International Business Shenkar & Luo (N.D.) Note Essay

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International Business

Shenkar & Luo (n.d.) note that "international business strategy must aim to find the most effective balance between global integration and local responsiveness" when entering new markets. Thus, firms need to balance all of the different factors that go into the market entry decision in order to enjoy the best outcomes. Among the key issues are timing of entry and mode of entry.

There has been considerable research with respect to the different options that are available to the firm. Gielens and Dekimpe (2001) note in their study that firms that enter a market early -- first movers especially -- and greenfield will tend to have the best success. Which of these elements is most important, however, is subject to debate. When Starbucks entered Japan and China, it met the criteria of having a novel concept and first-mover advantage, but the company used local partners rather than avoiding local partners and acquired assets. Gielens and Dekimpe were studying firms entering Eastern European markets, however, which are less "foreign" than Asian ones.

Hill, Hwang and Kim (1990) make the case that the ideal choice for the type of market entry is related to "the strategic relationship the firm envisages between operations in different countries.

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" To use a couple of examples, Starbucks has a low degree of interconnectedness between operations in different countries, so the franchise model is perfectly reasonable. The grocery stores moving into Eastern Europe are seeking to capture economies of scale by integrating these operations with the Western European ones, so Gielens and Dekimpe rightly found greenfield was the best approach. Likewise, FedEx's move into Subic Bay was primarily to deliver Intel chips produced nearby either to Chinese assemblers or to North America. When Intel closed, FedEx had no reason to keep the operation running. Thus, the way FedEx envisioned the business was central to its market entry and exit strategies.

Many of the….....

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