Foreign market entry and expansion – Directions for strategic organizational growth based on a global system perspective

Article type: Research Article

Authors: Kumar, Sameer | Waheed, Usman

Affiliations: OPUS College of Business, University of St. Thomas, Mail # TMH 343, 1000 Lasalle Avenue, Minneapolis, MN 55403-2005, USA. Tel.: +1 651 962 4350; Fax: +1 651 962 4710; E-mail: [email protected]

Abstract: The paper discusses motivations for international business expansion and its benefits to support an organization's global market system integration efforts. Combinations of domestic business diversification and international expansion that yield a successful growth strategy are assessed. The research considers an export substitution effect created by the elimination of tariffs and the reduction of non-tariff barriers. The study indicates pitfalls of overexpansion and assesses unfocused development as well as the socio-economic impact of less developed countries inviting foreign direct investment. A geographic survey of the global market for entry and expansion opportunity is presented and the generalized differences are identified between market structures and business cultures within US, Europe and Asia. Mexican and Asian liquidity crises are reviewed to show macro-economic variables that determine long-term viability of expansion strategy. The US domestic automotive market is assessed in terms of competitive pressures from Japanese and Korean automobile manufacturers' successful expansion into the US market and it is qualified with an assessment strategy employed by the entrants quantifying success and expected success using game theory models.

Keywords: Foreign market expansion, global system integration, business culture, macro-economic variables, automotive industry drivers, industrial strategy, foreign direct investment, global competition, organization growth

Journal: Information Knowledge Systems Management, vol. 6, no. 3, pp. 177-196, 2007