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The impact of firm resources and host country specific factors on international entry mode strategy
Pages 14 (3514 words)
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.Such factors shall pertain to either firm specific or country specific resources and attributes which exert an influence over the eventual choice of a mode of entry of a multinational firm into the host country…
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).
In the course of this study, the purpose is to gain possible insight into the evolving dynamics involving the entry of UK firms into foreign markets, particularly (though not exclusively) emerging markets. It expects to develop new insights into stakeholders’ perceptions about those considerations that would tend to favour one mode of expansion of foreign direct investment over another, the implications on control and risk, and the nature of the target market in relation to the home economy.
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