Country screening
1) Develop selection criteria
2) Develop likely segments
3) Rate market attractiveness
4) Assess compatibility
Kumar and Subramaniam (1997)
Firm and environmental factors influence desired mode characteristics
Desired Mode Characteristics - Kumar and Subramaniam (1997)
Control, Resource Commitment, Dissemination Risk and Flexibility to Withdraw
Entry Modes - Kumar and Subramaniam (1997)
Investment - wholly-owned subsid, acquisition, assembly operations
Contract - joint venture, strategic alliance, franchising, licensing
Direct Exporting - export department, agents, distributors
Indirect Exporting - trading companies, domestic purchasing, export management companies
Firm factors - Kumar and Subramaniam (1997)
Assessed by Porter’s 5, RBV, SWOT, transaction cost perspective
Cost leadership, product differentiation
Transaction Cost Perspective
Costs associated with uncertainties and an organisation’s capability to deal with them
Transaction Cost Perspective - 4 concerns (Schellenberg et al, 2018)
Asset specificity - is asset protected? easy to copy?
Environment uncertainty - dynamic and similarity of market. Depends on nature of industry and product
Behavioural uncertainty - partner trust, will contracts be respected
Transaction frequency - number of dealings
Environment factors - Kumar and Subramaniam (1997)
Location-specific advantages
Natural (resources) or artificial (Switzerland VET system)
First Mover Advantages
Lasting impression on customers - brand recognition and loyalty
Time to refine processes and perfect products/services
Control of resources - e.g. strategic location, exclusive contract with key suppliers
First Mover Disadvantages
Bear economic burden of developing new markets that followers can then exploit
Followers learn from your mistake, reducing own risk/cost
Followers can examine your processes and modify for efficiency
Institutional Perspective & Social Legitimacy (Peng, 2006)
RBV and Porter’s 5 fail to consider how a changing instit environment can impact marketing practice
Important in achieving social legitimacy - access to resources (Deephouse, 1999)
Homophobic Chick fil A
Institution Definition (North, 1991)
Humanly devised constraints that structure political, economic and social interaction