.. d table in appendix B . ; ) 4.3 Factors moderating mode choice According to Driscoll, there are several factors that affect the firms ability to achieve the desired level of different mode of characteristics.
They are government policies and regulations, firm size and corporate policies. For government policies, Driscoll discusses on the types of policies such as capital controls, intellectual property laws, monetary and etc.that would restrict the firms desired level of entry modes. Some evidence quoted includes the Poitiers Incident of 1983 by Hood and Truijens (1993) where French authorities boycotted Japanese VCRs market penetration, Kenyas internal export compensation, and South African two tier currency restriction to foreigners by Economic Intelligence Unit (1993b).
Another moderator factor is firm size restriction that limits the firm to commits on higher resources and ownership, and forced to resort to less desired entry modes. Then, corporate policy or the historical precedence does influence the undertaken mode of entry compare to the desired level. 4.4 Situational influences on mode choices The other method that Driscoll discussed in the article is on the situational influences that affects the firms desire level of entry mode.The two main category include firm factors that relates to the firms competitive advantage or skills, product or industrial experience, and strategic approach developed; and another factor is environmental that links with demand and competitive conditions, political and economic issues, and social cultural characteristics in the foreign market.
Some of the evidence discussed under firm factors where a company that has firm-specific advantage over others will choose a mode choice that gives more control. Hymer (1960); Kindleberger (1969) quoted that when product differentiation through R&D exists, firms will seek to establish control over these advantages and protect them from dissemination through the use of investment mode of entry. Then, experience and exposure of a firm in international marketing is another crucial firm factor that influences mode choice. This is in agreement with Buckley and Casson (1985) that states that experience reduces cost and risk in the serving market and increases the resource commitment of the firm.Driscoll also agrees with Kim and Hwang (1992) that a firm might want to leverage one product against another and to be strategic in its strategies to achieve overall corporate objectives. Meanwhile, in environment factors the demand of the foreign market plays an essential part of the entry.
Driscoll related that the demand and competitive condition influences the cost of serving the market and its commitment. Then, the stability of the host political and economic condition determines the entry modes of its resource commitments and flexibility. The ideal choices for higher risk factors, as Driscoll stated is through exporting options. Differences and dissimilarities in social cultural issues as quoted by Johanson and Vahlne (1977) would cause uncertainties of level of investments and foreign market penetration, and thus affects the entry mode decision making.5.0 Values/ Literature This article provides a comprehensive and feasible framework to help businesses to prepare for international business venture.
The concepts of entry modes discussed by Driscoll allows firms to determine their desired mode of entry characteristics, such as more control and low dissemination risk and thus enable companies to consider various choices that fits to their level. As compare to some other models, Driscoll has incorporated more alternatives for companies to assess and analyze their strength. Firms can also look into possibilities of combining various characteristics that best suit their environment, hence, allowing business managers to have a multidimensional task and priority in their mode choices. As a result, they would be more flexible and effective in adapting to the dynamic environment. The other contribution from the article is the introduction of situational influences, for instance, political and economic factors or firm specific advantage, which allows firms to measure an independent desired mode of characteristics against its independent actual mode chosen.
This would provide a more realistic and accurate scenario of the mode chosen for the business. This has been proven by recognized authors, where in many cases the implementation of desired modes are different from the actual modes, as this is due to the influences of various situational factors. Thus, as an advantage the managers would be able to evaluate more effective entry modes base on the various situational factors. Then, the following main contribution is the moderating factors, which allows firms to better evaluate their entry mode strategy after reassessing the potential moderators factors such as government and corporate policies, and firm size. The impact includes helping managers to understand the influences of moderating factors, instead of relying on the expected desired modes.
As a result, this prevents any potential pitfalls of overseeing the influencing moderating factors. The impact would ensure that there is a long-term success factor in its decision made for international business commitments.6.0 Conclusion In summary, Driscolls presentation on the entry mode framework for international business ventures has provided a very extensive and comprehensive coverage in the strategic business planning for a foreign market. Her three broad foreign market entry methods with a combination of various entry modes characteristics inter-relation has given a great insight and understanding of the practical business approach to an international environment.
For instance, Driscolls statistic research on firms of different entry modes in relation to different modes of entry characteristics proves an important practical solution in her argument, i.e. more control and low risk dissemination for investment, and etc. Then, Driscoll also related two very important factors that would affects the choice of entry modes; namely situational and moderator influences. These factors are crucial aspects to be evaluated and considered for every international business as the success factor of the entry mode chosen are largely depended on the accuracy of handling these factors. Her categorization and literature evidence on these factors are also precise and comprehensive which covers many aspects of the dynamic foreign situational analysis.
As compare to one of the research source by a Taiwanese author Aihwa Chang (1998) in Appendix C [Please check the date and put the article in attachment Appendix C], the author related 5 different modes of entry; namely choice according to industry traditions, random choice, pre-determined choice and contingent choice [you may or may not need to add more write-up] which does not covers a board aspect of the whole actual environment. Then, as the author associated several factors such as economic efficiency, financial commitment, control, flexibility and experience, which has some similarity with Driscoll, however the substance discussed does not fully review the success factor of the entry selection. Finally, Driscolls concluding remark recommended that firms should be flexible and adaptable to the situational changes of its entry mode choices from time to time as this would bear a high chances of success and sustainability in the international global business. Business Reports.
