Liability of Foreigness

At the Global Breakthrough and Expansion phase, expansion to new markets and increased pres-ence to existing markets continues with globalization degree 25-50% and sales in three continents (Gabrielsson & Gabrielsson, 2009b). As the firm matures and with the new fear of losing overseas markets, they establish their own sales office in the form of foreign direct investment in addition to relying on exports and partners (Hashimoto 2011, p.27). With the drive to achieve global break-through, firms will start to take on distant and challenging new markets thus coming across difficul-ties in cultural, legal, and localization aspects (Rönkkö et al., 2008).

1. High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy: A. global B. multidomestic C. transnational D. overall cost leadership 2. Foreign direct investment includes the following form of entry strategy: A. licensing B. franchising C. joint ventures D. exporting 3. According to Michael Porter, firms that have experienced intense domestic competition are A. unlikely to have the time or resources to compete abroad. B. most likely to design strategies aimed primarily at the domestic market. C. more likely to design strategies and structures that allow them to successfully compete abroad. D. more likely to demand protection from their governments.

This paper contributes to the global strategy literature by outlining the four debates that we believe to be frontier issues with which the field will engage in the years to come. Its purpose is to review four current debates taking place in the field of global strategic management and international business. The review provides in-depth coverage of the four major global strategic management debates, comprising: (1) cultural vs institutional distance; (2) global vs regional geographic diversification; (3) convergence vs divergence in corporate governance, and (4)

The rapid development of economy promotes the development of multinational companies, which have become a general form rather than a special form of a company. Multinational companies carry a lot of money, production technology, management expertise and sales channels to expand their business around the world. There is no doubt that multinational companies will become the subject of an act of international relations and play an increasingly large impact on international relations.

Introduction: Succeeding in international business is a tough job even for the most experienced multinational enterprise; international business has never come at a small price. There are trade barriers; cultural, political difficulties coupled with resource allocation and management strategy issues. In the mist of all these challenges some MNEs especially those from developing countries enter the international business arena with limited resources and experience and they still succeed.

"Firms may be able to exploit core competencies in international markets through resource and knowledge sharing between units across country borders" (Hill 384). This sharing generates synergy, which helps the firm produce higher-quality goods or services at lower cost. In addition, working across international markets provides the firm with new learning opportunities. Multinational firms have substantial occasions to learn from the different practices they encounter in separate international markets. Even firms based in developed markets can learn from operations in emerging markets.

Firms internationalize for couple of reasons. Philips expands their overseas market because home market is limited and Matsushita expanded as efficient operation did not guarantee growth anymore. Basic strategies adopted by these two companies evolved during their process of internationalization. As competitions become brutal, firms need to change strategies to cope with T high pressure for cost reduction and strong pressure of local responsiveness. Transnational strategy is now a feasible approach. Companies reduce cost to be competitive and the same time modify products to satisfy local customer preferences. However, firms’ structures are very different. Philips has a decentralized structure as Matsushita’s operations are highly centralized. Strategic human resources are also vital so both companies send expatriate experts to offshore subsidiaries. Philips and Matsushita also form strategic alliance relationship with each other. Companies’ strategy is highly correlated to their basic strategy and the fit between strategies is vital to company’s

26. Which entry mode gives a multinational the tightest control over foreign operations?: Setting up a wholly owned subsidiary

“A multinational enterprise is a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collison, 2012). A firm on the other side operates within the national borders of a country. Some firms want to expand, not only in sizes but also in value and market share, by becoming MNEs. This is due to the fact that it can bring remarkable advantages even though is very risky. MNEs perform international business operations named as: Exports and Imports, Foreign Direct Investment (FDI). The first branch includes the goods and services that are produced in a country and sold in another one and vice versa, the second branch consists in equity funds invested in foreign countries. It is when firms begin to use FDI that they become MNEs.

Klein et al. (1990) extended TCA by integrating production costs and dividing external uncertainty. Erramilli and Rao (1993) modified the TCA framework to adapt it to the service industry. Coviello and Munro (1997) argued that the network relationship developed affects firm’s internationalization and the choice of entry mode. Tse et al. (1997) have analyzed the influence of country specific, industry specific, and operation related factors on entry mode choice. Reuber and Fisher (1997) pointed out that the international experience of a management team is positively related with the development of strategic partners and foreign sales. Pan et al. (1999) examined the impact of order and mode of entry on firm performance in foreign markets. Finally, Brouthers et al. (1999) supported Dunning’s OLI framework by empirically examining German and Dutch firms that had invested in Central East European countries (CEE). 3

The structure and management systems of firms in different countries can potentially affect competitiveness. By using Porter 's diamond, business leaders may analyze which competitive factors may reside in their company 's home country, and which of these factors may be exploited to gain global competitive advantages. Business leaders can also use the Porter 's diamond model during a phase of internationalization, in which leaders may use the model to analyze whether or not the home market factors support the process of internationalization, and whether or not the

Business Strategy approach: - this is based on the idea of Pragmatism (Welford and Prescott, 1994) with the company making trade-offs between a number of unstable decision to internationalize and the way it adopts to do so Reid (1983) argues that foreign expansion is contingency based and

The OLI framework suggests that a location advantage or an ownership advantage separately cannot provide sufficient justification for the selection of different internationalization strategies. Thus, these advantages are interconnected and only when all three of them are present international expansion activities may occur (Dunning, 1980; Galán and González-Benito, 2001). Although this model has been widely used in numerous research studies, it contains some evident weaknesses. Some scholars criticize it, arguing that there is no significant difference between ownership advantages and internalization advantages (Buckley, 1988). Pinho (2007) includes that the framework overlooks the importance of managerial-specific characteristics and Ekeledo and Sivakumar (2004) even claim that the OLI theory cannot provide an adequate prediction of entry mode choices since it cannot explain why firms with a similar set of advantages do not follow the same expansion strategy in the same target

The world has been increasingly globalising in terms of political interest, acquisition of resources, and business opportunities over the last few decades. By reason of this explosion, national economies become incrementally more mutually dependent. In the meantime, cross-border business has been accelerated by MNEs, which have become universal. Furthermore, MNEs are perceived to be a chief vector of globalisation (OECD, 2005). However, there have been contrastive viewpoints on the argument of whether MNEs are the genuinely global. There are a number of existing international business studies point out that MNEs’ principle sales and related operation tend to concentrate in their home region. In other words, MNEs mostly operate on a regional level. Rugman and Verbeke (2004) conclude that the majority of multinational enterprises’ dominant sales volume generate from the particular regional market. Additionally, MNEs’ products and services are not proportionally distributed worldwide in terms of consumers’ preference. It has been identified based on the world largest 500 MNEs’ sales volume, and thereby a few number of MNEs are perceived as undeniably global. The reason of that, the MNEs’ trades can be equally distributed to each region or economy. Nevertheless, the outlined above observation might be limited because the dimension is primarily conducted by the proportion of sales distribution. Nonetheless, recent research has established alternative empirical evidence on this

WHY COMPANIES DECIDE TO ENTER FOREIGN MARKETS Competing in international markets allows companies to (1) gain access to new customers, (2) achieve lower costs through greater scale economies, learning curve effects, or purchasing power, (3) leverage core competencies developed domestically in additional country markets, (4) gain access to resources and capabilities located outside a company's domestic market, and (5) spread business risk across a wider market base. WHY COMPETING ACROSS NATIONAL