Chapter Ten Powerpoint Presentation

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1. Chapter 10 Learning Objectives After studying this chapter, you should be able to: Understand how institutions and resources affect liability of foreignnessMatch the quest for location-specific advantages with strategic goals ( whereto enter) Compare and contrast first- and late-mover advantages ( whento enter) Follow the comprehensive model of foreign market entries ( howto enter) Participate in three leading debates on foreign market entries Draw implications for action 2. LIABILITY OF FOREIGNNESS theinherentdisadvantage foreign firms experience in host countries because of their nonnative status differences in formal and informal institutions governing the rules of the game in different countries local firms are already well versed in these rules, but foreign firms have to learn the rules quickly foreign firms are often still discriminated against, sometimes formally and other times informally 3. WHERE TO ENTER? location-specific advantages -favorable locations in certain countries may give firms operating there an advantage agglomeration -beyond geographic advantages, location-specific advantages also arise from the clustering of economic activities in certain locations natural resource seeking -resources are tied to particular foreign locations innovation seeking -firms target countries and regions renowned for generating world-class innovations market seeking -firms go after countries that offer strong demand for their products and services efficiency seeking- firms single out the most efficient locations featuring a combination of scale economies and low-cost factors 4. 5. 6. 7. Global versus Regional Geographic Diversification Despite the widely held belief (and frequently voiced criticism from antiglobalization activists) that MNEs are expanding globally, surprisingly, even among the largestFortuneGlobal 500 MNEs, few are truly global. Should most MNEs further globalize? 8.