Introduction
What differentiates Market Entry Strategies from other publications on the subject? This book serves the reader through its unique integration of internationalization theories with real-life global business practise. Complex issues are explained in a manner that results in understanding, and relevant topics are applied in authoritative industry and firm case studies. The focus on Asian firms in the case studies delivers interesting insights into modern high-technology industries and changing global business dynamics. Various illustrations and tables enable comprehension of the points being discussed.
Questions at the end of each chapter help the reader review the core content of the chapter topics. The review questions are suitable both for students’ self-assessment of understanding and for team exercises. Questions can be assigned either as written homework or for class discussions or presentations. The case studies are of different lengths, giving instructors flexibility in terms of the timing and scheduling of the content to be taught in each class session.
Supporting the book’s pragmatic and goal-oriented philosophy, the publication is divided into three main chapters: ‘How to Combine Theory and Business Practise’, ‘Internationalization Theories’, and ‘Market Entry Strategies’.
Chapter One introduces and explains the importance of solid theory in academic work. Qualitative and quantitative research approaches as well as mixed-research methods are described, and the relevant strengths and weaknesses of each method are compared. Particular attention is paid to case study methods because the firm case studies presented in this book provide the reader with a window to international business reality. At the same time, the reader gains knowledge of case study design, which is helpful when developing his or her own case studies – whether required at a university (e. g., homework, thesis writing) or in business (e. g., competitor analysis). The case study of Panasonic, which completes chapter one, invites the reader to develop scenarios in terms of Panasonic’s business future.
Chapter Two is devoted to the most important theories of internationalization, including Product Life-Cycle, Internalization, Location, Eclectic Paradigm, Uppsala, Network, and International New Venture (Born Global). These models are grounded to a considerable extent in the Transaction Cost Theory and the Resource-Based View as explained and illustrated in the chapter. While writing this part, I emphasized the main contents of the theories, which necessarily includes a review of their conceptual weaknesses. The case study of Sharp illustrates rapidly changing technological industry dynamics. The industry case study titled Market Entry of Asian High-Technology Firms in Europe reviews and applies the section dealing with Location concepts. The Sony case serves to apply important elements of the Resource-Based View and how crucial firm resources, as a result of management decisions, change over time. The case study of Haier delivers insights to the firm’s learning by imitation capabilities. Finally, International New Venture (Born Global) concepts are illustrated in the Xiaomi case study.
Chapter Three starts with the introduction of the terms strategy and internationalization. It continues with a discussion of relevant market entry strategies, including exporting, franchising, licensing, contract manufacturing, international joint ventures, and foreign direct investment, among others (e.g., greenfield and acquisitions). Each market entry strategy is discussed in depth; thus the reader becomes aware of the strategy-specific advantages as well as the potential risks. All relevant strategies for market entry are explained and categorized in light of the crucial determinants of international business decision making: hierarchical control of operations, the firm’s proximity to the foreign market, the investment risk, and the factor of time. The theoretical discussion of relevant market entry strategies comes alive through the cases studies of Samsung (strategy and internationalization), Foxconn (contract manufacturing), LG Electronics and Philips (international joint ventures), Lenovo (acquisitions), and TCL (incremental takeover of control in the course of international joint venture operations).
I sincerely thank all the readers, students, instructors, scholars, and business executives who, through their valuable comments, contributed to various improvements to the 2009 first edition of the book. I would also like to thank Corinna Hlozek and Irina Fensky for their tremendous assistance as I developed my manuscript. I sincerely thank Margie Dyer from the US for her very professional and reliable support proofreading my final manuscript. For her outstanding expertise and ongoing assistance in the course of realizing this second edition of Market Entry Strategies, I wholeheartedly thank Anja Cheong from the De Gruyter Oldenbourg publishing house.
Berlin, Germany, January 2016
Mario Glowik