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The impact of firm resources and host country specific factors on international entry mode strategy
Pages 14 (3514 words)
THE IMPACT OF FIRM RESOURCES AND HOST COUNTRY SPECIFIC FACTORS ON INTERNATIONAL ENTRY MODE STRATEGY 1. Introduction Research Aim This study aims to determine the factors that influence the choice of entry modes that U.K firms may explore in their effort to establish a presence in a foreign market.
As a consequence, the globalisation commitment entered into by countries in multilateral agreements was met with slow progress and considerable suspicion by political and civic groups. Businessmen were quick to see the advantages, however, of gaining access to new markets opening up across borders. In deciding upon entering a foreign market, a firm takes on considerable risks, but foresees that there is an opportunity to earn considerable returns as well. It will therefore base its decision on whether or not there is a favourable trade-off between risks and returns – that is, whether the chances of earning returns significantly higher than it would in the local market would exceed the risks that it may be facing. This is the crux of the normative decision theory. On the other hand, behavioural theory suggests that a firm may also consider entry into foreign markets depending on the trade-off between the relative availability of resources in the targeted site compared with the home site, as against the degree of control that may be exercised, which is seen to diminish the more distant the host site (Agarwal & Ramaswami, 1992). ...
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