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Questions and Answers
What does the liability of foreignness refer to?
What does the liability of foreignness refer to?
Which of the following describes location-specific advantages?
Which of the following describes location-specific advantages?
What is cultural distance?
What is cultural distance?
What does the stage model of internationalization portray?
What does the stage model of internationalization portray?
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What is a first-mover advantage?
What is a first-mover advantage?
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How can foreign firms overcome the liability of foreignness according to the resource-based view?
How can foreign firms overcome the liability of foreignness according to the resource-based view?
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Which of the following modes of entry indicates a larger commitment to a foreign market?
Which of the following modes of entry indicates a larger commitment to a foreign market?
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Which option reflects first-mover advantages?
Which option reflects first-mover advantages?
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What characterizes a turnkey project?
What characterizes a turnkey project?
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What is institutional distance?
What is institutional distance?
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What is a build-operate-transfer (BOT) agreement?
What is a build-operate-transfer (BOT) agreement?
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What strategic issue must firms decide upon when entering foreign markets?
What strategic issue must firms decide upon when entering foreign markets?
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Which of the following describes a wholly owned subsidiary (WOS)?
Which of the following describes a wholly owned subsidiary (WOS)?
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Study Notes
Chapter 10: Entering Foreign Markets
- Entering foreign markets is about understanding how institutions and resources affect the liability of foreignness.
- Matching location-specific advantages with strategic goals is crucial (where to enter).
- Comparing first-mover and late-mover advantages helps in deciding when to enter.
- Following a comprehensive model of foreign market entries is vital (how to enter).
- Participating in debates concerning foreign market entry will enhance understanding and provide implications for action.
Liability of Foreignness
- Foreign firms experience an inherent disadvantage in host countries due to their non-native status.
- Thinking about a foreign firm operating in your country can help illustrate assets and liabilities of foreignness.
Institutions, Resources, and Foreign Market Entries
- Institution-based view considers regulatory risks, trade barriers, and cultural differences as factors impacting entry.
- Resource-based view focuses on the value, rarity, imitability, and organizational aspects of resources and capabilities.
Where to Enter?
- Location-specific advantages benefit firms based on the features of a specific place.
- Agglomeration is the clustering of economic activities in certain locations, which offers location-specific advantages.
Matching Strategic Goals with Locations
- Strategic goals like natural resource-seeking, market-seeking, efficiency-seeking, and innovation-seeking have location-specific advantages.
- Examples include oil exploration in specific areas, market penetration in China, efficient manufacturing in China, and technology hubs in Silicon Valley.
Cultural/Institutional Distances and Foreign Entry Locations
- Cultural distance measures differences between two cultures.
- Institutional distance examines the similarities or dissimilarities between the institutions of two countries.
- A stage model describes the steps a firm takes for internationalization.
When to Enter?
- First-mover advantages accrue to firms entering a market first.
- Late-mover advantages accrue to firms entering a market later.
- Examples are mentioned in the text
How to Enter?
- Scale of entry refers to the amount of resources committed to entering a foreign market.
- Modes of entry are the methods used for entering a foreign market.
Equity vs Nonequity Modes
- Nonequity modes use exports and contractual agreements for relatively smaller commitments to overseas markets.
- Equity modes involve JVs and wholly owned subsidiaries for larger, harder-to-reverse commitments.
The Choice of Entry Modes
- Different entry modes are listed with their advantages and disadvantages, including exports, contractual agreements (like licensing and franchising), joint ventures, and wholly-owned subsidiaries.
Making Actual Selections
- Turnkey projects involve clients paying contractors for designing and constructing facilities.
- Build-operate-transfer (BOT) agreements are nonequity modes for long-term presence.
- Co-marketing requires collaborations amongst multiple firms for joint product marketing efforts.
- Joint ventures create new entities jointly owned by two or more parent companies, and wholly owned subsidiaries are entirely owned by one parent multinational.
- Greenfield operations involve constructing facilities from scratch in a foreign country.
- A question on selecting options for entering a foreign market is included.
Liability vs Asset of Foreignness
- Country-of-origin effect refers to the positive or negative perceptions of firms and products from a particular country.
Implications for Action
- Understanding the rules of competition and developing resources to counter liability of foreignness and matching entry efforts with strategic goals are crucial for success.
- A table with nine global multinational enterprises is referenced.
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Description
This quiz covers key concepts from Chapter 10 on entering foreign markets. It discusses the liability of foreignness, the importance of location-specific advantages, and the comparison between first-mover and late-mover advantages. Engaging with these topics will enhance your understanding of foreign market entry strategies.
