Change Of Entry Mode : a case study of Swedish retail firm in the United Arab Emirate

Abstract: Over a decade, there has developed a strong tendency in International Business studies to discuss the internationalization of multinational corporations. This development is not surprising as the ongoing globalization has pushed corporations to seek entry into foreign markets at a relentless pace. When a firm decides to operate outside domestic market, it has to choose which market to enter, the organizational structure and the entry mode for entering the new market. There are varieties of modes which firms might use to enter to foreign markets, firms, for instance, might chose to use exporting through independent intermediaries to enter to one market, where as in another market might change to either sole ownership or franchising modes. There are several Factors that can cause firm to change from one mode to another. A situation arose where a Swedish retail firm enters to over thirty foreign markets with a particular entry mode, when this firm enter to a certain market in a particular year that is United Arab Emirate, the firm's normal entry mode was changed . The purpose of this study is to investigate what factors (such as internal or external) that caused or was responsible for Swedish retail firm change of entry mode. The study only focus on the internal factors comprises of resources commitment as well as external factors consists of target country laws and regulations. Different theories on factors causing entry mode change together with empirical data were analyzed. The analysis clearly indicates that Swedish retail firm has sufficient resources to compete and operate in UAE and that the nature of UAE law on foreign investment demands that this firm must use UAE agent to establish in the country. The paper however concludes that Swedish retail firm change of entry mode was as result of constraint places by United Arab Emirate laws or policies on their normal entry mode.