Extra's

Question 1

Trade based entry mode

Answer 1

This is the situation in which a company decides to operate in the foreign markets as a player of exports or imports of its own products and inputs to its production.

o	Advantages:
Low entry costs; no investment required
Easier to enter and exit
Less risk of know-how loss
Less market home dependency

o Disadvantages:
Sensitive to trade barriers
Less market knowledge and adaptation capacity
Risk of payment and operations

Question 2

Contracting entry modes

Answer 2

This is the situation in which a company engages into a contractual relation with a company from the EM, enabling the creation of a revenue, but in most of the cases not a new cost structure of scale.

o Advantages
Low capital requirements
Can be used to overcome ownership restrictions
Reduces cost by spreading then across partners

o	Disadvantages
Low levels of control
Risk due to knowledge transfer
Misalignment in interest
Risk of creating potential competitor

Question 3

Investment entry mode

Answer 3

This is the situation in which a company commits significant financial resources to own structures in the emerging markets, normally with the form of shares in a local corporation.
o Advantages
Avoid import and transportation costs
Access to first-hand information and data about the market
Access to local management with significant context

o Disadvantages
High levels of investment needed
Onboarding of risks of the target country
Lack of market knowledge at first and potential entry barriers

Question 4

Egypt Market Conditions (DEMOGRAPHICS) x3

Answer 4

1. Poverty rates 2x as high in Urban as in Rural ares
2. 95% of population concentrated close to the Nile
3. Strong population growth taking toll on education

Question 5

Egypt Market Conditions (ECONOMY) (6x)

Answer 5

1. Mostly UNFREE
2. Dependent on agriculture, tourism and petroleum
3. 15% of revenues comes from Suez Canal
4. Devaluation of Egyptian pound since 2016
5. Purchasing power is declining
6. No investment grade status

Question 6

Egypt Market Conditions (POLITICS) 5x

Answer 6

1. Political instability cast over economic outlook
2. Mubarak was overthrown by Morsi, now Al-Sisi
3. Al Sisi secured all three powers until 2030
4. Less internal stability because of Al-Sisi
5. Situation with Sudan & US unstable

Question 7

Egypt Market Conditions (EASE OF DOING BUSINESS) 5x

Answer 7

1. Top 25 of strucutral reforms
2. Ease of starting business better than avg.
3. Allows up to 100% foreign ownership
4. Below average in enforcing contracts
5. Trading across borders difficult due to cap on import

Question 8

Factors influencing the entry strategy

Answer 8

1. Culture and institutional distance
2. Control and Commitments
3. The liability or advantage of foreignness
4. Timing of entry
5. Cost and financial situation of the corporation

Question 9

Risks to be taken into consideration when expanding to EM:

Answer 9

1. Distance -> technology, physical presence
2. Multiple environments -> research, multiple HQ’s
3. Multiple currencies -> use of forex hedging insturments & contractual agreements
4. Political conflicts -> understand political context, build local relations
5. Social and corporate culture -> rotate international management, promote locally