II. THEORETICAL BACKGROUND A) Choice of Entry Modes There are several choices of entry modes for firms trying to globalize, however it should be kept in mind that there is no one method suitable for all the firms under a specific set of conditions. Although there are various entry modes which firms should consider before entering foreign a market? We have a global market and with this we get global competition. This means that more and more firms have decided to go in to new markets and this demands the right type of action in order to be successful (porter 2004:287).
The approach of the Chinese authorities in relation to the internationalization of Chinese enterprises has drastically changed over time. Prior to the mid-1980s the Chinese government dedicated little attention to the development potential of Chinese enterprises. Reasons for this can be associated to SOE reform and government’s interest on developing
Different countries have different views and ideas regarding this concept. Each country has different rules governing this phenomenon and has various legal contracts covering its implementation. Since the core focus of this research is to dissect the Chinese markets the rules and situation of the trade market of China shall be discussed in detail. Zhu et all (2013) wrote a comprehensive case regarding the employee ownership schemes in China with particular attention to the company Huawei. They highlight that the introduction of these schemes in China were initially just an employee incentive plan aiming to inspire the workers and making them feel involved.
Before adapting any approaches, the corporation must determine if the advantages of venturing into the new market outweigh the costs it will incur. The corporation has to choose if it will adapt its business model to developing countries while keeping its primary value propositions constant. It can also change the contexts of its business model or avoid the emerging market altogether. If a company chooses to adapt to the emerging market, it must fill the voids in the product markets (Khanna and Krishna 73). For example, Dell manufactures a wide variety of computers that are configured to the customers' requests.
Of course, it is possible for foreign customers to buy or order the product or service, but the company does not actively promote their product in another market than the domestic one. Human Resource management therefore has no need for an international approach. There are no expatriations except of short business trips in case of special projects. Technical and managerial skills are the only required
However, entering a foreign market often presents difficulties. It is influenced by a number of factors, among which can be economic, social, cultural and environmental. To achieve its goals, a company must make sure that the chosen strategy allows fully exploiting
They help to create demand for the local firm and competitive through horizontal linkages. Axele Giroud has comes out with 4 proposition for this research from the previous studies that factors related to the MNEs from the aspect of relationship, the different level of knowledge based on their locations, and the local suppliers capabilities. 1. There is potential for knowledge and technology transfer from foreign affiliates based in Malaysia and Vietnam to their local suppliers (Giroud, 2007). 2.
Moreover, the firms can also benefit from the competition against groups of local firms of a relatively homogeneous kind when entering foreign markets. However, with the increasing cultural distance and wider range of host countries, the abovementioned advantages will be weakened or neutralized. At the same time there will be higher levels of complexity and uncertainty for transaction cost, managerial decision-making regarding MNE strategies and organizational choices (Shane et al., 1995), the management of an MNE's portfolio of foreign subsidiaries from a culturally diverse country base (Tihanyi et al., 2005), and human resource management (Schuler, Dowling, & Cieri, 1993). Generally, such increased operational difficulties
Based on the firm’s experience in managing the customers with a new set of values and lifestyles in their home country, firms show interest in expanding the business to other countries where also the firm faces similar challenges. • Since the culture and tradition of a country decide consumer behaviour in a given country, the strategies developed by the firm in the home country to handle socio-cultural issues may help its decision on international business expansion. • The decision maker can find out the relevant similarities and differences among target markets with local market to decide what products/services may be the game changer. • The domestic socio-cultural environment effects of the firm and its decision makers on consumer perception of products, distribution, pricing, and communications policies which can be easily tested further in international business scenarios. (d) Technological Issues : The domestic technological environment issue is related to the technologies developed by the firm through its efforts on R & D and other locally available technologies to improve the features of the products and services so that they can be globally acceptable and
A business can’t succeed without knowing its weaknesses and how to deal with them, either by minimizing them as much as possible or by eliminating them if it is possible. Being a foreign company establishing a new business overseas adds many obstacles to the process, but we should know how to adjust to them and minimize their negative impact. Our first weakness is that we have no previous experience in the Chinese industry, which makes it difficult to deal with local employees that will form the majority of our workforce there. This will also affect the management process negatively and it will hinder our progress if we don’t deal with it correctly from the beginning. Moreover, another weakness related to the culture difference, is the challenging task of establishing a name for our brand, which is completely new to the market.