Internationalization and Market Entry Mode: A Review of Theories and Conceptual Framework
Added on 2021-04-19
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Running Head: MARKETING 1MARKETING Name:Institution:Course Code:
MARKETING2Introduction The purpose of this paper is to critically analyze a journal article on “Internationalization and Market Entry Mode: A Review of Theories and Conceptual Framework” so as to elaborate on internationalization and market entry mode asserted in appendix 1. Therefore, in this paper, we aim at discussing various aspects of conceptual frameworks concerning foreign entry mode decision as outlined in appendix 1. This will be elaborated basing our argument on perception portrayed by the author of this research article. Thus, different contributions on entry mode will be elaborated so as to critically understand the importance of studying different perspectives in internationalization and market entry mode. In appendix 1, table 1 involves comparison of different frameworks for studying foreign entry mode. In that connection, this paper will elaborate on theoretical and methodological aspects relating to the mode of entry. These aspects include:1.Entry mode as a chain of establishment 2.The transaction cost approach 3.The eclectic framework 4.The organizational capability perspective Entry mode as a chain of establishment This is the first aspect to be considered in appendix 1 based on author’s perspective on themode of entry. Basically, this aspect has been discussed from wider perspective and school of thought by determining methodology applied by firms to initiate internalization and market entrymode. This process has been initiated through a set of sequences so as to facilitate the operations set so achieve development goals and objectives of the firm. In this phase, there are several stages applied by various firms to initiate entry mode as a chain of the establishment. These stages are very vital to any firm willing to achieve international market entry. These stages include limiting export by ensuring no regular export, performing export services through an agent or export representative, enhancing sales subsidiaries and initiating a long-term production and manufacturing plans. These stages are very important for a firm willing to venture into this kind of market mode. The stages will propel the firm to enter the market via increasing market knowledge. In this entry mode, it I important to understand that increase in market structure will result to increase in market knowledge (Ryan & Deci, 2017). In that connection, the final result will increase in market commitment. The reverse is also true in this case. In this entry, behavior
MARKETING3assumption is based in bounded rationality. According to the article, this assumption is based on idea used in decision making process. This is because rationality of firms is limited by the information they apply in the market as well as cognitive limitation of their ideas. Another aspect of this mode of entry is based on organizational capability perspective. There is a close perfect positive correlation between chains of the establishment as a model of entry with organizational capability perspective. This is because the chain of establishment involves making market entry decisions based on time. This is entry mode is a time-dependent process. Therefore, each entry mode is based on various factors that can be elaborated from a particular entry mode to another so as to incorporated entry framework on chain establishment on independent and moderate factors. However, co-operative mode of entry has not been included in establishment chain as described by Johansson and Vahlne. This is one of the weaknesses of this mode of entry. Firms in this mode of entry need to move sequentially from stage to another. From the deterministic point of view, firms will be denied opportunities to enterthe international market if their strategic point regarding the mode of entry is inappropriate in oversee market.The transaction cost approach This is another aspect that needs to be elaborated in relation to internationalization and market entry mode. This mode of entry has become effective through the application of vertical integration decision. This mode of decision making strategy in this market entry has become so applicable to firms dealing with service delivery and manufacturing. This mode of entry involveshybrid modes unlike entry mode of a chain of the establishment as formulated by Johansson and Vahlne. Interfirm co-operation and vertical co0ordination make transaction cost approach much applicable in the market as compared to the chain of the establishment. This approach applies several dimension that makes the process relevant to the market (Ryan & Deci, 2017). These dimensions include transaction cost theory, uncertainty in exchange of resources involving sellers and buyers, specific assets and frequency of economic exchange. In that connection, the decision-making process should consider these dimensions so as to enable the decision maker to display opportunistic behavior that would propel cost-effective and efficient governance in this mode of entry. In addition, this approach applies transaction cost theory to enrich our skills and knowledge in this mode of entry. Thus, minimization process in transaction cost in this entry is
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