January 10th, 2018
Using knowledge to determine the best strategies of expansion in global firms
Modes of foreign entry may influenced by various factors. Among these are the similarity between home and host country cultures, ease of setting up businesses in the host country, laws such as labor laws and regulatory environment in the host nation, geographical distance between the host and home country, and level of control intended for the establishment in the host country. Wide cultural differences may for instance necessitate a business to enter foreign markets through joint ventures to gain the needed experience for green investments. Laws and regulatory environment in the host country may also limit complete ownership of subsidiaries in the country by foreign investors and thus affect the entry mode for an entity. Further, wide geographical distance may affect organizational control from the foreign parent and thus requiring the establishment of a semi-autonomous entity in the host country. As discussed subsequently, the above factors and many others influence expansion of global firms in a variety of ways.