Foreign Market Entry Strategy

1
Foreign Market Entry Strategy

• Issues to be discuss
• Where Location choice
• When Timing
• How Entry mode

2
Locational determinants

• Cost/Tax factors

• Transportation, wage, production factors,
  construction, financing, incentives, restrictions

• Demand factors

• Market size and growth, presence of customers,
  local competition

• Strategic factors

• Investment infrastructure, concentration,
  industrial linkages, logistics, workforce

3
Locational determinants (conti.)

• Regulatory factors
• Industrial policy, FDI policies, Special econ
  zones
• Sociopolitical factors

• Political stability, cultural barriers, community
  characteristics, government efficiency

4
Timing of entry

• Timing determines the risks and opportunities the
  MNE may confront.
• Early mover advantages (first mover advantages)

5

• Early mover disadvantages

• -

-

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6
Entry mode

• Greenfield entry vs. acquisitions
• Wholly-owned subsidiary vs. joint venture
• Acquisitions A firm buys an existing firm in the
  foreign market
• Greenfield investments A firm builds a new
  operation from scratch in the foreign market.

7
Benefit of acquisitions

• Any downside?