Regional Multinationals and the Korean Comestics Industry

Preprint OPEN
Chang Hoon Oh ; Alan M. Rugman (2007)
  • Subject: regional strategy, market penetration, cosmetics industry, double diamond, South Korea

This paper analyzes the market penetration and expansion strategy of cosmetics and toiletries multinational enterprises (MNEs) in South Korea from the perspective of regional strategy as developed recently by Rugman. We find that MNEs have different market entry and expansion strategies in the home region and in the foreign region. Home region MNEs (Japanese MNEs in this case), in general, utilize their firm-specific advantages (FSAs) better than foreign region MNEs (European and MNEs from the Americas in this case). Due to differences in transaction costs, home region MNEs exploit downstream FSAs while foreign region MNEs develop upstream FSAs. Market similarity also leads to a greater incentive to operate in the home region rather than in foreign regions. The home region effect significantly increases the likelihood of entry into foreign markets as the host country’s “diamond” significantly affects the market entry strategies of MNEs.
  • References (44)
    44 references, page 1 of 5

    Agarwal, S. & Ramaswami, S. 1992. Choice of foreign market entry mode: impact of ownership, location and internalization factors. Journal of International Business Studies, 23: 1-27.

    Aharoni, Y. 1966. The foreign investment decision process. Division of Research, Boston: Harvard Business School.

    Anderson, E. & Gatignon, H.A. 1986. Modes of foreign entry: A transaction cost analysis and propositions. Journal of International Business Studies, 17(3): 1-26.

    Bartlett, C. & Ghoshal, S. 1998. Managing across borders: The transnational solution. 2nd ed. Boston, MA: Harvard Business School Press.

    Buckley, P. & Casson, M. 1976. The future of the multinational enterprise. London: Macmillan and Co.

    Buckley, P. J. & Casson, M. C. 1998. Analyzing foreign market entry strategies: Extending the internalization approach. Journal of International Business Studies, 29(3):539-562.

    Caves, R. E. & Mehra, S. K. 1986. Entry of foreign multinationals into U.S. manufacturing industries. In M. E. Porter (ed.). Competition in Global Industries: 449-481, Boston: Harvard University Press.

    Chen, S. S., & Hennart, J. 2002. Japanese investors choice of joint venture versus wholly-owned subsidiaries in the US: the role of market barriers and firm capabilities. Journal of International Business Studies, 33(1): 1-18.

    Coughlan, A.T., Anderson, E., Stern, L.W., & El-Ansary, A.I. 2001. Marketing channels. 6th ed. Upper Saddle River, NJ: PrenticeHall.

    Davidson, W. H. 1983. Market similarity and market selection: implications for international marketing strategy. Journal of Business Research, 11: 439-456.

  • Similar Research Results (1)
  • Metrics
    3
    views in OpenAIRE
    0
    views in local repository
    0
    downloads in local repository
Share - Bookmark