Emerging Issues in International Business Research

Emerging Issues in International Business Research

New Horizons in International Business series

Edited by Masaaki Kotabe and Preet S. Aulakh

Top scholars in the field of international business (IB) contribute to this comprehensive analysis of the current state-of-the-art in IB research. The focus of the book is to examine the current state of international business research from an issue-oriented approach rather than the functional approaches that have been characteristic in the recent evolution of the field. In evaluating the current state and future research directions in research areas unique to international business, the book is structured in three parts: the macro-environment, interactions between business and institutions, and competition and strategy.

Chapter 11: Entering Foreign Markets through Strategic Alliances and Acquisitions

Michael A. Hitt and Klaus Uhlenbruck

Subjects: business and management, international business


11. Entering foreign markets through strategic alliances and acquisitions Michael A. Hitt and Klaus Uhlenbruck INTRODUCTION Over the last decade, we have witnessed a revolution in the business world. For example, there are now approximately 40 000 multinational enterprises that are responsible for about 25 percent of the world’s GNP. In fact, this understates the actual amount of GNP accounted for by international businesses as there are a number of small and medium-sized firms that also have substantial amounts of international operations and sales. Additionally, an increasing percentage of the large number of mergers and acquisitions undertaken each year are between firms in different countries, in other words, cross-border acquisitions (Hitt et al. 2001a). Thus, globalization is creating a revolution in the business world. Globalization creates a number of new opportunities as well as challenges for businesses (Hitt et al. 1997b). For example, new market opportunities have been created, but also new competitors. New markets have opened due to free trade agreements and the liberalization of markets (for example, Latin America). These changes have also led to new types of competition. For example, the potential for multipoint competition whereby two firms simultaneously compete against each other in two or more product markets has existed for many years. However, increasing globalization has enhanced the potential for multipoint competition based on geographic markets across country borders. Thus, one firm may have a strong presence in the North American market while another may have a strong presence in the European Union or Asian...

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