Topic
International Business Environment
Instructions
Discuss why acquisitions are advantageous over Greenfield site investments as an entry mode for internationalising firms. How have national environments influenced the choice of mode of entry for internationalising firms? Please note that you are only allowed to use cases covered in the Morrison (2009) textbook and in the lectures/classes as examples in your essay.
Maximum word-count: 1000 words
Use Harvard format.
Answer preview
Most of investments are in inform of acquisitions and mergers and has received a lot of attention from most scholars of international business in the recent years. Most organizations are considering expansion into foreign market thus they have to deal with making decision on two essential issues. One, the organization has to deal with the option of choosing between non-equity entry modes (e.g. exporting through licensing and agents) and equity based entry modes where the local business is partially or wholly owned. Hitt, (2017) articulates that there are several factors that guides to organizations to arrive on such decisions of either a non-equity or equity based entry modes which are focused on licensing, joint ventures and wholly owned subsidiaries. Secondly, the decision is also made on the issue regarding the choice of equity based mode entry in which either acquisition of an existing local firm is done or greenfield investment of setting up a new plant is done.
Word count: 1274