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ped international programs with their own incentive and compensation systems, performance metrics, and opportunities to groom managers for global positions (Exhibit 3, on the next page). Such programs, which often provide training focused on tolerance and cultural awareness, aim to produce managers who are well versed in a company's distinctive capabilities but flexible enough to deal successfully with novel situations. These managers learn to distinguish the nonnegotiable aspects of a business model from those that can be modified as necessary. Ranbaxy, whose current CEO is British, is one of the companies working to develop this kind of global cadre. Its country managers move to new locations as soon as they are ready to assume larger challenges.

2. 3. External Factors

3.1 Barriers to market entry

3.1.1 Regulation

Firms in regulated industries face a significant strategic dilemma when expanding abroad. On the one hand, established theory and practice recommend following a gradual, staged model of international expansion so as to minimize risks and cope with uncertainty (Johanson and Vahlne, 1977; Chang, 1995; Rivoli and Salorio, 1996; Guill′en, 2002; Vermeulen and Barkema, 2002), that is, to overcome the so-called liability of foreignness (Hymer, 1976; Zaheer, 1995). On the other, the regulated nature of these industries tends to require a strong commitment of resources anda fast pace of entry into foreign markets. This is the case for three interrelated reasons. First,these industries tend to be highly concentrated, and they often exhibit certain features of the ‘naturalmonopoly.'1 Second, entry may be restricted by the government, frequently under a system oflicenses. And third, the government may own significant parts of the industry. Under these circumstances, foreign entrants face strong incentives to commit large amounts of resources and to establish operations quickly, whenever and wherever opportunities arise, and frequently via acquisition as opposed to greenfield investment (Sarkar et al., 1999). Thus, the regulated and oligopolistic nature of these industries generates strong first mover advantages (Doh, 2000; Knickerbocker, 1973). Recent research in strategy argues that firms in regulated industries follow ‘asymmetric strategies' in that they seek to defend their home-country position by preventing rivals from competing on a level playing field while pursuing entry into foreign markets as deregulation occurs. Given that deregulation has taken place at different moments in time and to different degrees from country to country, firms in regulated industries tend to follow a multidomestic strategy of foreign expansion, namely, they pick and choose which markets to enter depending on the specific circumstances

A natural monopoly emerges when it is possible to exploit economies of scale over a very large range of output. As a result, the optimally efficient scale of production becomes a very high

proportion of the total market demand for the product or service. present in each foreign country, arranging their operations with a local rather than a global logic in mind, and engaging in limited cross-border coordination (Bonardi, 2004). Another distinctive feature of regulated industries is the role of the state as a shareholder. Some of the most active firms in regulated industries expanding abroad are former monopolies in which the state ha