Entering foreign markets is nothing new in a globalised world. Merchants have dealt with international partners in nearly every decade throughout history. Firms like Siemens opened foreign subsidiaries more than 150 years ago. What is the fascination associated with entering international markets? This research suggests it is the strategy firms apply to their market entry and the design of the market entry itself. Some firms decide to enter foreign markets based on exporting while others choose business partners or build their own subsidiaries. Furthermore, the scope of operational activities differs: ranging from sales offices to complete production. Each of the chosen options requires a firm to employ different strategies. Market entry decisions are based on economic, political, institutional and cultural issues. Firms evaluate market attractiveness based on a set of decision criteria and thereby decide how to use their available resources, which are limited as defined by economic theory. Depending on a firm’s size, market entry abroad has a different meaning. Since a large firm has typically gained foreign experience, it will be much easier to decide on a further market entry than for a small firm preparing a market entry in a neighbouring country for the first time. Another aspect of market entry decisions is the industry in which a firm is operating. Each industry has its specific characteristics which influence strategy and thereby decision making processes.
KeywordsEuropean Union Foreign Market Market Entry Foreign Subsidiary German Firm
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