Country-specific factors
Another important factor has been the possibility of developing a better relationship with the local partner, and to build stronger relationships with sub-suppliers to the JV. A relational approach has also been viewed as critical for the success by previous research (Leonidou et al., 2014). The investment-entry mode involves different kinds of risks in relation to the local market. A fragile infrastructure e.g. supply capacity of electricity contributes to an uncertainty regarding supply to customers in the market. The distribution system is also delicate. Political and economic risks contribute to the decision to work up a JV in case A. Market opportunity is also a main driving force in increasing exporting efforts in case B. On the other hand, weaknesses in infrastructure and different business risks affect both case firms.
Industry-specific factors
Two vital management areas are involved in the planning of international operations. One is production and the other is distribution. The inherent industry-specific factors affecting business in the paper kissbrides.com source weblink and packaging industry are various and related to the structure in the local market. The underlying structural dimensions in the local market, irrespective of whether they are related to the supply of raw material, or the distribution of products from a factory, will have a direct effect on the ability to establish an efficient production unit. Industry-specific factors related to the local industry have been a disadvantage in case A. Local competition is often based on supply with lower qualities. New and higher demand on packaging from e.g. the cosmetic industry underpins the need for high quality material. Supply to the market requires an efficient logistic system in all stages of a supply chain, which is a necessity in case B.
Product-specific factors
Product development and innovation form the basis for meeting customer demand and competition with regard to packaging materials. A unique opportunity to meet local demand at a higher service level contributes to the decision to set up a JV in case A. Management is also in a position to use local suppliers for certain customer requirements and customization with other paper qualities. This speeds up delivery time and service level in relation to local customers. Another factor is the capacity to cater for smaller order sizes. This gives management the possibility to overcome diverse political and economic risks by working together with a local partner. The development of a local design centre has been an attempt to meet customer requirements in a more efficient manner in case B.
Product specific factors (e.g. technology; differentiation) in relation to competition can be of great importance in overcoming market barriers in a novel business context.
Firm-specific factors
Firm-specific advantages refer mainly to inherent technological know-how and international market experience. Integration and control over the supply chain are an added advantage in relation to its market rivals, whereas the main market-specific advantage is a growing market for packaging materials in relation to other market regions. From a management perspective, market attractiveness ought to be considered in relation to the risks in the market. High market attractiveness in combination with a high risk is associated with a market uncertainty, whereas a low risk and high market attractiveness can be considered a market opportunity for a firm. Low market attractiveness in combination with a high risk can also be considered as a high-risk market for further investment. In this study, management in case A is developing activities in relation to a market with uncertainty. One reason for this alignment is the fact that the market has a high growth rate (9% in comparison with 2.4% globally), although there is considerable market risk due to uncertainties in the infrastructure and the society in general.
