2.In our opinion, foreign companies should use option one: adapt to the host country, keeping it’s own core dominant logic. AIG coped with the voids as below:
-Started joint venture with PICC, which gave options for networking with government. -Investment of 195million dollars in the Shanghai Center Office complex. As a result AIG gained the trust of politicians. -The CEO of AIG helped to develop the International Business Advisory Council in Shanghai, which also led to more trust between both. -AIG recovered a missing Chinese relic, to built a good name. -AIG invested in training insurance agents, which provided the Chinese market with well educated insurance personnel.
3.AIG developed two FSA’s in China:
-Trust of Chinese politicians, and the good reputation among the Chinese population. -AIG’s ability to adapt their products to the Chinese market. The following non location bound FSA’s were transferred to China: -Expertise in training insurance agents
-Knowledge in insurance policies
As first movers, AIG had some advantages:
-Favorable government relationships.
-Domination of niche markets, due to no competition.
-AIG was able to establish a minimum efficient size which led to lower costs then later entering competitors. -Other companies were obliged to set up joint ventures, otherwise they were not allowed to do business in China. AIG was...