Today’s business worldwide is characterized by the impact of globalization. As the world has become more interconnected international business is almost omnipresent.
This report of international business focuses on foreign market entry strategies of two companies which have chosen to expand their operations in recent times. In the race for corporate global expansion, international companies constantly evaluate a range of locations and mix of strategies appropriate to succeed abroad. A general overview about commonly proven foreign market entry principles provides the reader with the essential framework.
The author chose corporate examples from different industries, such as the British grocery retailer Tesco PLC and the German machine tool manufacturer Deckel Maho Gildemeister AG and delivers deep insights into the market conditions.
The market entries take place in two contrasting nations such as China and the USA, whereas each case study contains an in-depth research of the economic freedom.
Table of Contents
1. International business: Foreign market entry principles
2. Deckel Maho Gildemeister AG’s investment in Shanghai
3. Tesco PLC in the United States
Project Objective and Core Themes
This report examines the foreign market entry strategies of two multinational corporations operating in distinct industries to illustrate different approaches to global expansion. The study analyzes the motivations, challenges, and strategic decisions involved in entering new international markets, specifically contrasting the entry into an emerging economy versus a developed market.
- Analysis of market entry strategies (Greenfield investment vs. organic growth)
- Evaluation of economic factors and FDI (Foreign Direct Investment) environments
- Impact of globalization and market competition on corporate decision-making
- Comparative case study of Deckel Maho Gildemeister AG and Tesco PLC
- Political and regulatory considerations in international business operations
Excerpt from the Book
Deckel Maho Gildemeister AG’s investment in Shanghai
Gildemeister is the leading manufacturer of cutting machine tools worldwide. Their business includes the ‘Machine tools’ and the ‘Services’ segments, along with the ‘Corporate services’ segment, which functions as the management holding company for the group. The ‘Machine tools’ segment covers the group’s new machines business including the ‘turning’, ‘milling’, ‘ultrasonic’ and ‘laser’ technologies. Gildemeister combines its expertise in development and technology at five product facilities with ten production sites. They offer services of all aspects of their machines across all areas. Gildemeister is represented in 28 countries with 59 national and international sales and service sites. A total of 5,272 committed employees attend to their innovative machine technologies, services and state-of-the-art software products.
The general machine tool market and competition situation which Gildemeister is facing can be characterized as follows: Globalized and fragmented market with a multitude of medium sized demanders and few big one’s; Edging out competition especially caused by strong rivalry from Asian countries; Discontinuous market changes; Progressive shortening in technical innovation cycles; Differentiated customer needs.
“A crucial feature of market leadership is the ability to serve markets promptly, reliably and with high quality.” Therefore Gildemeister is continuing their international market presence. One essential contribution to that purpose was Gildemeister’s move to China in 2003 where the world’s largest market for machine tools has developed in the past few years. Among others, customers of Gildemeister are the well-known car manufacturers DaimlerChrysler, Volkswagen, BMW and Renault which also established their market entry in China.
Summary of Chapters
1. International business: Foreign market entry principles: This chapter defines the fundamental concepts of international business and globalization while outlining the standard stages companies progress through when expanding their operations abroad.
2. Deckel Maho Gildemeister AG’s investment in Shanghai: This section investigates the strategic choice of Greenfield investment made by a German machine tool manufacturer to gain a foothold in the rapidly growing Chinese market.
3. Tesco PLC in the United States: This chapter examines the strategy of a UK-based retailer to enter a developed market via organic growth and the introduction of a new, smaller store format.
Keywords
International Business, Globalization, Foreign Direct Investment, Market Entry Strategy, Greenfield Investment, Emerging Markets, Retail Industry, Machine Tools, Competitive Advantage, Economic Freedom, Multinational Corporations, Strategic Expansion, Market Transparency, Trade Policy
Frequently Asked Questions
What is the primary focus of this research paper?
The paper explores the diverse foreign market entry strategies adopted by international companies to adapt to the challenges and opportunities presented by global expansion.
Which companies are used as case studies in this document?
The research analyzes the strategies of the German machine tool manufacturer Deckel Maho Gildemeister AG and the UK-based retailer Tesco PLC.
What is the central research objective?
The goal is to analyze how companies evaluate different locations and strategies to meet global goals, specifically comparing entry into an emerging economy versus an established, developed one.
What research methodology is employed?
The report utilizes a comparative case study approach, analyzing secondary data including annual reports, international indices, and economic studies to evaluate the business environment in China and the US.
What topics are covered in the main body?
The main body discusses the definition of globalization, market entry stages, specific investment strategies in China, the economic environment of the US, and the associated risks and benefits of FDI.
What are the characterizing keywords of this analysis?
Key terms include globalization, FDI, Greenfield investment, competitive advantage, market entry strategies, and economic interdependence.
Why did Gildemeister choose a Greenfield investment for its China entry?
The company sought to maintain full control over its proprietary technology, avoid the risks and potential instability associated with Joint Ventures, and establish purpose-built facilities closer to its key automotive clients.
What strategy is Tesco pursuing in the US market?
Tesco is entering the US through organic growth with a new, smaller convenience store format designed to compete in a fragmented sector and minimize direct competition with large-scale supermarket rivals.
How does the paper differentiate between the Chinese and US business environments?
It contrasts China's state-influenced economic environment and regulatory challenges with the US's liberal, open-market environment and emphasis on property rights and lower investment barriers.
- Quote paper
- Mike Kleinemaß (Author), 2006, International Business: Foreign market entry principles, Munich, GRIN Verlag, https://www.grin.com/document/66819
