Merger and acquisition is the most suitable exporting strategy for LIDS due to the great benefits it would bring to the company if adopted. Firstly, the company would have an easy and quick entry into the foreign market of interest since the domestic companies it intends to take over already have a well-established distribution network and product line in the countries. Secondly, LIDS would overcome entry barriers and restrictions on fundamental aspects such as materials supply, skills, patents, and technology, which usually delay the entry process into foreign markets. Lastly, the strategy would help the firm remain ahead of the competition by lowering the number of companies in the industry.
Although the strategy can bring a lot of benefits to LIDS, it needs to take note of a few shortcomings associated with this option. Firstly, the strategy lacks the necessary due diligence for entering new markets, which may affect LIDS’ successful entry into its target foreign markets. Secondly, this option is a significant financial investment with high political and market risks. However, these faults can be minimized through conducting intens...
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...nd expand their markets. The main advantages of this strategy are tax subsidies and reduction of the price escalation risks associated with customs, duties, and transportation costs. The main disadvantage of this option is the slow entry into foreign markets.
Companies can also export their products to foreign countries through mergers and acquisitions. A merger is a strategy in which the exporter amalgamates with a domestic company in the foreign country and establishes a new company. In the case of acquisition, the exporter takes over the operations of one domestic company in the targeted foreign company. The main advantages of the merger and acquisition strategy are quick penetration into the foreign market and preventing the entry of new competitors. The main drawbacks of this strategy are the high political and market risks the exporting company is exposed to.
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