“If both the local and foreign firms adopt a competitive (aggressive) approach by developing and implementing offensive strategies in order to “win” the competition in a (host) market, they will be more likely forced to enter into a never-ending competitive-circle. A competitive circle increases the level of competition for both foreign and local firms, therefore increasing the costs of doing business for both foreign and local firms (i.e. both LOF and LOL will increase)”.
Discuss the statement with supporting evidence.
Very much like in nature, the businesses which are most susceptible to changes in the environment are most likely to survive. Managers must adapt to the arts of competing and cooperating as equally valid aspects of survival in the business world . In this essay, I will be discussing the overall result of when both local and foreign firms adopt a competitive (aggressive) approach in order to compete for dominance in the host market. This discussion can have varied conclusions and interpretations, therefore in this essay, the American public multinational corporation, namely Walmart, shall be addressed, and how this it has fared by utilizing a competitive approach when conducting business.
Before focussing into the Walmart case study, the theory and issues behind adopting a competitive approach has to be covered. For example, defining the Liability of Foreignness and Liability of Localness, and what offensive strategies entail. These will be discussed in the initial part of the essay, followed by addressing the case study by analysing Walmart’s progress in emerging markets (China and Mexico), as well as developed markets (Germany and South Korea). And finally, a critical analysis of how the theory relates to the case study and whether the statement above is accurate.
1. Contractor, Farok J., and Peter Lorange. "Why Should Firms Cooperate? The Strategy and Economics Basis for... [continues]
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