Miss
international business
I know there are cultural and institutional factors needed to be considered but actually I only put them in an inferior position when considering an entry mode. From this article I know that cultural and institutional problems are quite complicate and it is time-consuming for the foreign companies to manage them successfully.
For the selection of foreign markets, I focused a lot on the host market size and its potential growth. If the foreign country meets these standards, I thought it would be worth to invest, but I neglected the impact of culture and institution which form the whole macroeconomic environment. I acquired from this article that firms prefer to enter markets with similar cultures because they understand better consumers’ needs and thus take fewer risks. And I acquired the knowledge that one country’s unique culture could influence customers’ behavior which is helpful for a foreign company to design its international product strategy.
I’ve re-identified and considered the choices of entry mode from a cultural and institutional perspective. National culture and institutions may have an interaction effect on the modes chosen to enter international markets. Take strategic alliance as an example, alliances allow foreign and local parties to share the risks and costs of entering new international markets. To decrease the potential risks and uncertainties caused by limited knowledge about host country’s culture and regulation, it is common to build an alliance with a local firm to gain access to local knowledge, distribution channels, and customers’ aesthetic value. Foreign company’s strategies, such as management, distribution method, advertisement may not fully suitable the local environment. It will exhaust a lot of financial and human resources to get valuable information about the market when the company wants to operate independently. But if the foreign company finds a local...
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