Market entry decisions are among the most important strategic choices companies make. Entering any market requires a major commitment of financial and managerial resources, but foreign markets can be especially demanding.
The recent issue of the SternBusiness carries an article on a discussion of strategies for enterning new markets globally.
It says that the majority research on the internationalization process focuses on two factors as the primary determinants of foreign market entry: cultural similarity and economic attractiveness. Many researchers find that cultural similarity with respect to the domestic market is an important determinant of entry, while others have found that market entry decisions are positively related to country size and the levels of development, trade, and infrastructure.
Higher near-market economic knowledge is associated with higher probability of entry. By investing in a small country first and learning about the cultural and economic characteristics of its consumers and business institutions, a firm may be more successful when entering a larger country with similar characteristics.
The article explores the prevailing assumptions regarding the entry of an MNC into a new market, and then further goes on to analyse the most common product domains which have been a success in entering new markets. An interesting article, and the inferences drawn from the study henceforth.
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