Mode of Entry

Topics: Marketing, Strategic management, International trade Pages: 2 (387 words) Published: May 11, 2014
Literature on entry mode choice has tended to follow the narrow confines of a single theoretical framework for bringing together the industrial organization, transacion cost, evolutionary, and strategic management streams of literature on entry mode choice. The paper the illustrates an application of the framework to the choice of entry mode into Thailand, Malaysia, and Indonesia.

This paper aims to provide insight into the choice of foreign mode of entry (as proxied by equity stakes) of Singaporean multinationals. An electric framework based on Hill, Hwang and Kim's (1990) study is used to model the choice of entry mode. Three broad categories of variables, relating to control, cost and competence, are posited to affect the equity stake in an overseas venture. This study focuses on the manufacturing sector. We used a survey instrument targeting CEOs and Managing Directors and received 83 valid responses. TOBIT analysis lends support to the hypothesized relationships.

Heru Satyanugraha 10.1 INTRODUCTION In exporting its products, a firm has to make two strategic decisions: first, to choose the target country market, and second, identify the most suitable type of export entry mode to use. The structural mode decision is considered as the key factor in any international marketing strategy, as it affects all marketing mix variables and will have a major impact on the firm’s export business performance (Wind and Perlmutter, 1977; Anderson and Gatignon, 1986; Terpstra, 1987; Hill et al., 1990; Klein, 1993; Root, 1994). The relative importance of the export entry mode decision may even be greater for industrial products, because brand names, advertising and pricing are usually less critical for industrial products than for consumer products (Davidson, 1982; Haas, 1986; Kim and Daniels, 1991). The export entry modes, or types of organizational systems employed to bring products into the market, can be viewed as the varying degrees of channel integration. At one...
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