Possible entry modes strategies into china for australian beer product Essay

Possible entry modes strategies into china for australian beer product and examine the key strategic issues that need to be considered - Essay Example FDI, and then to cost-orientated FDI; Technology and marketing factors combine to explain standardization, which drives location decisions’ (Buckley et al., 1998, 539) The decision of a firm to entry a foreign market is depended on a series of factors. According to Gaba et al. (2002, 39) ‘firms face three interlocking questions with regard to international expansion: what market to enter (entry location), how to enter (mode of entry), and when to enter (timing of entry)’. On the other hand, it has been considered by Zacharakis (1997, 23) that international expansion involves ‘risks, including political instability in the target market, expropriation, social unrest, fluctuating exchange rates, poor infrastructures, host government regulations, differing language, norms, religion, and legal systems’. The presentation of the above factors however does not exclude the possible existence of other elements that can influence the company’s decision to enter a foreign market. In accordance with the views stated in the literature, a firm’s decision to enter a foreign market could be possibly analyzed using certain theoretical models. One of these models (Agarwal et al., 1992, 2), the normative decision theory suggests that ‘the choice of a foreign market entry mode should be based on trade-offs between risks and returns; A firm is expected to choose the entry mode that offers the highest risk-adjusted return on investment’. On the other hand, behavioral evidence indicates that a firms choices may also be determined by resource availability and need for control; Resource availability refers to the financial and managerial capacity of a firm for serving a particular foreign market while control refers to a firms need to influence systems, methods, and decisions in that foreign market’ (Agarwal et al., 1992, 2). Entry mode has been characterized as ‘the cornerstone of a firms market entry strategy’ (Au et al., 1997, 780). Moreover, in accordance