Foreign Entry Strategies

4 important questions on Foreign Entry Strategies

What is a foreign subsidiary?

An operation abroad set up by foreign direct investment.

Which two ways of wholly-owned subsidiary (WOS) are there? Give an explanation of both ways.

Greenfield operations; building new factories and offices from scratch.
Acquisition; the transfer of the control of operations and management from one firm (target) to another (acquirer), the former becoming a unit of the latter.

What is a partial acquisition (one of two collaboration between independent firms systems)?

It is an acquisition of an equity stake in another firm.
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What is, at the time of entry, already necessary to consider how the operation will be run in the future, which three key issues?

  1. Marketing; global standardization versus local adaption of products, processes, and brands.
  2. Human resources; critical to foreign entry because each subsidiary needs qualified, knowledgeable, and motivated people.
  3. Logistics; lower labour costs are only valuable for a business if the products can be transported to the customer in good time at an acceptable cost.

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