It has been observed through the case of the Japanese businesses investing in the American market that string advantages aid in pulling businesses towards Greenfield investments as they are more efficient in terms of shifting to new market. Moreover acquisitions are usually used to enter markets that predominantly have extreme growth rates, i.e., they are either very high or very low. The stock market conditions and the nature of the industry usually tend to have only minimal effect on the choice of the market entry strategy for entering foreign markets.
“In most cases, the initial entry strategy serves as a platform allowing the firm to make subsequent investments to exploit host-country advantages and capabilities. We allow for this by taking a two-step expansion strategy explicitly into account. The evolutionary process of the value of the foreign direct investment includes two stochastic elements as well as the timing that triggers the transition from export to foreign direct investment. The results suggest that uncertainty and future investment opportunities play an important role when it comes to transit from export to the first phase of the foreign direct investment commitment as well as have an impact on the choice of entry strategy.” (Gilroy & Lukas, 2006)
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