The need for control over foreign operation varies with the firm’s strategies and core competencies.and the implications for the choice of entry mode(International Business)

Whenever the company plans to go for the foreign operations it has to be equally creative as well as sensitive in protecting itself from its competitors. The euphoria of first-mover advantage may often be taken by the competitor with its second mover advantage. Expanding the business is not only about gaining the opportunities, but it is also coming across the multi-dimensional threats that may come across. Indeed, lots of company that has done their best domestically had faded away when they went foreign boundary.  Walmart lost in Germany and Best Buy was too big in the United Kingdom (Seale, 2015).

If the competitive advantage of the company is based on the technological know-how or the new kind of innovation that other firms are also looking for, it is better to avoid licensing and joint ventures. Mitsubishi was the pioneer in car engines, with its plans to expand the business in the 1980s, it licensed to Hyundai (DeMatio, 2008), ironically now Hyundai is far more ahead than Mitsubishi. Whereas, if the company is in infancy state, lacks enough funds to acquire the firm in foreign than exporting could be a viable option for the company; globally, most of the SME’s uses the export mechanism.

Coco-cola is a multi-national company and it expands through greenfield investments. It does not like to disclose its century-long drink formulae, if the company had expanded through licensing or franchise, it would have lost its strategy. The subsidiary has allowed the company to tailor its activity as per the localized demand if the company has a strong international brand, high financial capital, and technological know-how, Greenfield is best to incorporate. 

In contrast, Walmart rather than opening its own subsidiary acquired Indian e-commerce giant Flipkart for the expansion of its business in India, the grocery business indeed does not entail technological innovation that should be protected, its management driven. So, the acquisition will hold a good for Walmart to use its management expertise to compete in the world second largest populous country and countervail competitors like Amazon which is also eying Indian grocery market. 

Hence, the entry strategy to be adopted by the company depends upon the various political, economic, legal, cultural and social factor. Always greenfield would not be a worthy investment, sometimes exporting is a necessity and sometimes acquisition will be better off, indeed the global expansion is reconciling the company’s vision through the resources it has in the most efficient and optimum manner.

References

DeMatio, J. (2008, May 8). Hyundai: from borrowing engines from Mitsubishi to providing them for Mercedes-Benz. Retrieved from www.automobilemag.com: https://www.automobilemag.com/news/hyundai-engines/

Seale, A. (2015, January 27). Seven epic fails by businesses that tried expanding into foreign markets. Retrieved from www.firmex.com: https://www.firmex.com/thedealroom/seven-epic-fails-by-businesses-that-tried-expanding-into-foreign-markets/