International Business Entry Case Study

Students will be assigned a large corporation to research. They will explore the best methods for entry into a new market by the corporation.

The Facts:
It is no secret that Microsoft continues to dominate the software industry in the U.S. Additionally, Microsoft derives over half its annual revenues from overseas operations. Microsoft has developed an interesting and highly effective strategy for entering new foreign markets.
Listed below are some key points to consider:

• Microsoft programs are considered the standard against which other software is measured and are used throughout the world.
• The company currently counts on sales in Europe and Japan for a substantial portion of its revenue, but feels that emerging markets such as China, India and Eastern Europe will become more important in the future.
• Microsoft's strategy for entering new markets involves hiring a local manager to set up operations. The local manager then hires other locals in an effort both to gain knowledge of the local marketplace and to make a symbolic goodwill gesture toward the host country.
• The company then forms alliances with smaller, local companies that allow the firms to market Microsoft products. It is Microsoft's hope that its strategy will result in local software industries specifically linked to local circumstances.
• Microsoft's reliance on local partners has allowed it to be effective in product distribution and sale, minimize difficulties with local languages, and even reduce problems associated with product piracy.
• Critics warn, however, that relying heavily on local partners could result in long term problems including a loss of corporate culture and product quality and distribution problems.

Based on your text readings, class material and class discussions; respond to the following questions?

1. What are some relative advantages and disadvantages of using smaller local partners vs a large local partner?

2. Are there countries where Microsoft's strategy might not work?

3. What other kinds of businesses might find Microsoft's strategy to be effective?

4. How might Microsoft need to change its strategy once it has established a strong position in a foreign market?