Where to Enter?
This theory explains why certain countries are highly competitive in specific industries.
Porter’s Diamond of National Competitive Advantage
Entering a new market before competitors can offer companies this specific advantage
First-mover advantage
This is the simplest entry mode, where a company sells its product abroad without setting up local operations.
Exporting
This company used a joint venture strategy to expand into China’s complex market
Microsoft
This factor can influence a company’s decision to withdraw from a country, as seen with companies leaving China
Regulatory challenges
When considering entering a foreign market, companies analyze these factors to determine if demand aligns with their product offerings.
Location-specific advantages
Companies entering late in a market may face fewer of these initial expenses borne by early entrants.
upfront market-entry costs
This entry mode involves partnering with a local firm, often required by governments in certain countries.
Joint venture
This brand formed a five-year global coffee alliance with Starbucks to expand its offerings
Nestle
The CAGE framework suggests companies consider these factors when entering foreign market
Cultural, Administrative, Geographic, and Economic distances
Countries with well-developed supply chains, skilled labor, and infrastructure offer these advantages.
location-specific advantages
First movers face this downside, often related to unknowns in the new market
Greater uncertainty
To expand without high initial costs, a company might allow local businesses to operate under its brand through this mode
Franchising
Known for its ride-hailing services, this company invested heavily in its Indian operations to boost market share
Uber
According to the slides, about 70% of these international growth strategies fail, often due to poor integration and cultural differences
Mergers and acquisitions
Name one cultural or institutional consideration when entering a foreign market.
Language barriers, regulatory requirements, or business practices
TikTok exemplifies how, in digital economies, these competitors can often outperform first-mover
Imitators
The most resource-intensive mode of entry, where a company sets up or acquires its own facilities in the foreign country
Wholly-owned subsidiary
In response to regulatory pressures, companies in this sector have increasingly withdrawn from China
Technology sector
According to the slides, an overly aggressive entry strategy might have been a poor choice for this company
Ascendancy Climbing-Gym
When considering new markets, companies may look for countries with supportive trade policies and fewer tariffs. This falls under which type of consideration?
Regulatory considerations
Relationships with this type of stakeholder can provide an advantage for first-movers
Government stakeholders
Name a key consideration when deciding how to enter a new market
Access to complementary assets, new knowledge, or competitive positioning
This beverage company partners with local bottlers to produce and distribute its products globally.
Coca-Cola
What are three ways to diversify into new businesses
Organic Development, Mergers and Acquisitions, Strategic alliances