares costs, risks and profits with a local partner
2) the MNE gains access to knowledge about the host country
3) JVs may be politically more acceptable

Shared control can also be established by acquisition of an equity take but not full ownership Where do partial acquisitions occur in particular

1) if a seller is unwilling to sell the business in full
2) if the previous owners are still needed to run the operation

Why are partial acquisitions also common for MNEs buying out entrepreneurial firms

If the entrepreneurs retain an ownership stake, they are probably more motivated to continue to pull their weight for the company

JVs and partial acquisitions are special cases of strategic alliance what does that mean

Collaboration between firms independent firms in a given economic space and time for the attainment of a set of agreed goals

What are the advantages of marketing is global standardization versus local adaptation of products processes and brands

Include product development, production and marketing. In contrast, local adaptation strategies aim to accommodate local needs and prefferences

What involves both the transfer of organizational practices to the new operation and the tapping of headquarters into local knowledge

Human resources are critical to foreign entry because each subsidiary needs qualified and motivated people, especially to facilitate knowledge sharing within an organization

What are the types of constraints for institutions and foreign entry strategies

1) certain operations or transactions are not permitted
2) need for local knowledge
3) higher transaction costs due to costly contract enforcement
4) higher transaction costs due to lack of financial intermediaries
5) higher tariffs or other trade barriers

Governments discourage or ban wholly-owned subsidiaries thereby leaving JVs with local firms as the only entry choice. Also, the institutional environment in many emerging economies is characterized by idiosyncratic rules and extensive use of networks. Lastly, weak institutions also increase transaction costs such as search costs arising from information asymmetries and contract enforcement costs associated. What is the common term for these situations?

Illusion trates the possible impact of such constraints on entry mode and location decisions

Resource-rich companies face a strategic choice regarding the scale of entry between what?

Between entering with a large up-from investment, or with a small foothold operation

Platform investment is an example of small-scale entry reduces the costs and risks of entry. They focus on organizational learning by getting firms 'feet wet' what does it mean?

Provides investors with a small foothold from which to observe the local industry and to flexibly react to business opportunities if and when they emerge

In some case, subsequent investment completely overlays the acquired organization; we then talk of a brownfield acquisition what happens here?

In these cases the foreign investor may be interested only in a particular asset, such as an operating licence, a distribution outlet or a brand name.

Sometimes foreign investors may want to build an operation that incorporates several local businesses, especially when the local industry is highly fragmented. What is this called

Actors may pursue a strategy of multiple acquisitions, that it, a strategy based on acquiring and integrating several businesses

Often the foreign investor soon increases its equity stake, sometimes based on a pre-agreed schedule what is it called

Staged acquisitions here the ownership transfer takes place over stages

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International Business Awareness

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Foreign entry strategy

16 important questions on Foreign entry strategy

Of the resource dimension, we have built new factories and offices from scratch called greenfield operations what are the 3 advantages

When we transfer of the control of operation and management from one firm to anther the former becoming a unit of latter what doe we call it Acquisition what are the 2 most important advantages

When we talk about joint venture it has three principal forms what are those forms?

A joint venture is a new corporate entity created and jointly owned by two or more parent companies what are 3 advantages

Shared control can also be established by acquisition of an equity take but not full ownership Where do partial acquisitions occur in particular

Why are partial acquisitions also common for MNEs buying out entrepreneurial firms

JVs and partial acquisitions are special cases of strategic alliance what does that mean

What are the advantages of marketing is global standardization versus local adaptation of products processes and brands

What involves both the transfer of organizational practices to the new operation and the tapping of headquarters into local knowledge

What are the types of constraints for institutions and foreign entry strategies

Resource-rich companies face a strategic choice regarding the scale of entry between what?

Platform investment is an example of small-scale entry reduces the costs and risks of entry. They focus on organizational learning by getting firms 'feet wet' what does it mean?

In some case, subsequent investment completely overlays the acquired organization; we then talk of a brownfield acquisition what happens here?

Sometimes foreign investors may want to build an operation that incorporates several local businesses, especially when the local industry is highly fragmented. What is this called

Often the foreign investor soon increases its equity stake, sometimes based on a pre-agreed schedule what is it called

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