racts companies to offshore outsource for operating call centers. According to Lenovo, Lenovo's ThinkPad customer research takes place in USA, hardware designs from Japan and ThinkPad products are built and tested in China.
Imperfect market theory: Artisien explained concepts of Hymer (1970) and Kindleberger (1960) (Artisien, P Lecture, 8th March 2011), MNE succeeds if there are imperfections in goods and services. Imperfect competition gives superior access to technology, superior knowledge, better access to market, skilled management, and higher levels of research. However, in perfect competition, a company would not be able to exploit the advantages as there are many buyers, sellers, homogenous products, no control over cost, information is readily available to all. According to,
Product cycle theory: Madura (2008) explained Vernon's theory, every product has a limited life and goes through various stages (Introduction, Growth, Maturity, Saturation and Decline).
Products are first produced in home country and exported to foreign lands. Then in order to gain competitive advantage, the product is manufactured in foreign countries to reduce costs. The competition might increase and so product is then differentiated to sustain in the market. Also when the markets mature, firms search for potential markets to avail opportunity and advantage over competitors.
OLI theory: Needle (2004), explained Dunning's 'Eclectic Paradigm' that a firm would enter a market considering the Ownership factors, Location factors, Internalization factors. The firms should have some benefit over local firms like better access to finance knowledge, technology and management. Western firms would be in a better position to borrow money from stock market of less developed countries than local companies. Location factors are cheap labour, low rates of
taxation and import tariffs. Internalization factors are based on transaction costs. A subsidiary could be set to exploit technology and due to location specific advantages due to which companies get easy access to resources, however, some firms might create a wholly owned subsidy and control all the activities. According to Dash K.C.(2010) et al. General Electronics is offshore outsources in India in manufacturing as well as knowledge based services. GE instead of relying on third party, created its own Greenfield and around 50 percent of GE's software is developed in India.
Modes of Entry: 进入模式:
As explained by Root (1994) in Osland (2001) et al. selecting the right mode of entry is one of the most crucial strategic decisions to be made as a well chosen mode can help a company in reaping benefits whereas a wrong decision is difficult to change when long term commitments are made, its technology can be copied by competitors and certain laws in a country can prevent a company to take full advantage of the opportunities in the market. According to Wall Street Journal (2010), Japanese and US firms agreed to build trains for China and thought they would get access to a potential new market, however, Chinese companies adapted their technology and became their competitors.
According to Osland (2001) et al. Exporting is mostly the initial stages of internalization where a product or part of it is manufactured outside the home country and then transferred to it. Exporting can be done indirectly with the use of a middleman in home cou
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