The main reason for the investment in a JV in case A is a growing market for dairy products
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 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. (more…)