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3 M Proposal Essay

1195 words - 5 pages

MGMT 2102 z3335161 LEUNG MING KAI MELODIEIndividual ProposalSubject area: What entry mode should the company choose to ensure competitiveness, especially against local operators?Introduction to proposalOver the century, 3M Incorporation, an American based multinational corporation, has a long history of operating business in every corner of the globe. Its operations are conducted in over 60 countries, and its products are purchasable through distributors and retailers in more than 200 countries.3M has expanded its business through a number of entry strategy alternatives, such as exporting, partnership, contract manufacturing and acquisitions. This proposal is therefore investigating which entry mode will be best suited for 3M when entering into France from US headquarters that can ensure the highest possible competitiveness against local operators. Three aspects will be discussed to explain the choice of entry mode:Cultural distance between the host and home countryThe domestic environment for the host countryEase of establishing a new businessPotential Risk and Modes of EntryThe choice of method in entering a market has significant impact in determining the competitiveness and survival potential of a foreign venture (Rugman, 2000). 3M should therefore take concerns of the following potential investment risk when choosing the best entry mode in entering France.Cultural DistanceAccording to Kogut and Singh (1988), it is shown that a high cultural distance is likely to result in a more shared-control modes of market entry mode, such as joint ventures. This is because firms entering a high cultural different market tend to perceive a higher level of country and investment risks, which greatly hinders managerial effectiveness and reduce productivity (Hill, 2003). 3M is an American based company, which its company culture is greatly distinct from the French. Take Disneyland in Paris as example, the miscalculation of cultural difference and management deficiency has resulted in a loss of almost $1 billion (Spencer, 1995). One of the most important issues is that, the French, generally, shows resentment of American culture and harbors hostility to American products. In order for 3M to success, shared-control entry mode can help to neutralize the perception of American produced goods, which is likely to lowered the potential cultural antagonism and allow higher profits potential. The Euro Disney case set a good reference for 3M to adapt their products and marketing skills to the needs and customs of the French to ensure its competitiveness within the overseas market.Economical/Political environmentBrouthers and Brouthers (2000) also suggested that the potential profits and risks of an entry mode are greatly affected by the cultural context of the host country. The cultural context should include not only the national culture but also the investment risks associated with the host country's economic, legal and political environment.As a member of the...

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