Book contents
- Frontmatter
- Dedication
- Contents
- List of figures
- List of tables
- Foreword
- Preface
- List of abbreviations
- 1 Introduction: the rise of EMNCS
- 2 Understanding the challenges of internationalization
- 3 Country selection
- 4 Entry mode selection
- 5 Establishment
- 6 Operation
- 7 Integration
- 8 Expansion
- 9 Conclusions
- References
- Index
3 - Country selection
Published online by Cambridge University Press: 05 March 2016
- Frontmatter
- Dedication
- Contents
- List of figures
- List of tables
- Foreword
- Preface
- List of abbreviations
- 1 Introduction: the rise of EMNCS
- 2 Understanding the challenges of internationalization
- 3 Country selection
- 4 Entry mode selection
- 5 Establishment
- 6 Operation
- 7 Integration
- 8 Expansion
- 9 Conclusions
- References
- Index
Summary
INTRODUCTION
Most countries have the potential to offer benefits to a budding multinational. There are always opportunities to expand abroad and serve new customers who may have similar needs and desires as a firm's customers at home. Such expansions can be very beneficial as the firm can obtain higher returns on previous investments in technology and knowledge. There are also opportunities to expand abroad to obtain inputs in better conditions than those available at home, because they are either available at a lower cost or more sophisticated in other countries. These superior inputs can help the firm improve its operations at home.
The challenge for managers of emerging market multinational corporations (EMNCs) is not really identifying such foreign opportunities. Country indicators and tools are widely available, and many consulting firms offer services that can help managers assess conditions and identify opportunities for foreign expansion. The global mobility of managers also enables them to spot new business opportunities. The greater challenge is to identify which particular country is the most appropriate for the company, that is, whether the company can build advantages over competitors and serve customers there or obtain inputs that will improve its home operations.
Identifying an appropriate country for foreign investment requires, first and foremost, a deep analysis of the firm and its reasons for expanding outside the home country. Understanding the logic for moving across borders can help narrow down the list of potential countries and, more important, determine whether foreign expansion is a potentially value-creating strategy. Moving abroad just because everyone in the industry is doing so is not a good enough reason for doing the same; in this case, the manager is merely following others rather than deciding what is best for the firm. In some cases, deciding not to expand across borders may be the better strategy, never mind what everyone else is doing.
In this chapter, we focus on analyzing the reasons for expanding abroad, distinguishing between expanding to sell more and expanding to buy better. Expanding to sell more requires transferring and using in another country competitive advantages created by the firm in its home country. Expanding to buy better requires accessing and transferring comparative advantages of a foreign country to the home country and using them there.
- Type
- Chapter
- Information
- Emerging Market MultinationalsManaging Operational Challenges for Sustained International Growth, pp. 31 - 60Publisher: Cambridge University PressPrint publication year: 2016