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Entry Strategies in China’s Telecoms Market

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University of Bradford Electronic Thesis/Dissertation Deposit Agreement 2005 Student name: YAN SUN Student ID: 02009352 School/Dept. : SCHOOL OF MANAGEMENT Degree: M A IN MARKETING AND MANAGEMENT Thesis/Dissertation Title: AN ANALYSIS AND EVALUATION OF ENTRY STRATEGIES IN CHINA’S TELECOMS MARKET: A CASE STUDY OF BT GROUP Student Agreement: I understand that the University of Bradford has the non-exclusive right to electronically store, copy or translate my thesis/dissertation, in whole or in part, for the purpose of future preservation and accessibility.

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I certify that the thesis/dissertation submitted is my original work, and that the version submitted is the same as the final version approved by the Examiners. I have made every reasonable effort to obtain permission from the owner(s) of each third party copyrighted material to be included in my thesis/dissertation. I am aware that the University may submit copies of student work to a national database set up to detect plagiarism. I understand that the thesis/dissertation may be available electronically to a variety of individuals and institutions via the World Wide Web, including automated search agents.

I understand that once the thesis/dissertation has been deposited, metadata relating to my work will be incorporated into the University of Bradford Library Catalogue. The University of Bradford reserves the right to remove any thesis/dissertation from the electronic repository in the event of its content breaching any laws including defamation, libel and copyright. I I acknowledge that the administrators of the electronic repository do not have any obligation to take legal action on my behalf in the event of a breach of intellectual property rights, or any other right, in the thesis/dissertation deposited.

Student Signature: YAN SUN Date: 2, September, 2005 II Yan Sun AN ANALYSIS AND EVALUATION OF ENTRY STRATEGIES IN CHINA’S TELECOMS MARKET: A CASE STUDY OF BT GROUP Keywords: Entry strategies, China’s telecoms market, BT Group, International expansion. Abstract International markets have become a necessary way for companies who wish to survive in increasing domestic competition and grow in the dynamic world economy.

Meanwhile, the entry strategy decision is one of the most critical decisions during a firm’s globalization. This research focuses on analyzing the term of entry strategy through a case study of BT Group, and a spotlight on China’s telecoms market. Based on an accurate academic research methodology, this research involves the indispensable literature review, a deep investigation of China’s telecoms market, and an overall analysis and evaluation of BT’s diverse entry strategies during its international expansion.

The ultimate aim of the dissertation is to give some advice for BT’s future operations in China, and also to recommend some implications both in international experiences and critical lessons for emerging telecoms, and/or new entrants in the globalization process. III THE ANALYSIS AND EVALUATION OF ENTRYE STRATEGIES IN CHINA’S TELECOMS MARKET: THE CASE STUDY OF BT GROUP by Yan Sun 2005 Dissertation submitted to the Bradford University School of Management in partial fulfilment of the requirements for the degree of Master of Arts in Marketing. IV Preface

The fulfillment of this research inevitably depends on the vital help and support from many people, without these, it would be impossible to finish the study. I would especially like to thank my supervisor Dr. Chris Lowe who gave me invaluable guidance, advice and comments in the whole process of writing this dissertation. Many thanks for his moving encouragements. I also appreciate the help of my friends who have shown me selfless favour in helping interviews, and the interviewees in BT, China Netcom and 21ViaNet, who have openly shared their opinions, which dramatically helped the research analyses.

Although their names do not appear in this preface due to requested confidentiality, I still thank them for help and their cooperation. A very special tha nks goes to Phil Scaife, whose patience on proofreading has improved the fluency of this dissertation. Thank you for his valuable time and kindly help. Likewise, I am indebted to my host family – Anne Duchemin, Richard Holderness and Tom Holderness, who have given me meticulous care, support and encouragement during my life in Bradford. Finally, my heartfelt love and gratitude go to my family and my boyfriend – Mr.

Cui Guanjun, for their support, encouragement, hope and love. V Statement of Authenticity I have read the University Regulations relating to plagiarism and certify that this dissertation is all my own work and does not contain any unacknowledged work from any other sources. Yan Sun September 2005 Word Count: 21,215 VI TABLE OF CONTENTS Preface… … … … … … … … … … … … … … … … … … … … … … … … … … … … . V Chapter One Introduction… … … … … … … … … … … … … … … … … … … … .. 1 1. 1 Background of the Research… … … … … … … … … … … … … … … … … … … 1 1. 2 Objectives of the Research… … … … … … … … … … … … … … … … … … … .. 1. 3 Structure of the Dissertation… … … … … … … … … … … … … … … … … … … 2 1. 4 Limitations of the Research… … … … … … … … … … … … … … … … … … … . 3 Chapter Two Literature Review… … … … … … … … … … … … … … … … … … . 4 2. 1 Introduction… … … … … … … … … … … … … … … … … … … … … … … … … .. 4 2. 2 The Analytical Necessity of Market Entry Strategy… … … … … … … … … … . 4 2. 3 Definitions and Forms of International Market Entry… … … … … … … … … .. 5 2. 3. 1 Exports… … … … … … … … … … … … … … … … … … … … … … … … … . 6 2. 3. 1. 1 Indirect Exporting… … … … … … … … … … … … … … … … … … … 6 2. 3. 1. Direct Exporting… … … … … … … … … … … … … … … … … … … .. 9 2. 3. 2 Foreign Manufacturing Strategies without Direct Investment… … … … 10 2. 3. 2. 1 Contract Manufacture… … … … … … … … … … … … … … … … … . 11 2. 3. 2. 2 Licensing… … … … … … … … … … … … … … … … … … … … … … 12 2. 3. 3 Foreign Manufacturing Strategies with Direct Investment… … … … … . 14 2. 3. 3. 1 Assembly… … … … … … … … … … … … … … … … … … … … … … 14 2. 3. 3. 2 Whole Owned Subsidiaries … … … … … … … … … … … … … … … 14 2. 3. 3. 3 Company Acquisitions and Mergers… … … … … … … … … … … .. 16 2. 3. 4 Cooperative Strategies… … … … … … … … … … … … … … … … … … 16 2. 3. 4. 1 Joint Ventures… … … … … … … … … … … … … … … … … … … … . 17 2. 3. 4. 1. 1 Equity Joint Ventures… … … … … … … … … … … … … … …. 18 2. 3. 4. 1. 2 Contractual Joint Ventures… … … … … … … … … … … … … 22 2. 3. 4. 2 Strategic Alliances… … … … … … … … … … … … … … … … … … .. 23 2. 4 Factors Influencing the Choice of Entry Mode… … … … … … … … … … … …. 25 VII 2. 5 A Focus on the Entry Strategies in the Telecoms Industry… … … … … … … … 26 2. 5. 1 The Major Entry Strategies… … … … … … … … … … … … … … … … … .. 26 2. 5. 2 The Key Factors Influencing the Telecom’s Selection of Entry Mode…. 7 2. 5. 3 The Critical Issues Associated with Managing of the Collaborative Mode … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … 27 2. 6 Conclusion… … … … … … … … … … … … … … … … … … … … … … … … … … . 28 Chapter Three Research Methodology… … … … … … … … … … … … … … … … 30 3. 1 Introduction… … … … … … … … … … … … … … … … … … … … … … … … … … 30 3. 2 The Item of Research… … … … … … … … … … … … … … … … … … … … … … . 30 3. 2. 1 The Nature of Research… … … … … … … … … … … … … … … … … … … . 30 3. 2. 2 The Research Process… … … … … … … … … … … … … … … … … … … … 31 3. The Dimensions of Research… … … … … … … … … … … … … … … … … … … .. 31 3. 3. 1 Research Philosophy… … … … … … … … … … … … … … … … … … … … . 32 3. 3. 2 Research Approaches… … … … … … … … … … … … … … … … … … … … . 33 3. 3. 3 Data Collection… … … … … … … … … … … … … … … … … … … … … … .. 35 3. 3. 3. 1 Secondary Data… … … … … … … … … … … … … … … … … … … … . 35 3. 3. 3. 2 Primary Data… … … … … … … … … … … … … … … … … … … … … . 38 3. 4 Conclusion… … … … … … … … … … … … … … … … … … … … … … … … … … .. 42 Chapter Four The Investigation on the Circumstances of China’s Telecoms Market… … … … … … … … … … … … … … … … … … … … … … … … … … … … … . 4 4. 1 Introduction… … … … … … … … … … … … … … … … … … … … … … … … … … . 44 4. 2 Market Sectors and Market Size… … … … … … … … … … … … … … … … … … . 44 4. 3 Analysis of Domestic Telecoms Companies… … … … … … … … … … … … ……. 46 4. 3. 1 Industrial Reforms and Restructurings … … … … … … … … … … … … … . 46 4. 3. 2 Snapshot of Main domestic Leading Competitors… … … … … … … …….. 48 4. 3. 3 Fixed- Line Networks and Services… … … … … … … … … … … … … … … 48 4. 3. 4 Mobile Networks and Services… … … … … … … … … … … … … … … … . 53 VIII 4. 4 PEST Analysis … … … … … … … … … … … … … … … … … … … … … … … … . 5 4. 4. 1 Political and Legal Regulation… … … … … … … … … … … … … … … … 55 4. 4. 2 Economic Forces… … … … … … … … … … … … … … … … … … … … … . 56 4. 4. 3 Social and Technological Scanning… … … … … … … … … … … … … ….. 57 4. 5 Foreign Multinational Telecoms Corporations in China… … … … … … … … .. 58 4. 6 Conclusion… … … … … … … … … … … … … … … … … … … … … … … … …….. 59 Chapter Five Case Study – BT Group plc… … … … … … … … … … … … … … … 61 5. 1 Introduction of BT Group plc… … … … … … … … … … … … … … … … … … … 61 5. 1. 1 Company Overview… … … … … … … … … … … … … … … … … … … … . 61 5. 1. 1. Organizational Structure… … … … … … … … … … … … … … … … . 61 5. 1. 1. 2 Company’s Version… … … … … … … … … … … … … … … … … … . 62 5. 1. 1. 3 Company’ Strategy… … … … … … … … … … … … … … … … … …. 62 s 5. 1. 1. 4 Financial Performance… … … … … … … … … … … … … … … … …. 63 5. 1. 2 SWOT Analysis… … … … … … … … … … … … … … … … … … … … … … 65 5. 2 The Summary of Entry Strategies Associated with BT Group International Expansion………………………………………………………………………………………….. 69 5. 2. 1 The Key Driven Reasons… … … … … … … … … … … … … … … … … … .. 69 5. . 2 The Detailed Entry Strategies with Successful and Unsuccessful Cases. 73 5. 2. 3 A Spotlight on China’s Telecoms Market… … … … … … … … … … … … . 76 5. 2. 3. 1 The Current Entry Methods… … … … … … … … … … … … … … … . 76 5. 2. 3. 2 The Critical Elements and Future Trends… … … … … … … … … … 80 5. 3 Conclusion… … … … … … … … … … … … … … … … … … … … … … … … … … . 81 Chapter Six Analyses and Recommendations Based on Findings… … … … … . 84 6. 1 Alternative Entry Strategies in Different Regions… … … … … … … … … … … .. 84 6. 2 Implication of BT’s International Expansion for Other Telecoms………………… 6 6. 2. 1 International Experiences of BT’s Globalization… … … … … … … … … .. 86 6. 2. 2 Critical lessons of BT’s Globalization… … … … … … … … … … … … … … 88 IX 6. 3 Some Recommendations for BT in China in the Future… … … … … … … … … .. 89 6. 4 Conclusion… … … … … … … … … … … … … … … … … … … … … … … … … … … 90 Chapter Seven Conclusion… … … … … … … … … … … … … … … … … … … … … … 91 7. 1 Summary of the Research… … … … … … … … … … … … … … … … … … … … … . 91 7. 2 Summary of Findings, Implications and Recommendations… … … … … … … … 92 7. 3 Future Research… … … … … … … … … … … … … … … … … … … … … … … … … 93

Appendices Appendix I Research Proposal… … … … … … … … … … … … … … … … … … … … … 94 Appendix II Stages in Planning, Negotiating and Managing Joint Ventures… … … 104 Appendix III Analysis of Prospective Partners… … … … … … … … … … … … … … . 105 Appendix IV The Interview Questions For BT… … … … … … … … … … … … … …. 106 Appendix V The Interview Questions For 21ViaNet… … … … … … … … … … … … 109 Appendix VI The Interview Questions For China Netcom… … … … … … … … … .. 110 Appendix VII Glossary… … … … … … … … … … … … … … … … … … … … … … … . 111 Bibliography… … … … … … … … … … … … … … … … … … … … … … … … … … … 113

X Lists of Tables Table 2. 1 Types of Wholly Owned Subsidiary… … … … … … … … … … … … …. 15 Table 2. 2 Who Provides What in East-West Partnerships… … … … … … … … … 18 Table 2. 3 Relationships of Stage of Development to Venture-Creation Rationales … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … .. 20 Table 2. 4 Rank Ordering of Local Partners’ Contributions to the Joint Venture … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … .. 22 Table 3. 1 A Comparison of Primary and Secondary Data… … … … … … … …….. 35 Table 4. 1 China – Telecommunication Statistics… … … … … … … … … … … … .. 5 Table 4. 2 ‘4 + 2’ Competitive Pattern in Current China’s Telecoms Industry… .. 48 Table 4. 3 Market Structure in Fixed- line Network and Services (Voice)… … … 49 Table 4. 4 Market Structure in Fixed- line Network and Services (Internet)… … . 51 Table 4. 5 Market Structure – China Networks & Services… … … … … … … … … 53 Table 4. 6 The Regulation for Foreign Investment in China ’s Telecoms Sector… 55 Table 4. 7 Key Macro-economic Data… … … … … … … … … … … … … … … … … 56 Table 5. 1 The SWOT Analysis of BT Group plc… … … … … … … … … … … … .. 66 Table 5. The UK Fixed-Line Telephones Sector by Type by Value (? m and %), Years Ending March 2000-2004… … … … … … … … … … … … … … … … … … … 71 Table 5. 3 The UK Broadband Market by Operator (% of total subscribers), June 2004 … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … .. 72 XI Lists of Figures Figure 2. 1… … … … … … … … … … … … … … … … … … … … … … … … … … … …. 5 Figure 2. 2 Partner-to-partner Relationships Creating a Joint Venture… … … … … 21 Figure 2. 3 Collaboration Possibilities for Partners A and B in the Value Chain…. 24 Figure3. The Research Process ‘Onion’… … … … … … … … … … … … … … ……. 32 Figure 3. 2 Forms of Qualitative Interview… … … … … … … … … … … … … … ….. 40 Figure 5. 1 BT’s Organizational Structure… … … … … … … … … … … … … … … … 61 Figure 5. 2 BT Group – Total Revenue (FY 2002-03 – FY 2004-05)… … … … … .. 63 Figure 5. 3 BT Group – Total Revenue by Business Line (FY 2002-03 – FY 2004-05) … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … …. 64 Figure 5. 4 BT’s Revenues by Geography in FY2004… … … … … … … … … … … . 65 XII Chapter One Introduction 1. Background of the Research Currently, more and more enterprises are pursuing sustainable growth in markets that are becoming increasingly global. In other words, it is essential for organizations to understand the complexity and diversity of international marketing in order to compete globally effectively (Doole & Lowe 2004). Meanwhile, selection of entry strategy, as the most significant globalization decision company is likely to take, signals ‘the firm’ intent to key competitors’ and determines ‘the basis for future s battles’ (Douglas & Craig 1997, as cited by Doole & Lowe 2004, p. 17). For BT Group plc – a leading provider of communications solutions serving customers throughout the world (BT Group plc) – global expansion composes a theme within its commercial performance on the world stage. Facing one of the most dynamic and vastly potential market – for example China, and especially since it joined the WTO and gradual deregulation in the telecommunications market is being progressed, BT has been enlarging its business into this lucrative region.

Based on current status, this research attempts to analyze and evaluate BT’s practical entry strategies implemented during globalization, in particular focusing on China’s telecoms market, and hopefully recommends some useful advice for emerging telecoms or new entrants in globalization. 1. 2 Objectives of the Research The whole research is to be fulfilled by collecting a mass of information and data based on theoretical literature and formulized research methodology, followed the intensive analyses based on the findings from a case study of BT. The ultimate aim is to achieve the following key objectives: (1) To identify alternative entry strategies for companies during the internationalization process; (2) To investigate the current circumstances of China’s telecoms market, and forecast trends for telecoms services in China; (3) To evaluate the BT Group’s current situation, focusing on its international expansion; (4) To analyze the BT Group’ entry strategies in China’s telecoms market associated with appealing opportunities and critical elements to the BT Group; (5) To provide implication and recommendation to the BT Group’s future development in China’s telecoms market. . 3 Structure of the Dissertation This dissertation involves s even chapters which are briefly clarified in sequence below, Chapter one simplifies an outline of the research which involves from the research background and objectives, to the structure of the dissertation and its limitations. Subsequently, chapter two and chapter three mainly contribute a theoretical and academic basis for this dissertation from the two aspects of literature review and research methodology respectively.

The former provides the essential review on the theories of market entry strategies, which is one of the key research objectives and also a vital process during a company’ globalization. The latter includes the research s philosophy, approaches and data collection, which are tailored for this particular research according to formulized research frameworks. These two chapters offer a consolidated foundation for the following analyses. Utilizing PEST to investigate the circumstances of China’s telecoms market is the main context in chapter four.

A comparative clear perspective surrounding the 2 complicated Chinese telecoms market is exhibited at the end of this chapter. Chapter five spotlights the case study of BT from company overview and SWOT analysis, to the focus on its entry strategies during international expansion with successful and unsuccessful cases in particular regions such as the US, Western Europe, and Japan. Meanwhile, a survey of entry approaches adopted by the UK carrier in China also appears in this chapter.

In chapter six, the analyses and recommendations based on findings are highlighted, which concentrate on the characteristic summary of implemented international entry strategies by BT, the implication for other telecoms which want to be globalized and some recommendations for BT in China in the future. Finally, the general conclusion is summarized in chapter seven, including the outcome of this dissertation and a further research plan in the future. 1. 4 Limitations of the Research The first limitation of this research is mainly due to confidentiality from interviewed companies, not only BT but also its Chinese partners.

The encountered difficulties pushed the process of collecting primary data through interviewing into a dilemma. Particularly, when referring to the details around strategies, they were normally refused a response by interviewees because of sensitiveness and worries about imitation by rivals. As a result, unclear and inaccessible information easily caused inaccurate analyses. Likewise, limited time is another bottleneck to access to sufficient research. Having only two months time is a huge challenge for the research both in depth and width.

Therefore, it is completely necessary to undertake more in depth research in the future. 3 Chapter Two Literature Review 2. 1 Introduction This chapter will relate to three aspects: Firstly, a brief statement about the analytical necessity of market entry strategy will be revealed. In the second part, it is also essential to penetrate whole research – review market entry strategy, including the conceptions of alterna tive methods of international market entry, the reasons of utilization, their advantages and disadvantages and relative implementation methods.

The third section will list relative factors influencing the choice of entry mode. Finally, a conclusion based on the literature review will be summarized. 2. 2 The Analytical Necessity of Market Entry Strategy For the majority of companies, internationalism is likely to be involved and become one of many key parts in their competitive strategies. Doole and Lowe (2004) point out ‘the most significant international marketing decision they are likely to take is how they should enter new markets, as the commitments that they make will affect every aspect of their business for many years ahead’ (p. 17). Indeed, for both smaller and global companies, how to select the most suitable method from different market entry options with minimum risk is a challenge for them. Moreover, the problems associated with a company’s international expansion are also being appeared obviously. For example, as Doole and Lowe (2004) mention ‘how to exploit opportunities more effectively within the context of their existing network of international operations and, particularly, how to enter new emerging markets’ (p. 217) are problems not only f r small and medium-sized businesses, but o also for established ompanies. Although in real business environment, there is unlikely to be a common standard market entry strategy for an organization because different entry methods are 4 assumed by different companies to enter same market, or by the same firm in different markets, it is still necessary to analyse and determine various market entry methods accompanied by their advantages and disadvantages, which are vital and critical during the decision-making process due to other relative key factors, such as control, cost and risk and so on. . 3 Definitions and Forms of International Market Entry Basically, there are a wide variety of market entry methods which range from exports, licensing, franchising to joint ventures and wholly owned subsidiaries with control from non to whole, associated with different level risks (see Figure 2. 1). Figure 2. 1 Risk and Control in Market Entry Control Cooperation strategies Joint ventures Strategic alliances Direct investment Own subsidiary Acquisition Assembly

Direct investment Distributors Agents Direct marketing Franchising Management contracts Indirect exporting Piggybacking Trading companies Export management companies Domestic purchasing Risk Source: Doole & Lowe 2004, p. 220 5 The following contents will distinguish more precisely between the distinctive characteristics of these alternatives based on definitions and descriptions (Young et al 1989). 2. 3. 1 Exports As the ‘only one of a range of methods that may be utilized in penetrating and developing markets abroad’ (Young et al 1989, p. 4), exporting includes two major methods, namely indirect exporting and direct exporting. The detailed contents will be given as below. 2. 3. 1. 1 Indirect Exporting The former represents the status where a firm’s ‘products are sold in foreign markets without any special activity for this purpose being undertaken within the company’ (Young et al 1989, p. 11). Doole and Lowe (2004) note this method is utilized for firms which ‘have little inclination or few resources for international marketing’, therefore, ‘the simplest and lowest cost method of market entry is for them to have their products sold overseas by others’ (p. 20). They illustrate three main methods of indirect exporting as below, followed by their description in details. u Domestic purchasing u An export management company (EMC) or export house (EH) u Export trading companies (ETC) and Piggyback Exporting Domestic purchasing Accurately, domestic purchasing barely falls into the category of market entry strategies due to the knowledge poverty of international market for the company. However, ‘the supplying organization is able to exert little control over the choice of markets and the strategies adopted in marketing its products’ (Doole & Lowe 2004, p. 21). Therefore, it is widely adopted by small firms as the easiest method of obtaining foreign sales. Noticeably, Doole and Lowe (2004) believe that local subcontractors to original equipment manufacturers (OEMs) should fall into this 6 category due to their international market performances heavily dependent on the representations of companies supplied by OEMs. For instance, VIA Technologies, Inc. which is the provider of core logic chipsets was quickly developed through adopting OEM to other multinational PC companies, such as

HP&Compaq. Based on the least cost and risk of this kind of entry method and the high quality and reputation from product, VIA Technologies, Inc. has been dramatically expanding its market shares attacking its competitor – Intel (Ni Fan 2001). However, the drawbacks of this entry method are likely to be obvious because undertaking marketing activities heavily rely on the purchaser. As a result, the company may be in passive status and lack awareness of a change in consumer behaviour and competitor activity and so on.

Therefore, Doole and Lowe (2004) suggest that ‘if a company is intent upon seeking longer-term viability for its export business, it must adapt a more proactive approach which will inevitably involve obtaining a greater understanding of the markets in which their products are sold’ (p. 221). Export management companies (EMCs) or export houses Doole and Lowe (2004) define that ‘export house or export marketing companies (EMCs) are specialist companies’ which ‘set up to act as the export department for a range of companies’(p. 221).

Normally, they provide a quite attractive overall ‘sales package’ to foreign purchasers through offering ranges of products from various companies. Compared with the method above, firms generally have closer cooperation and increased control (Terpstra & Sarathy 2000), and they also benefit from working with an EMC due to the latter’s valuable knowledge of local buying practices and government regulations which is vital in marketing activities (Doole & Lowe 2004). Moreover, there are other significant benefits derived from this approach, for example, the producer can acquire foreign- market knowledge and approach through the operations and experience of the EMC, remarkable cost saving, and foreign credit responsibility can be guaranteed by most EMCs. Therefore, this approach is likely to be ideal for some small or medium-sized companies due to its limitations in size and shortages on foreign market knowledge, while they retain relative control. For instance, in the USA, thousands of manufacturers have used the EMC for exporting their products to foreign markets (Terpstra & Sarathy 2000).

During adopting this method, however, disadvantages are revealed gradually. First, some EMCs may be too small or too new to have foreign market knowledge, and as a result it may be vitally weak for those new exporters. Second, too many lines carried by EMCs may cause a lack of necessary attention to the firm’s products from sales people. Also, the product ranges might include competitive products or substitutes which are against a particular firm.

Last but not least, due to a desire for sales commission from EMCs, they might tend to sell all products immediately rather than those that might ‘require greater customer education and sustained marketing effort to achieve success in the longer term’ (Doole & Lowe 2004). Therefore, Doole and Lowe (2004) suggest that manufacturers should select a suitable EMC, develop and manage the relationship and monitor their performance. Moreover, the firm should take time to research the markets where its products are sold in order to ‘ensure that opportunities to sell products into new markets are not being missed by the EMC’ (p. 22). Export trading companies (ETC) and Piggyback exporting Both of them should fall into the cooperation exporting category. The advantages of choosing the former to an exporter is similar to EMC’s, ‘but to a greater degree because of the greater resources and coverage of the ETC’ (Terpstra & Sarathy 2000, p382). 8 In the term of piggyback exporting, Terpstra and Sarathy (2000) define that ‘one manufacturer uses its overseas distribution to sell another company’s product along with its own’ (p. 383).

Because of the significant advantages through the selection of this method to two involved parties with different interests – the carrier and the rider, this approach is being adopted widely today. Noncompetitiveness and complementarity between the products of carrier and rider are its major characteristics. For example, by piggybacking, the carrier can satisfy foreign distributors through providing more various and complete product lines, contrarily, the rider can learn more international market knowledge through knowing how well each needs are met.

In actual operation, the methods of piggyback exporting may be various, such as in selling, branding, product coverage, or country coverage. For instance, AT&T used Toshiba to provide end-to-end networking and equipment communications solutions for small and mid-size businesses solely in Japan (TMCnet 2003). In sum, due to the advantages of simplicity and low-cost, indirect exporting is often adopted by exporters as the first experience in complicated international markets, especially for some small companies.

However, little control may cause a dull reaction when it faces new situations or opportunities. Besides, the lack of direct relations between the company and the market may be a stumbling block to establish long-term relationships with foreign distributors, and gain rich international marketing knowledge. 2. 3. 1. 2 Direct Exporting Compared with indirect exporting, there are noticeable benefits associated with direct exporting, which Doole and Lowe (2004) comment on in several aspects, such as greater control over the selection of markets and the elements of marketing mix, 9 improved feedback about the performance of individual products’, and ‘the opportunity to build up expertise in international marketing’ (p. 224). On the other hand, the disadvantages of direct exporting are significant. At least partly, the direct investment is considerable because the company has to be responsible for whole costs from marketing, distribution and administration and so on, which might outweigh the benefits from the markets. Therefore, as Doole and Lowe (2004) suggest that ‘the company must be quite sure that the costs can be justified in the light of the marketing opportunities identified’(p. 25). During implementation of this approach, the firm should pay attention to some critical factors in order to ensure successful direct exporting. For instance, a sufficient productio n capacity and capability, effective market research, suitable exporting approaches which include agents, distributors, management contracts, turnkey operation, franchising, and direct marketing. In short, direct exporting is the most common method in international marketing.

Because of its advantages and disadvantages, in actual business, direct and indirect exporting are not mutually exclusive (Terpstra & Sarathy 2000). In addition, monitoring a company’s performance, such as cash flow, profits, delivery time and precision analysis of market entry time, are also critical aspects in managing the export process (Young et al, 1989). 2. 3. 2 Foreign Manufacturing Strategies without Direct Investment Before exploiting the methods falling into this category, it is necessary to consider the key reasons which drive a company to produce abroad.

Some of the positive possibilities are listed below. Firstly, it is helpful to save costs, ‘especially when transportation and tariff savings 10 are added’ (Terpstra & Sarathy 2000, p. 390). In addition, labour cost saving is also one of the key benefits of overseas manufacturing. For instance, the figure of hourly labour costs in Poland is much lower than the average of the original EU 15 membership countries, at 4. 48 Euros and 22. 21 Euros respectively (Eurostat, 2004).

It is not hard to explain, at least partly, why lots of major foreign investors, such as Fiat (Italy), Metro AG (Germany), Saint-Gobain (France), have manufactured their products in Poland (Mercado, Welford & Prescott 2001). Secondly, Terpstra & Sarathy (2000) believe ‘local production allows better interaction with local needs concerning product design, delivery, and service’ (p. 390), through which encourage the firm to perform well in the local market. The final reason is related to government regulations.

Doole and Lowe (2004) note ‘entry to some markets, such as Central and Eastern Europe are difficult unless accompanied by investment in local operation’ (p. 231). Therefore, companies are encouraged by the above reasons to produce abroad, although this is associated with unavoidable risks and other underestimated high costs involved in transferring technology, skills and training and so on (Doole and Lowe 2004). The following approaches are major entry strategies without direct investment. 2. 3. 2. Contract Manufacture The concept of contract manufacturing abroad is explained by Terpstra & Sarathy (2000) that ‘the firm’ product is produced in the foreign market by another producer s under contract with the firm’ (p. 391). Noticeably, the contract only covers manufacturing, marketing is still handled by the firm according to the description from two scholars above. When the company’s competitive advantage replies on marketing rather than on 11 production, this approach is more attractive to the company.

For instance, P&G has several contractual manufacturers in Italy. Moreover, the firm can avoid huge costs accompanied with establishing a whole-owned plant, especially in the small or risky market, which involves tough competition, political uncertainty, unfamiliarity with local labour and culture, it is less costly to terminate a contractual manufacturer than to close an owned one down. Again, transportation savings, compared to exporting, is another attractive advantage (Terpstra & Sarathy 2000). The main drawbacks of this method, however, may confine its implementation.

For one, it is difficult to find a local satisfactory manufacturer in the foreign market with the sufficient capabilities to produce the products with high quality and quantity. For another, even where such a manufacturer can be found, direct quality control may be unrealizable (Mercado, Welford & Prescott 2001). Generally, the advantages of contractual manufacturing outweigh its drawbacks. Once a good local partner is found and a closer relationship developed, the company can benefit from this approach. . 3. 2. 2 Licensing Doole and Lowe define the licensing as ‘a form of management contract in which the licenser confers to the licensee the right to use one or more of the following things’ (p. 234): (1) patent rights, (2) trademark rights, (3) copyrights, (4) know- how on products or processes. It may occur in the markets where direct involvement would be impossible, or where targeted marketing segments may not be sufficiently large for full involvement (Doole & Lowe, 2004).

Normally, the licenser can benefit from licensing from the following aspects. Firstly, the licenser achieves revenue from the licensee’s sales through licensing. Secondly, considerable control can be operated by the licenser when a licensee uses the rights or 12 know-how to produce agreed standard products. Thirdly, licensing is usually prefered by a host-country government rather than direct investment because the former ‘brings technology into the country with few strings and costs attached’(Terpstra & Sarathy 2000, p. 392).

For the licensee, the main advantage is that it may avoid high R&D costs and risks through adopting a license, especially when launching a new product. Notwithstanding these advantages, some problems still arise through licensing. For one, due to involvement of knowledge or technology in host-country producer, the licenser may create a potential competitor, especially when the licensee is very capable. As a result, the licenser may lose not only technological advantage, but also market shares. For another, licensee control is also a problem. Misunderstanding or conflicts may occur in its implementation.

Based on evaluation of licensing, Terpstra and Sarathy (2000) identify some techniques which minimize the potential problems of licensing as follows: O Develop a clear policy and plan O Allocate licensing responsibility to a senior manager O Select licensees carefully O Draft the agreement carefully to include duration, royalties, trade secrets, quality control and performance measures O Supply the critical ingredients O Obtain equity in the licensee O Limit the product and territorial coverage O Retain patents, trademarks, copyrights O Be an important part of the licensee’s business. (Cited by Doole & Lowe 2004, p. 35) 13 2. 3. 3 Foreign Manufacturing Strategies with Direct Investment Doole and Lowe (2004) demonstrate the reasons why a firm selects this approach as its entry strategy as follows: to gain new business, to defend existing business, to move with an established customer, to save costs and to avoid government restrictions. Basically, the selection to establish ownership of facilities in the overseas market is regarded as ‘a deeper-level commitment to a foreign market environment and as an investment in high-level control of foreign operations’ (Mercado, Welford & Prescott 2001, p352). . 3. 3. 1 Assembly Terpstra and Sarathy (2000) indicate the term of foreign assembly as that ‘the firm produces domestically all or most of the components or ingredients of its product and ships them to foreign markets for assembly’(p. 390). Noticeably, foreign assembly is adopted widely in automobile and farm equipment industries. This is because it can effectively diminish the effect of tariff barriers which are normally lower on components than on finished goods. It is also advantageous on transportation costs saving, especially when the products are large, such as cars.

In that case, the firm prefers to assemble in the local market. Besides, establishment of local assembly plant may pull local employment. By contrast, relatively simple required activity, low levels of local management, engineering skills and development support are other benefits for the firm through assembling. In short, assembly option brings not only advantage of low costs including transportation, labour wages, tariffs, but also on government stimulus (Doole & Lowe, 2004). 2. 3. 3. Whole Owned Subsidiaries When the firm thinks its products have long-term marketing potential in a relatively politically stable country, Doole and Lowe (2004) recommend that, whole owned subsidiaries may be a necessary entry method, which meet the company’s strategy associated with more powerful control and high competitiveness. After all, achieving 14 100 percent profit through 100 percent ownership is one of the stimulating temptations to an international organization. Poynter and White (1984) have developed five- fold classification of whole-owned subsidiaries which is shown in Table 2. 1.

They also suggest that small – or those companies just starting to attempt internationalization – should adopt the Miniature replica and/or Marketing satellite as the type of whole-owned foreign subsidiary. Contrarily, ‘for lager MNEs and those globally integrated and co-ordinated strategies’, Rationalised manufacturer, Product specialist and Strategic independence are preferable for their subsidiary (cited by Young et al, 1989). Table 2. 1 Types of Wholly Owned Subsidiary Miniature replica A business which produces and markets some of the parent’s product lines or related product lines in the local country.

Marketing subsidiaries which sell into the local trading area products which are manufactured centrally. Where the subsidiary produces a particular set of component parts or products for a multi-country or global market. Where the subsidiary develops, produces and markets a limited product line for global markets. Where the subsidiaries are permitted independence to develop lines of business for either a local, multi-country or g lobal market. Marketing satellite Rationalised manufacturer Product specialist Strategic independence Source: Poynter & White (1984), as cited by Young et al, 1989, p. 239) On other hand, there are also considerable risks. For instance, the demands for financial and management commitment are massive which may be problems and/or challenges for small companies with limited resources. Second, the issues of political risk in the host countries may have unexpected harm for the company’s whole-owned investment. Moreover, lack of quick achievement local knowledge due to no local collaborator is another drawback. However, there are other entry methods which may 15 ffectively avoid these disadvantages which are involved in the next section. 2. 3. 3. 3 Company Acquisitions and Mergers Terpstra and Sarathy (2000) believe that ‘acquisition is a quicker way for a firm to get into a market than building its own facilities’ (p. 399). Nowadays, this method is generally adopted by many western companies, especially those from the UK and US. Doole and Lowe (2004) give the key reason to explain this phenomena as speed of market entry is essential, and it is likely to be easily achieved by acquiring an existing company in the market.

This approach is considerably effective when the firm is pressed to gain profits in a short time. Although acquisition and merger are common in practice, there are many arguments around them as an approach of achieving rapid expansion. This is because they have significant pitfalls. For instance, synergy is a big challenge for merger or acquisition due to cross-cultural issues, different ways of doing business in Europe and Asia and so on. Moreover, the recession in the new millennium may influence their performance (Doole & Lowe 2004).

Based on this status, Finkelstein (1998) recommends some method to minimize the potential issues associated with acquisition and merger which is explained in detail below, ‘… the integration process should focus on value creation by ensuring employees actually achieve the synergy that is promised before the deal is done, planning in detail how the various cross-border problems will be overcome and developing a clear communication plan to cop with the whole process… ‘ (cited by Doole & Lowe 2004, p. 202) 2. 3. Cooperative Strategies Dool and Lowe (2004) put the two terms – joint ventures and strategic alliances into the cooperative strategies category because from a financial aspect, both of them have a common characteristic, namely holding a stake by each of the involved entities. The 16 following section will exploit them in details. 2. 3. 4. 1 Joint Ventures Dool and Lowe (2004) define the premise of joint venture as below, ‘… two or more companies can contribute complementary expertise or resources to the joint company, which, as a result, will have a unique competitive advantage to exploit’(p. 40) In Table 2. 2, the illustration of the contribution between east and west regions in the early 1990s based on this entry approach, sufficiently imply the reason why setting up joint ventures: n Co-operation with partners in the host country can increase the speed of firm’s market entry, most importantly, it is vital when good business and government contacts are essential for success. n In some particular industry, such as multimedia, complementary technology or management skills provided by the partners can create new opportunities in an emerging and/or exciting market. Some countries, such as Philippines, the government tries to restrain foreign ownership. In that case, joint venture as the form of market entry is reasonable. (Source: Doole and Lowe 2004) 17 Table 2. 2 Who Provides What in East-West Partnerships West Marketing systems Financial management Forecasting Planning Technology Information systems Capital Know-how Human resources Financial incentives East Land Buildings and equipment Distribution networks Skills Low costs Beneficial wage rates Tax relief Political connections Neighbouring markets (Source: Florescu & Scibor-Rylski (1993), as cited by Doole and Lowe 2004, p. 40) Due to joint venture playing an increasingly important role as a method of market entry, the following part will be divided into two sub-sections: equity joint venture and contractual joint venture. The former will focus on four aspects: its advantages and disadvantages, in which situations to adopt it, its performance and finally, how to select partner(s) 2. 3. 4. 1. 1 Equity Joint Venture Advantages and disadvantages of joint venture Doole and Lowe (2004) argue that the main advantages to firms selecting joint ventures from three aspects.

First, firms have ‘more direct participation in the local market’ (p. 240), and access to knowledge about how to operate in a local market. Second, they may benefit from not only finance and profit, but also reduction risks during their activities. Finally, they can ‘ exert greater control over the operation of the joint venture’(p. 240). This approach, however, still carries some significant problems. First of all, due to involvement of different joint companies, the interests of one partner might conflict with others. For instance, the national partner tends to care more on the local market, 18 hereas the interests of the international firm incline ‘totality of its international operation’ (Terpstra and Sarathy 2000, p. 396). Generally, these actions adopted by the internationa l firms for their further global aims may not bring significant direct benefits to the local partner. Therefore, conflict occurrence seems unavoidable. Secondly, compared with other approaches of market entry, such as licensing, the use of agents, even directly owned subsidiary, it is likely to spend more management time on education, and negotiation with partners in many of the operational details of joint venture

Another major complaint about joint venture is about its difficulty on integration different participation during a synergistic international operation (Terpstra and Sarathy 2000). Hence, as Young et al (1989) emphasize that, it is vital to ‘consider carefully all the details and to understand the wealth of variations possible on the basic theme’ (p. 220). Most importantly, a careful selection of partner is critical which will be related in the next section. In which situations to adopt joint ventures After lots of investigation, Terpstra and Sarathy (2000) conclude three situations where joint venture is more preferable.

First, some governments prefer or even demand joint ventures because they believe their national firms can benefit from it in various ways, such as profit and technology, if these local firms have a stake. This phenomenon is increasingly remarkable, especially in less-developed countries. The following Table 2. 3 evidently indicates government’s influence in the area above during examining why to select joint venture. 19 Table 2. 3 Relationships of Stage of Development to Vent ure-Creation Rationales Rationale Developed country (%)a Less-developed country (%)b

Government suasion/legislation 17 Skills needed 64 Assets or attribute needed 19 a Based on sample of 34 joint ventures by Killing. b Based on sample of 66 joint ventures by Beamish. Source: Beamish (1985), as cited by Young et al 1989, p. 226 57 38 5 Second, joint venture also suits some markets which are ‘ competitive or crowded too to admit a new operation’ (Terpstra & Sarathy 2000, p. 396). For example, some Japanese firms successfully enter the USA market through adopting this method in those situations above.

Moreover, Terpstra and Sarathy (2000) notice that when ‘standardization, international exchange, and integration are important to the company’ (p. 397), the joint- venture method may be a handicap. Contrarily, when ‘national operations have differing product lines and localized marketing’, there are relatively less problems. Joint ventures performance Commonly, seven stages permeate the whole process of joint venture, namely, establishing joint venture objectives, cost and benefit analysis, selecting partner(s), developing business plan, negotiation of joint venture agreement, contract writing, performance evaluation (Young et al 1989).

Simply, Figure 2. 2 shows the flow of creating a joint venture by two partners. Moreover, more details are given in Appendix II. 20 Figure 2. 2 Partner -to-partner Relationships Creating a Joint Venture Firm A Weighting of: Factors leading Firm A to cooperate and value of strengths giving Firm A bargaining power Partner-to-partner relationship Firm B Weighting of: Factors leading Firm B to cooperate and value of strengths giving Firm B bargaining power The bargaining agreement Partner-child relationship Partner-child relationship

Joint venture (‘the child’) Child’s competitive environment Source: Harrigan, 1985, as cited by Hollensen 2004, p. 323 How to select partner(s) The reason why analysis of selecting a partner(s) is done separately is that it is a vital role due to the involvement in at least four separate stages in the whole joint-venture process as illustrated in Appendix II. Moreover, it may be useful to evaluate and analyze the company’s potential joint- venture partner(s) from a third status, if the company is willing to select this approach of market entry.

According to a survey of a hundred US MNEs, UNCTC (1987) ranks the importance order of local partner’s contributions which is shown in Table 2. 4. 21 Table 2. 4 Rank Ordering of Local Partners’ Contributions to the Joint Venture Rank 1 2 3 4 5 6 7 8 9 10 Contribution Knowledge of the political situation, economy and customs of the country General management Access to markets for goods produced in the country Marketing personnel and expertise Local capital Contacts and relationships with governments of host counties Plants, facilities and land of local artners Capability of recruiting local labour and dealing with labour unions Access to local materials Access to local financial institutions Source: UNCTC (1987), as cited by Young et al (1989), p. 227 In addition, an analysis sketch of prospective partners is listed in Appendix III, from which the firm may judge a potential partner’s effectiveness from several aspects, such as finance, organization, market, production, institutional and possible negotiating attitudes. In short, Harrigan recommends three criteria when the company selects the appropriate partner(s): it should make a conscious decision, not just rely on outside requests.

Besides, partners with previous joint- venture experience should be considered firstly. Finally, ‘the choice of partner should be based on the complementarities which exist between the two enterprises in order to maximize potential synergies’ (cited by Young et al 1989, p. 234). 2. 3. 4. 1. 2 Contractual Joint Venture Hollensen (2004) defines that ‘in a contractual joint venture no joint enterprise with a separate personality is formed’(p. 318), which is a significant distinction from equity joint venture.

Normally, it is regarded as another entry method with international character and may ‘represent a means of developing new links in new (geographic) markets through contractual (non-equity) association’(Mercado, Welford & Prescott 22 2001, p. 350). More interesting is that contractual joint venture is much more similar to strategic alliances which will be mentioned below. 2. 3. 4. 2 Strategic Alliances Bronder and Pritzl (1992) define the term of strategic alliances as that at least two companies combine value chain activities for the purpose of competitive advantage (cited by Doole & Lowe 2004).

It usually covers no-equity contractual relationship frequently between competitors, who tend to be cross-border. It aims to meet a strategic need for each party through allying. Clearly, one of its objectives is market entry (Terpstra & Sarathy 2000). The following lists are main bases of formation alliances, u Technology swaps u R exchanges u Distribution relationships u Marketing relationships u Manufacturer-supplier relationships u Cross-licensing (Source: Doole & Lowe 2004, pp. 242-243)

In some circumstances, strategic alliance is recommended by Terpstra and Sarathy (2000) as the best and, sometimes the only way to enter world markets. Examples are ranged from airlines industry to communications industry. For instance, both American companies – AT allies Sprint to go global, Star Alliance allies Lufthansa (Germany), BMI (the UK), Air Canada (Canada) and so on in the same airline network. Doole and Lowe (2004) list some driving forces for the formation and operation of strategic alliance as: u Insufficient resources 3 u Pace of innovation and market diffusion u High research and development costs u Concentration of firms in mature industries u Government cooperation u Self-protection u Market access (Source: Doole & Lowe 2004, p. 243) In practice, the partners’ roles played in the collaboration should be considered because it relates to how to maximize an alliance’s function through integrating each other’s value chain. Figure 2. 3 shows how two partners form three different types of value chain partnership. Figure 2. Collaboration Possibilities for Partners A and B in the Value Chain A R Production Marketing Sales and services Upstream 1 3 2 Downstram Upstream Downstram B R Production Marketing Sales and services 1. Upstream-based collaboration: A and B collaborate on R and or production. 2. Downstream-based collaboration: A and B collaborate on marketing, distribution, sales and /or service. 3. Upstream/downstream-based collaboration: A and B have different but complementary competences at each end of the value chain. 4 Source: Lorange & Roos 1995, as cited by Hollensen 2004, pp. 318-319 Porter and Fuller (1986) call the type 1 and 2 in Figure 2. 3 above as Y coalition, and similarly, type 3 is called X coalition. In Y coalition, they believe that partners have similar strengths or weakness in their value chain, therefore, adopting this collaboration type makes partners share the ‘actual performance of one or more value chain activities’ (cited by Hollensen 2004, p319).

On the other hand, in X coalition, partners have ‘asymmetric competences in the value chain activities’ (cited by Hollensen 2004, p319), meanwhile, partners collaborate with each other across different sections in their value chains. Like other entry strategies, there is still some limitation accompanied with strategic alliance, such as leadership and financial problems. Therefore, Bronder and Pritzl (1992) stress the need to ‘analyse the situation, identify the oppertunies for cooperation and evaluate shareholder’ (as cited by Doole & Lowe 2004, p. 43). Moreover, understanding other partners’ motivations and objectives is also vital. 2. 4 Factors Influencing the Choice of Entry Mode A firm’s selection of its entry mode may be restricted by several forces, which, sometimes, are conflicting. Therefore, Hollensen (2004) argues that the process of the entry mode decision is complicated with numerous tradeoffs among alternative entry approaches, because of the need of anticipating the strength and direction of these forces.

The following lists are main factors influencing the choice of entry mode, which fall into four categories: internal factors, external factors, desired mode characteristics and transaction-specific behaviour (Hollensen 2004). n Internal factors u Firm size u International experience u Product 25 n External factors u Sociocultural distance between home country and host country u Country risk/demand uncertainty u Market size and growth u Direct and indirect trade barriers u Intensity of competition u Small number of relevant intermediaries available Desired mode characteristics u Risk averse u Control u Flexibility n Transaction-specific factors u Tacit nature of know-how 2. 5 A Focus on the Entry Strategies in the Telecoms Industry 2. 5. 1 The Major Entry Strategies In the telecoms industry, three major entry approaches have been taken by the giant telecoms to implement their globalization strategies: acquisitions, joint-ventures and strategic alliances ( cCreary, Boulton & Sankar 1993).

The reasons centre on a M series of significant advantages from the methods above, such as a quicker entry speed with considerable low risks; easier access to knowledge about operations, customers, competitors and environments in a local markets. Besides, due to the characteristics of telecoms industry which heavily depends on networks to provide services, few telecoms can afford to the vast investment on construction of comprehensive network infrastructure worldwide and following ‘black- hole’ of continual technological update of network.

Hence, the entry approaches above become a shortcut for giant telecoms to enlarge the international markets effectively and efficiently. Exceptively, telecoms also operate their whole owned subsidiaries with 100% 26 controlled networks in some particular lucrative overseas markets in order to keep solid and more profitable competitiveness. 2. 5. 2 The Key Factors Influencing the Telecom’s Selection of Entry Mode Some key factors influencing the choice of entry mode which mentioned previously are particularly embodied in the telecoms industry where telecoms companies are partly even 100% owned by the go vernment.

Consequently, the policies of government in the home country and regulatory circumstances in the host country are likely to play the two determinative roles in the process of telecoms deciding entry approaches. The former can be found from the international expansion of Germany’s Telekom and France Telecom who are very active in joint arrangements involving joint-ventures and strategic alliances, while AT and BT are acquiring company. This might be a result of the France and Germany carriers’ overnment ownership, ‘the lack of freedom given to management in pursuing competitive actions’ (McCreary, Boulton & Sankar 1993). Another actual example is from Japan, the Japanese carries are doing little to become major players, except the language barrier, the major reason might be the discouraging attitude from Japanese government who owns major stakes of companies (Yi 2002). The influence from the latter factor – regulatory circumstances in the host countries – is more significantly evident.

The company must and have to comply with extensive regulation which normally differs from region to region. Therefore, telecoms players sometimes passively opt entry approaches in the limited only one or two ways (Li & Wu 2005) 2. 5. 3 The Critical Issues Associated with Managing of the Collaborative Mode 27 In recent years, an increasing number of cross-border collaborative strategies have been adopted worldwide by lots of multinational organizations, such as joint-ventures, strategic alliances.

It may be dangerous, however, to ignore the reality that the average lifetime for alliances is only about seven years, and almost 80% of joint- ventures ultimately incur a failure end (Hollensen 2004). The same phenomena also appear in the telecoms industry where collaborations as an entry approach are more frequently implemented than other industries. Therefore, some typical potential conflicts between two cooperative parties listed by Hollensen (2004) become major challenges in the globalization of telecoms, such as diverging goals, double management, different cultures mix and trust development.

Take the issue of mixing different cultures in joint ventures as an example, the study of Pothukuchi et al (2002) highlights that the organizational culture similarity is important fo r joint venture success, especially link international joint ventures to share capabilities. Meanwhile, the main elements that make a joint venture successful include ‘listening, paying attention, spending time, humility and willingness to learn’, while those that make it fail include ‘mistrust and arrogance’(Pothukuchi et al 2002, p20).

Regarding to those of organizational culture distance, development a joint organizational culture across national borders and development management practices acceptable to both partners can significantly contribute to international joint-venture success (Pothukuchi et al 2002). 2. 6 Conclusion Once a company wants to internationalize, market entry is thought to be a critical first step. Meanwhile, ‘market entry methods can be seen as a series of alternatives available to international firms’ (Doole & Lowe 2004, p. 245).

The choice of market entry approach should be based on elements which are the firm’s involvement, 28 marketing control and, accompanied risks. Moreover, there are lots internal and external conditions to affect the choice. Therefore, in practice, companies may use more than one of these approaches to enter global marketing. A spotlight on the telecoms market, acquisitions, joint-ventures and strategic alliances are most common entry approaches implemented by telecoms due to their significant advantages on effectiveness and efficiency.

Distinctively from other industries, the options of international entry strategy in telecoms industry are heavily influenced by the policies of government in the home

Cite this Entry Strategies in China’s Telecoms Market

Entry Strategies in China’s Telecoms Market. (2018, Jun 01). Retrieved from https://graduateway.com/entry-strategies-in-chinas-telecoms-market/

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