Monday, February 6, 2012
Entry mode dynamics and emerging markets..
Chaps 11-15b highlight entry mode dynamics, remember they must be CAGE consistent of at least distance achievable, meaningful (e.g. RATS), and in line with firms specific advantages. Given that in mind how would you evaluate the description of entry mode dynamics, the role of emerging economies, and the moderating factors of social responsibility and sustainability? Take a stab at this one, it's going to be your thoughts - you don't have to parrot what's written in Verbeke, you should however, say what you THINK (which is what this class is trying to achieve, and judging from the posts, you're there).
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Entry mode dynamics: Applying the ideas of Cultural, Administrative, Geographic, and Economic distance along with Relevance, Appropriable ness, and Transferability MNE’s can evaluate and make decisions on where they can go; may go; should go. The entry mode dynamics describe potential methods of how to get there. It is interesting the self interest (greed) – whether it be corporate or individual and on both sides of the operations – seem to be the common element that if properly controlled would enable more successful ventures. Just because emerging economies are where a lot of opportunity exists – doesn’t mean that the players in those economies should take a subordinate role in the FDI opportunity. It also doesn’t mean the MNE going into the emerging economy should go in with the thought of exploiting the people/labor in the country just because the government of the host country may be allowing the exploitation. For me three questions prevail. Will the move into the host country truly add value for the share holder? Will the move into the host country truly improve the quality of life for the people of the host country? In the long run was is the true impact to the home country? Reckless greed seems to mostly easily prevail.
ReplyDeleteI don't know if this is what you were after - but this is what I think.
American Outsourcing Reality:
ReplyDeleteAfter reading this article I can certainly see that the developmental cycles that the economically emerging countries are going through really impact the other more developed countries according to where they are in their own cycle of development. Who can’t be impressed at the educational prowess of India and all that has meant to that country? The actions taken by the Mexican and Chinese governments to bring in FDI and more prosperous circumstances to their countries have truly been effective. The story of these emerging economies reminds me of the “Late Movers” article and how late movers are often able to capitalize on opportunities by exploiting the weaknesses and inability to react by the heavy weight companies already in the business.
I ask myself - what are we doing about this? Education of the population is truly the key to future success of being able to compete.
The American Outsourcing article was a good review of what has worked in evolving companies that were emerging markets, and making them global players in the world economy. It seems that as the economic advantage is squeezed from an emerging market, if it does not evolve it could possibly fall by the way side. It will also be interesting to see what happens once all global markets have been exploited, and global firms have no where else to go for market advantage. The United States could reverse some of this outsourcing were it to foster similar policies that would make doing business in the United States more lucrative.
ReplyDeleteCAGE and RAT give any organization a starting point of discussion for looking outside of its boarders to do business. I think with these tools industry specific companies can be judged and measured about their viability to internationalize. I also would have to say that CAGE and RAT do not give you the full picture but only a starting point. There are many other factors that need to be taken into account when looking to internationalize.
ReplyDeleteI agree with Oliver that CAGE and RAT are the building blocks of discussing entry mode dynamics and that each case needs to be individual basis. I also agree with David that MNE should not go into an emerging market expecting to exploit the local labor force. I believe that companies should use CAGE and RAT to identify areas where they will be able to develop an advantage but do so responsibly in providing the local population with some sort of benefit while also receiving some sort of benefit. Business interactions do not last very long if one side of the party is not being fairly compensated in one way or another.
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