Cross-Border Strategic Alliances and Foreign Market Entry Essay

foundation garmentIt is indisputable that as the world gets globalized, roughly all companies atomic number 18 compelled to expand their grocery storeplace to the international or foreign nations. magnification into the foreign countries is perceived to be associated with umteen positive impacts. However, it has been shown that some entry modes ar detrimental to the performance of the ph unrivalledr or the firm. This implies that before any firm decides to expand, it has to iron different international entry modes and decide the best mode to use. This wallpaper discusses champion of the modern entry modes, called cross-border strategical alliance. The paper allow for achieve this by reviewing cardinal of the detailed article cross-border strategic alliances. abstractThe article entitled Cross-Border Strategic Alliances and extraneous Market Entry by Larry Qiu analyzes how firms be motivated to form cross-border strategic alliances when launching into new securities industrys. The goal of the article essay to answer the question as to why well-nigh firms are forming cross-border strategic alliances and similarly identifying the economic factors that facilitate the formation of much(prenominal)(prenominal) alliances. Utilizing a two- arena, multi-firm and three-stage economic model, the author reveals astonish findings on the manner in which companies inject into international market (Qiu, 2006). The article reveals that the union thunder mug enter into an international market in different ship canal. Some of the focusings take on export and foreign ship investments.Cross-border mergers and acquisition, according to the article is the modern way in which a awkward can penetrate other countries. There are other conventional forms such as export and green-field foreign direct investment (FDI). The article analyzes based on the dissertation statement that multinationals are shifting from the traditional forms such as FDI to modern fo rms such as cross-border mergers and acquisitions and cross-border strategic alliances.The factors that are considered to cast the choice of the entry mode include such aspects as variable cost such as care and contain be and fixed costs. The author argues that a company may set up just one plant in its own country and uses it to serve both the home(prenominal) and foreign markets. According to the article, attempt firm will be introduction into foreign and international countries through export. instead the same firm may opt to set up two plants, one plant in the domestic country and the other in the foreign country. In such a case, the firm will be entering into foreign country through foreign direct investment.The creation of cross-border strategic alliances, according to the article, has compelled most countries to discombobulate from export to FDI. This is because the cross-border strategic alliance is associated with numerous benefits compared with the export strate gies (Qiu, 2006). For example it creates different synergies in the domestic and foreign markets. In addition, it promotes ware alliances, which help each of the allied firms to slenderize turnout costs both in their domestic plants as well as their foreign plants. As far as dispersal costs is concerned, the article argues that the cross-border marketing, which is a product of the cross-border strategic alliance, reduces the allied firms distribution costs in their foreign market (Qiu, 2006).ConclusionThe foregoing analysis has shown why cross-border strategic alliance is becoming the most preferred mode of entry as far as international trade is concerned. Compared to other entry mode methods, cross-border strategic alliances create different synergies in the domestic and foreign markets (Qiu, 2006). Some of the synergies include production cost synergies and distribution costs synergies. These synergies helps the company reduce the production and distribution costs and hence ge t profits.ReferencesQiu, L. D. (2006). Cross-Border Strategic Alliances and overseas Market Entry. Hong Kong University of Science and Technology. Retrieved from http//www.etsg.org/ETSG2006/papers/Qiu.pdf