Hennart & Larimo (1998) propose that limited information about local conditions may push a company to choose a low-control entry model, whereas it will adopt high-control acquisition when it is confident to operate alone in that country. Moreover, high cultural distance would increase the costs related to collaborative agreements. “TCE suggests that wholly owned subsidiaries are preferred when the costs of searching, negotiating and enforcing a cooperative agreement are greater than the costs of direct control” (Brouthers & Brouthers, 2001, p.179). On the other hand, joint ventures would help to decrease the cultural gap by distributing some tasks to local partners, and learning local market and expertise (Hennart & Larimo, 1998). Therefore, based on literature review, following hypothesis is
As the market in GPRD is becoming competitive, existing enterprises are more likely to be motivated to optimize their business competitiveness. For example, they may try to build closer relationship with foreign companies in order to expand their business; therefore, this trend can improve the international competence of GPRD at the same
It also means India owns more population market to help enter manufacturing industry because in this kind of industry always needs many people to manufacture. And the import and export trade is more convenient. Therefore, the best market entry strategy is foreign direct investment, and the joint venture of that strategy is the first choice. “A joint venture is a special type of strategic alliance that have two or more firms join together to create a new business entity” (Griffin and Pustay, 2013). It also means through the joint venture, ABC Limited will own more high profit potentials, and “joint ventures are created when two or more firms agree to work together and create a jointly owned separate firm to promote their mutual interests” (Griffin and Pustay, 2013).
EXECUTIVE SUMMARY • This is a study that shows the various entry and expansion strategies that are available for a firm when choosing to go global or increase market share within the market. • There are various strategies found out , they are : Exporting and importing , Joint Ventures, Strategic Alliances, Franchising , Licensing and Foreign branching. • In exporting and importing, firms choose between direct involvement and indirect involvement. This is the level of involvement with the foreign customers. Most firms prefer direct involvement due to the costs and risk of having an intermediary do the communicating in the foreign market.
These costs include the losses of consumer surplus because of higher prices and the resulting deadweight losses as import volume is reduced, lost economies of scale as opportunities for further trade are foregone, and the loss of incentives for technological development because of the pressure of import competition (Carbaugh, 2009). So if the government realizes that the cost of protectionist policies are going to increase the cost to society, the more likely that the policies would not be implemented. This is another disadvantage that the protectionism could cause to society, compared to free trade. Moreover, the industry which uses imported materials for production also have to pay more because of the implemented tariffs. That is why the cost to manufacture a product increase.
Market Entry Modes A market entry barrier is defined as any factor that reduces the motivation or ability of potential entrants to enter a new market despite the high profits enjoyed by the early pioneers in that market. Market entry barriers can be assumed the cost that must be accepted by a firm seeking to enter a new industry or market that is not borne by firms already in that industry or market. Market entry barriers vary according to the market structure in that market barriers are higher in pure monopoly and tight oligopoly markets than in pure competition markets. The entry barriers facing Chinese executives differ from those of other industrial countries since the Chinese economic environment and firm-specific attributes are different
Similar to economic liberalization, protectionism has both its upsides and downsides, and impacts various parties differently. Our antithesis statement is that it is more beneficial for a country to keep its economy closed. Protectionism protects certain companies or industries that are important to the country. When tariffs are implemented by these countries, the overseas competitors will be discouraged to trade with the local companies. Hence, with less competition for the local companies, many would start buying products from their own country made by the local companies.
Capability may come from acquiring a unique technology platform rather that trying to build it. Gaining a competitive advantage or larger market share – companies may decide to merge interest in order to gain a better distribution or marketing network. A company may want to develop into diverse markets where a similar company is already operating rather than starting from zero, and so the company may just merge with other company. This distribution or marketing network gives both companies a wider customer base practically overnight. Cutting costs – when two firms that has similar products or services joining together, it can create a big chance to reduce costs.
Karadeniz (2010) stated that the primary focus of relationship marketing is towards building closer relationships with customers as a strategy to overcome problems such as obtaining global competitive advantage. This journal article enhance our understanding of relationship based competitive advantages with the expanding literature of relationship marketing, interorganization
Policy Measures 1. Openness to international trade Open policies for access to foreign intermediate goods and services will improve India’s position in regional or global supply chain and encourage firms to invest in production facilities, job creation, and technology in Indian market. Openness to trade entails the following measures: 1.1 Trade facilitation: Addressing border and information bottlenecks a. As goods cross borders in GVCs, primarily as inputs and then as final products, fast and efficient customs and port procedures will play an essential role to smoothen operations in supply chains. To compete globally, Indian firms require lean inventories to respond swiftly to demand; and reduce unpredictable border delays with fast-track