Globe: Investment and Comparable Institutional Contexts Essay

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Based on your institutional context decide whether you’ll adapt your business model, change the institutional context or Stay away

Many CEOs are wary of emerging markets and prefer to invest in developed nations
-Many corporations enter new lands because of senior managers’ personal experiences, family ties, gut feelings, or anecdotal evidence. Others follow key customers or rivals into emerging markets; the herd instinct is strong among multinationals.
-Companies use composites to analyze a nation’s potential. However should only be used between countries with comparable institutional contexts
- Its impossible to tell developing countries apart even though the market infrastructure in them varies widely
5 contexts framework lets executives map the institutional contexts of any country (setr of questions that companies can ask to create a map of each country’s context and to gauge the extent to which businesses much adapt their strategies to each one.
1. Political and social systems- shape market contexts
a. Every country’s political system affects product, labor, and capital
b. Relationships between ethnic, regional, and lingusitc groups also affects foreign investors
c. Need to identify a country’s power centers such as bureaucracy, media, and civil society and figure out if there are checks and balances in place. Also how much power does gov have
2. Openess- shape market context
a. Countries that welcome direct investments by multinationals or entering country through joint ventures, but also welcoming ideas. China vs India
b. Easier to function in markets that are more open because they can use the services of both local and local intermediaries, however a gov that allow local companies access to global capital markets it neutralizes one of foreign companies’ key advantages.
3. Product markets-
a. Companies struggle to get reliable consumer info especially ones with low income
b. Market research and advertising is in its intimacy in developing countries, and it is difficult to find research on consumption patterns, etc
4. Labor markets
a. Multinationals have
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