Country Risk and Entry Mode Selection

In: Business and Management

Submitted By crystal314
Words 1239
Pages 5
Country Risk and Entry Mode Selection

Political, legal and regulatory risks
Political, legal and regulatory risks, for example, exchange and repatriation of funds risks of our host country, Japan includes the following: Marketers must attempt to comply with the host country’s laws and regulations and keep up with laws and regulations that change frequently. Some examples of Political risks include: War, Social unrest, politically motivated violence, Social conditions, corruption, labor costs and tax discrimination. The political impact on economic transformation includes deregulation, privatization, and the creation of a legal system to protect property rights. The legal risks include the rules and laws that regulate the host country’s behavior; property rights, private and public actions. International property issues include protection of property by law enforcement and product safety and liability. This also includes competitiveness and ethics.
Social and cultural risks There are so many risks when conducting business in an Asian country that you must consider before you decide to conduct business overseas. One of the first things you must figure out is will our product need to be adapted for Asian markets. Some Adjustment is ok, but we would need to figure out if wearing rings is a big thing in the culture. We also should look at which colors and metals are best to use and which are most popular. Another issue that needs to be looked at is how accessible would are advertising be. Although there are far more people in Asia than most other places on the planet we would need to know the best way of advertising. We would also need to start in cities with a lot of young and old people because that is who we would market first. We would also need to look into their tradition to make shore that rings are not sacred or anything like that. We must also…...

Similar Documents

Globalstrategy and Multinationals' Entry Mode Choice

...GLOBAL STRATEGYAND MULTINATIONALS' ENTRY MODE CHOICE W. Chan Kim* INSEAD Peter Hwang** Baruch College Abstract. This paper makes a case directed towards establishing the importance of global strategic considerations in choosing multinationals'entry mode. Specifically,it is our contention that beyond the environmental and transaction-specificfactors well established in the literature to affect the entry mode decision, we should also consider the strategicrelationshipa multinational envisages between its operations across borders in reaching this decision. After incorporating various global strategic variables into an eclecticframeworkof the factorsinfluencing entrymode the choice, this paper tests both the validityof the overall framework and the importance of each entry mode determinant in differentiating among entry modes. This is done based on ninety-six multinational managers' responses to a survey questionnaire concerning their entry mode decision experiences. The results suggest that an express incorporationof global strategicvariables into an analysis of the entry mode decision is warranted. This paper is concerned with the critical decision of multinationals' foreign entry mode choice. While existing studies have already identified a diversity of variables that influence this decision, in our view these variables can or essentiallybe collapsedinto one of two categories:environmental ftansactionspecific factors. Common to existing studies identifying these factors is......

Words: 3800 - Pages: 16

Ikea and Its Mode of Entry

...| ------------------------------------------------- Question 1: should Ikea change its mode of entry? In IKEA’s history two different modes of entry were used. Both were met with big success and allowed IKEA to enter new markets very easily, and in a secure way. In the 70’s and the 80’s the IKEA’s method as mode of entry was simple: try to establish a link with a supplier in the host country before opening a retail outlet through company-owned subsidiaries. This direct mode of entry was used to enter European and North American markets and it worked well to develop IKEA concept (without any adaptation) in these countries. Then IKEA looked for an expansion by franchising, an intermediate mode of entry where the franchisor was in charge of R&D, production (sub-contractors), marketing, centralized control and the franchise in charge of sales and services. There is a drastic selection in researching people interested in opening an IKEA franchise. Solid financial background and high experience is required to be authorized to develop IKEA concepts. After the acceptance, IKEA headquarters were very careful and really controlling the activities of the franchisees. The only freedom for them was to adapt some products and methods to the local market. Franchising was a very good way for IKEA to transpose its concept, its name and its reputation. These traditional modes of entry was fully tried and tested, with the big accomplishment we known, in Europe and Northern......

Words: 1807 - Pages: 8

Entry , Mode

...India- Country with social diveristy having different culture,language,religions,cast etc. Population – more than 1 billion inhabitants,only behind china large percentage between 15- 64 years of age Religion- important role in life of people of the country,80.5% (hinduism) ,13.4 %( muslim),2.3% (Christians),rest include sikhs,budhdhists,jain and jews. Language- 18 Major languages and More than 1000 minor languges.. demographics are going to futher skwed in favour of young people. At present in India two wheeler has the largest share in indian automobile industry. Two wheelers- first choice for middle and low income as a medium of transportation. -also attracted to young people as a style statement. -rapid increase in women focused scooters shows the interest of womens in two wheelers. India today is a young nation with a large percentage of its population below 35 years of age. The demographics are going to be further skewed in favor of the young over the next 15 years because of the boom in media and satellite TV, Indian youngsters are today exposed to global lifestyles, and in the process they have broadened their horizons. For youngsters, bikes are a style statement and not just a mode of transport. The two-wheeler industry is therefore likely to see further growth as more and more youngsters give expression to their lifestyle aspirations. Women are also going to play a pivotal role in further driving the growth of the two-wheeler......

Words: 421 - Pages: 2

Modes of Entry Into International Markets

...Modes of Entry into International Markets (Place) How does an organization enter an overseas market? Background A mode of entry into an international market is the channel which your organization employs to gain entry to a new international market. This lesson considers a number of key alternatives, but recognizes that alteratives are many and diverse. Here you will be consider modes of entry into international markets such as the Internet, Exporting, Licensing, International Agents, International Distributors, Strategic Alliances, Joint Ventures, Overseas Manufacture and International Sales Subsidiaries. Finally we consider the Stages of Internationalization. It is worth noting that not all authorities on international marketing agree as to which mode of entry sits where. For example, some see franchising as a stand alone mode, whilst others see franchising as part of licensing. In reality, the most important point is that you consider all useful modes of entry into international markets - over and above which pigeon-hole it fits into. If in doubt, always clarify your tutor's preferred view. The Internet The Internet is a new channel for some organizations and the sole channel for a large number of innovative new organizations. The eMarketing space consists of new Internet companies that have emerged as the Internet has developed, as well as those pre-existing companies that now employ eMarketing approaches as part of their overall marketing plan. For some companies......

Words: 1201 - Pages: 5

Jollibee Entry Mode Into Australia

...Entry Mode Strategy for Jollibee into Australia Table of Contents Executive Summary 2 Introduction 4 The Jollibee Phenomenon 4 Overseas Expansion and Modes of Entries 4 Company Analysis 5 Values – Mission – Vision 5 Distinctive competence 8 Foreign Market Analysis 9 The Australian Economy 9 Legal and Political Environment 9 Entry mode selection 11 Conclusion and recommendations 14 Reference list 17 Executive Summary Jollibee Foods Corporation (JFC) is a highly successful Philippines’ based food services company that operates over 1,700 stores locally and internationally. JFC has developed its international business over three distinct strategies. Its corporate strategy is one of related diversification into the fast food, restaurant and bakery sectors of the food industry. Its international business strategy focuses on establishing market share by acquisition, joint venture and franchising, often by initially targeting high Filipino population centres, and also in differentiation by localizing their menus to suit various cultural tastes in all their overseas markets (Jollibee 2009a). JFC has successfully adopted a transnational strategy being able to combine the benefits of global scale efficiencies in its regional management business model with the benefits of local responsiveness by adapting for local tastes. It depends on an integrated network and teamwork to drive the needs of the marketplace and the need to be......

Words: 4927 - Pages: 20

Entry Modes

...china. Electronics, they pulled out. So understanding the consumers and the difference between a dutch, chinees market. It’s a challenge for the company, there are al lot of things going on. A whole nother level of compleixity when you cross borders. A lot of uncertainty. Think about stratgegilcaally to handle these things. Currency risk, political risk, entirely different structure. Is The cost of doing business can be higher if there is a lack of trust. How to navigate these kind of difference is important how to make a profit. Because of these complexity, its interdisciplinary, we have political science and economics. I’m an lawyer, phd strategic management. That makes it interesting. Value creating opportunities. A lot of private companies, but also government. Coutry other than national origin. The firms that a going over boarder and impacting over border. It’s a holistic approach to international business. The level of analysis is often multinationals. There are a lot of different ways to own and control business across borders. Burnet. happened differences factor endowments across borders, one country had a lot of capital, another country a lot of natural resources. Because of these different in factor endowments fdi was happening to capitalize on these things. They were looking at transfers of capital. They weren’t viewing fdi as a firm, but between contries. They also had simplistic assumptions about perfect markets. They used national statistics trade. You......

Words: 1068 - Pages: 5

International Entry and Country Analysis

...INTERNATIONAL ENTRY AND COUNTRY ANALYSIS A Lecture Programme delivered at the Technical University of Košice Andrew Harrison Formerly of Teesside University, United Kingdom December 20112 Andrew Harrison’s Brief Biography Andrew Harrison was a Principal Lecturer and Subject Group Leader in economics at Teesside University until August 2010 and has been a visiting lecturer at the Technical University of Košice since April 1993. He has also been a visiting lecturer in Germany, Ukraine and Singapore. Since leaving the full-time staff of Teesside University, he has continued to work as an occasional lecturer and as an external examiner at two other UK universities. He holds qualifications from London, Salford and Leeds Universities and Trinity College of Music, London. In April 2008, he was awarded the degree of Doctor Honoris Causa by the Technical University of Košice. He is married to Heather and has two grown-up children, David and Rachel. In his spare time he is a keen amateur pianist and organist. Brief Course Description International business activity is one of the key features of the contemporary global economy. The decision to venture abroad involves the evaluation of alternative entry modes, bearing in mind the degree of risk and the suitability of the business environment in a potential host country or region. Political, economic, cultural and other factors are all of vital importance. This short course aims to explore these issues in the light of current research and...

Words: 15285 - Pages: 62

Ikea and Its Mode of Entry

...methods or considering alternative evidence. Further advice can be found on our website http://www.sqa.org.uk/assessmentarrangements. SQ Equality and inclusion A C E-assessment may be appropriate for some assessments in this Unit. By e-assessment we mean assessment which is supported by Information and Communication Technology (ICT), such as e-testing or the use of e-portfolios or social software. Centres which wish to use e-assessment must ensure that the national standard is applied to all learner evidence and that conditions of assessment as specified in the Evidence Requirements are met, regardless of the mode of gathering evidence. The most up-to-date guidance on the use of e-assessment to support SQA’s qualifications is available at www.sqa.org.uk/e-assessment. hi na Fi le do w nl oa de d by ce For all modes of delivery, assessment conditions and quality assurance arrangements must ensure that the same standard is applied for all learners. nt re _3 00 Opportunities for e-assessment 54 02 Time is allowed within Units for assessment and re-assessment of Outcomes. Where learners have not attained the standard necessary to achieve a particular Outcome or Outcomes, they should have the opportunity to be re-assessed. SQA’s advice is that there should normally be one Unit re-assessment opportunity, or in exceptional circumstances two. In some cases learners may be required to resubmit original work which has......

Words: 4808 - Pages: 20

Entry Modes in International Business

...Business 3 3.1 Equity Entry Modes 3 3.2 Non-Equity Entry Modes 5 4. Conclusion 7 5. References 8 1. Introduction Nowadays, the leading force in doing business is competition. Consequently, a company has to adjust his whole strategy to the aim of outperforming competitors. Therefore, getting a new customer base, offering a service with a higher quality as well as cheaper products, are the main advantages a company can achieve to increase their market share. To acquire these abilities a company needs to go global in order to gain advantage from the cultural differences as well as differences in the workforce. Due to the increasing importance of foreign markets, many companies ask themselves, which is the most successful way of entering a new country. Therefore, the purpose of this paper is to clarify the most important forms of international business to go global. In order to answer the problem statement, this paper is structured as follows. At first, a short overview about the motives of doing business in other nations will be given. This will be followed by a short explanation of the difference in equity and non-equity international businesses, which are the main categories. Afterwards the different types of international business will be defined and their advantages as well as disadvantages will be clarified. Finally, this paper ends with a conclusion, which sums up the most important points. 2. Motives of International Business The entry modes that will......

Words: 2934 - Pages: 12

Country Selection

...Phase 2 Research Country Selection Matrix: A Tool to Prioritize Geographic Focus IKATU is GUARANI for “Yes I Can ” Ikatu International is attempting to create employment opportunities for the world’s youth population. We are identifying gaps within current youth employment efforts, strategically modeling and implementing solutions that leverage our blended value experience (economic, social, and environmental), and creating significant impact measurements that drive dialogue on transparency and accountability. Ikatu International aspires to enable self sufficiency, teach life and social skills, and create building blocks for future generations by connecting youth to economic opportunity. Ikatu is Guarani for “Yes I Can”, a translation that speaks to both our organization and the belief systems we hope to cultivate. We would like to inspire personal dignity, realized opportunity, and leadership within young adults who have been underexposed by circumstance. Giving back to the community through smart business can stimulate positive change regardless of economic, political, religious and social context. At Ikatu International, we believe in endless possibilities and the power of “Yes I Can”. Country Selection Matrix: A Tool to Prioritize Geographic Focus Revised Report August 2010 Ikatu International The original report was authored by Meghan Corroon and Elizabeth Stewart from Causemopolis in January, 2009. INTRODUCTION The Country Matrix analysis is a reference......

Words: 6256 - Pages: 26

International Modes of Entry Into Foreign Market

...report on Modes of Entry into Foreign Markets. Sir, It’s been pleasure for me to submit my report on “Modes of Entry into Foreign Market”. This report contains the structure and material as instructed by you. I have tried hard to do my best and fulfill your expectation. The assigned work and the information gathering process involved with it gave me access to the areas, which I didn’t know before. However it is needless to say that, there may be some mistake in my organization, presentation and style. In completing the report I have tried my best in imparting ever available details of the, “Modes of Entry into Foreign Market” avoiding unnecessary amplification of the report. Thanking you, Yours faithfully Md.RazibulMatin ID. No: 801414091 EMBA Program Department of International Business University Of Dhaka. Table of Content SL NO. | TOPIC NAME | PAGE NO | | Letter of Transmittal | 1 | | Executive summary | 3-4 | Chapter-1 | Introduction | | 1.1 | Problem of Modes of Foreign Markets Entry | 5-6 | 1.2 | Rationale for Modes of Foreign Markets Entry | 6 | 1.3 | Scope and Objectives of the study | 6-7 | 1.4 | Methodology of the Study | 7 | 1.5 | Limitation of The Study | 7 | Chapter-2 | Literature Review | 8 | Chapter-3 | Modes of Entry into Foreign Market | | 3.1 | Market entry strategy | 9 | 3.2 | Market Entry Modes | 10 | 3.2.1-3.2.7 | Different Markets Entry Modes |......

Words: 7614 - Pages: 31

Foreign Market Entry Modes

...Name: 馮光合 Student ID: M0414102 Foreign market entry modes 1. Exporting: Exporting is the process of selling of goods and services produced in one country to other countries. There are two types of exporting: direct and indirect. * Direct Exports The most basic mode of exporting made by a (holding) company, capitalizing on economies of scale in production concentrated in the home country and affording better control over distribution. Direct export works the best if the volumes are small. Large volumes of export may trigger protectionism. The main characteristic of direct exports entry model is that there are no intermediaries. Advantages: * Control over selection of foreign markets and choice of foreign representative companies * Good information feedback from target market, developing better relationships with the buyers * Better protection of trademarks, patents, goodwill, and other intangible property * Potentially greater sales, and therefore greater profit, than with indirect exporting. Disadvantages: * Higher start-up costs and higher risks as opposed to indirect exporting * Requires higher investments of time, resources and personnel and also organizational changes * Greater information requirements * Longer time-to-market as opposed to indirect exporting * Indirect exports Indirect export is the process of exporting through domestically based export intermediaries. The exporter has no control over its products in the...

Words: 1200 - Pages: 5

Entry Modes

...University of Glasgow Adam Smith Business School International Business & Entrepreneurship Research Method MGT 5174 A Comparative Study of Entry Modes Adopted by Sainsbury’s and M&S in China Based on Resource-based View Theory Yuyu Xiong 2203873 07/24/2016 Word Account: 3013 Table of Contents 1. Introduction……………………………………………………………………..…3 1.1 Background ………………………………………………………………..…3 1.2 Research Questions …………………………………………………………..3 1.3 Research aim and objectives………………………………………………… 4 2. Literature Review ……………………………………………………………..….4 2.1 Timing ………………………………………………..…..4 2.2 Scale of Entry ………………………………..…..……5 2.3 Steps taken before choosing entry modes………………………………..…. 2.4 Entry Modes……………………………….……………………………..…. 2.5 Factors that influence the choice of entry mode…………………………..…. 3. Methodology…………………………………………………………………..….6 3.1 Research philosophy………………………………………………….………6 3.2 Research......

Words: 3482 - Pages: 14

Modes of Entry

...MODES OF ENTRY There are five modes of entry into the foreign market. They are- * Indirect exporting * Direct exporting * Licensing * Joint ventures * Direct investment Fiat ‘s mode of entry into the foreign market is through licensing. Licensing is a lower risk entry mode that allows a company to manufacture a product all over the world for global distribution. Licensing permits the company access to markets that may be closed or that may have high entry barriers. Polski fiat was sold in the countries of manufacture at low prices, with few taxes, while automobile imports were charged tarrifs at rates ranging from 50 to 100 PERFORMANCE OF FIAT SALES PERFORMANCE FIAT sold 23,551 vehicles in 2009 and registered an increase of 241% compared to the previous year sales which stood at 6,897 vehicles. It plans to sell 130,000 cars annually in India by 2014 FINANCIAL PERFORMANCE INCOME STATEMENT: 10-YEAR SUMMARY DATE | SALES | EBIT | DEPRECIATION | TOTAL NET INCOME | EPS | TAX RATE (%) | 12/11 | 78.43 Bil | 2.88 Bil | 4.42 Bil | 1.76 Bil | 1.41 | 24.40 | 12/10 | 47.25 Bil | 928.36 Mil | 3.93 Bil | 185.67 Mil | 0.15 | 68.70 | 12/09 | 43.04 Bil | 135.63 Mil | 2.68 Bil | -441.14 Mil | -0.36 | 435.00 | 12/08 | 78.44 Bil | 2.88 Bil | 3.89 Bil | 2.12 Bil | 1.71 | 21.30 | 12/07 | 77.07 Bil | 3.65 Bil | 3.70 Bil | 2.57 Bil | 2.36 | 25.90 | 12/06 | 68.25 Bil | 2.16 Bil | 3.69 Bil | 1.40 Bil | 1.29 | 29.90 | 12/05 | 61.29 Bil |......

Words: 679 - Pages: 3

Modes of Entry Into an International Business

...Modes of entry into an International Business:- There are some basic decisions that the firm must take before foreign expansion like: which markets to enter, when to enter those markets, and on what scale. Which foreign markets? -The choice based on nation’s long run profit potential. -Look in detail at economic and political factors which influence foreign markets. -Long run benefits of doing business in a country depends on following factors: - Size of market (in terms of demographics) - The present wealth of consumer markets (purchasing power) - Nature of competition By considering such factors firm can rank countries in terms of their attractiveness and long-run profit. Timing of entry:- It is important to consider the timing of entry. Entry is early when an international business enters a foreign market before other foreign firms. And late when it enters after other international businesses. The advantage is when firms enters early in the foreign market commonly known as first-mover advantages First mover advantage;- 1. it’s the ability to prevent rivals and capture demand by establishing a strong brand name. 2. Ability to build sales volume in that country. so that they can drive them out of market. 3. Ability to create customer relationship. Disadvantage: 1.firm has to devote effort, time and expense to learning the rules of the country. 2.risk is high for business failure(probability increases if business enters a national......

Words: 1860 - Pages: 8