12 - Foreign Entry Strategies

Question 1

Natural resource seeking FDI

Answer 1

Investors quest to pursue natural resources in certain locations

Question 2

Market-seeking FDI

Answer 2

Investors quest to go after countries that offer strong demand for their products and services

Question 3

Efficiency enhancing FDI

Answer 3

Investors quest to single out the most efficient locations featuring a combination of scale economies and low-cost factors

Question 4

Capability-enhancing FDI

Answer 4

Investors quest for new ideas and technologies, which upgrade their own technological and managerial capabilities

Question 5

First-mover advantages

Answer 5

• proprietary, technological leadership
• pre-emption of scarce resources
• establishment of entry barriers for late entrants
• relationships and connections with key stakeholders such as customers and governments

Question 6

Late-mover advantages

Answer 6

• Opportunity to free-ride on first-mover investments
• Resolution of technological and market uncertainty
• First mover’s difficulty to adapt to market changes