Multinational enterprises (MNEs) are becoming increasingly present on the global market. Since their products and services are offered globally, their multinational strategies must be adapted to different cultures, environments of target countries and their internal strengths. Since the market in the 21st century is oversaturated, it is no wonder that more and more MNEs are targeting emerging markets for multiple business opportunities.
Since markets are very dynamic, entry strategies chosen by MNEs must be up to date with market changes. Although MNEs are present in the global market and well acquainted with its dynamics, entry into certain countries is not always an easy task.
The main concern of this thesis is to evaluate international entry strategies of companies operating in fast moving consumer goods (FMCG) industries in China and India. Additionally, the thesis aims in exploring and evaluating the consistency of the market entry strategies performed by one specific company (P&G) and two different theoretical frameworks, namely:
- Resource-Based Theory by Grant (1991) and
- Eclectic paradigm (OLI) by Dunning (2000).
For the purposes of this thesis I concentrate on one of the largest and best-known MNEs delivering widely known consumer goods, namely, Procter and Gamble (P&G). My interest lies in exploring whether P&G´s market entries in two target markets can be compared to above mentioned theories. If not, the goal is to understand inconsistencies and factors which influence them.
Emerging markets have a very unique nature which could be a challenge even for the most successful MNEs like P&G. Therefore, understanding these could be a very complex but unavoidable process in order to achieve long term winning strategy.
Table of Contents
1 Introduction
1.1 Introduction and motivation
1.2 Structure of the thesis
1.3 Summary of research questions
1.4 Methodology
2 Theories on market entry modes and theoretical frameworks
2.1 International market entry strategies
2.1.1 Factors influencing entry strategies
2.1.1.1 Factors influencing entry strategies by Hollensen (2011)
2.1.1.2 Factors influencing entry strategies by Koch (2001)
2.1.1.3 Factors influencing entry strategies by Pan & Tse (2000)
2.2 Resource-Based Theory by Grant (1991)
2.3 Eclectic Paradigm (OLI) by Dunning (2000)
3 Emerging markets
3.1 Emerging markets and PEST analysis
3.1.1 China; PEST analysis
3.1.1.1 Political and legal dimensions
3.1.1.2 Economic dimension
3.1.1.3 Socio-cultural dimension (Hofstede´s cultural dimensions)
3.1.1.4 Technological dimension
3.1.1.5 Summary of country´s analysis
3.1.2 India; PEST analysis
3.1.2.1 Political and legal dimensions
3.1.2.2 Economic dimension
3.1.2.3 Socio-cultural dimension (Hofstede´s cultural dimensions)
3.1.2.4 Technological dimension
3.1.2.5 Summary of country´s analysis
3.1.3 China´s and India´s FMCG sector
3.1.3.1 FMCG industry in China
3.1.3.2 FMCG industry in India
4 Overview of the P&G Company, introduction of two cases and application of theoretical frameworks
4.1 Overview of the company
4.2 Case 1: P&G´s entry strategy in China
4.2.1 P&G´s resources and capabilities according to Resource-Based Theory
4.2.2 Applying OLI Paradigm
4.2.3 Findings and discussion
4.3 Case 2: P&G´s entry strategy in India
4.3.1 Applying OLI Paradigm
4.3.2 Findings and discussion
5 Conclusion and limitations of thesis
5.1 Conclusion
5.2 Limitations
Research Objectives and Topics
The primary objective of this thesis is to evaluate the international market entry strategies of companies within the Fast Moving Consumer Goods (FMCG) industry, specifically focusing on the Chinese and Indian markets. The research explores the consistency between the strategies employed by Procter & Gamble (P&G) and two key theoretical frameworks: the Resource-Based Theory and the Eclectic (OLI) Paradigm.
- Analysis of market entry modes and factors influencing strategic decision-making.
- Comprehensive PEST analysis (Political, Economic, Socio-cultural, Technological) of China and India.
- Evaluation of the FMCG sector in both target countries.
- Application of Resource-Based Theory and the Eclectic Paradigm to P&G's entry strategies.
- Investigation into potential inconsistencies between theoretical expectations and practical business applications.
Excerpt from the Book
4.2 Case 1: P&G´s entry strategy in China
P&G is the first foreign company which entered the Chinese market in 1988 (ICMR, 2006). The company first started with researching the country and did the market research in 1985, because it wanted to get to know the local culture before it invests in it. (ICMR, 2006).
At that time, the foreign trade was not allowed, and consumers were able to buy foreign products only when travelling (ICMR, 2006). P&G had a goal to reach Chinese unconscious consumers and offer them products they were never able to buy in their local market. Since it used extensive research before it entered the market, the company knew that Chinese major concern (especially among female consumers) was dandruff. Company had solution to it; Head and Shoulders.
However, before it considered entering with hair product, company evaluated the potential of detergents in the market; however research revealed negative results. Well, research results regarding Head and Shoulders were not favoring either. However, the company´s management had a straight goal; to help Chinese deal with dandruff and used their intuition for the first time even though many local experts were not positive about their decision since China already had couple of hair products offered at lower prices. (ICMR, 2006).
Summary of Chapters
1 Introduction: Provides an overview of the thesis, research objectives, problem statement, research questions, and the methodology used.
2 Theories on market entry modes and theoretical frameworks: Evaluates literature on market entry strategies, influencing factors, and defines the Resource-Based Theory and the Eclectic (OLI) Paradigm.
3 Emerging markets: Defines emerging markets, performs a PEST analysis for China and India, and analyzes the FMCG sector in both countries.
4 Overview of the P&G Company, introduction of two cases and application of theoretical frameworks: Introduces P&G and applies the chosen theoretical frameworks to the company's entry into China and India.
5 Conclusion and limitations of thesis: Summarizes the findings and discusses the constraints and limitations of the research.
Keywords
FMCG, International Market Entry, P&G, China, India, Resource-Based Theory, Eclectic Paradigm, OLI, PEST Analysis, Multinational Enterprises, Market Strategy, Foreign Direct Investment, Joint Venture, Competitive Advantage, Emerging Markets.
Frequently Asked Questions
What is the core focus of this master thesis?
The thesis evaluates international market entry strategies of Multinational Enterprises (MNEs) within the Fast Moving Consumer Goods (FMCG) industry, specifically comparing P&G's performance in China and India against theoretical frameworks.
What are the key thematic areas covered?
The study covers international marketing strategies, the PEST (Political, Economic, Socio-cultural, Technological) environment of emerging markets, and the specific application of management theories to practical corporate cases.
What is the primary research question?
The research asks what factors influence the strategic decisions of MNEs in these specific markets and whether there are inconsistencies between P&G's actual strategies and those predicted by Resource-Based Theory and the Eclectic Paradigm.
Which scientific methodology is applied?
The research is classified as descriptive (case study) research based on secondary data, including reports, books, internet sources, and academic journals.
What does the main body of the work examine?
The main body examines the PEST environments of China and India, the structure of the FMCG industry in these regions, and a detailed case study analysis of P&G's entry and operational strategies in both countries.
Which keywords characterize the work?
Key terms include FMCG, International Market Entry, MNEs, P&G, China, India, Resource-Based Theory, OLI Paradigm, and PEST Analysis.
Why did P&G prioritize high-control entry modes in its later stages?
As P&G gained market intelligence and local experience, it moved towards higher internalization (WOSs) to protect its intellectual property, retain full control over strategic decisions, and capture 100% of profits.
How does the business environment in China differ from India according to the author?
The author highlights that China's business environment is heavily influenced by the government and the necessity of 'Guanxi' (connections), whereas India presents specific challenges related to weak infrastructure, yet offers a different set of opportunities through its young population and English-speaking workforce.
- Quote paper
- Nikolina Saric (Author), 2014, International Market Entry Strategies of Multinational Enterprises (MNEs) in Emerging Markets, Munich, GRIN Verlag, https://www.grin.com/document/282072
