Question

Discuss three reasons for firms seeking new market opportunities. Illustrate each with an example of a firm.

Answer 1

1. Compete with key rivals in their own markets-Some MNEs may choose to confront current or potential competitors directly, in the competitors' home market. The strategic purpose is to weaken the competitor by forcing it to expend resources to defend its market. For example, in the earth-moving equipment industry, Caterpillar entered a joint venture with Mitsubishi to put pressure on the market share and profitability of Komatsu, their common rival. Expending substantial resources to defend its home market hampered Komatsu's ability to expand its activities abroad.

2.access to new markets or opportunities-The existence of a substantial market motivates many firms to produce offerings at or near customer locations. Example for this is chip making company Intel. When it enters into Indian market they know that there were so many demands.

3. Undiscovered new market- Many new markets are there which requires new technology and upgradation and by working towards it, will create benefit.