Kraft Market Entry Strategy

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1.0. Market Entry Strategy

1.1. Theory

According to the resources-based view (RBV), every entry mode plays a significant role for multinational corporations (MNCs) in order to enter the foreign markets with the intention of making use of the capabilities or resources in the host country (Ekeledo & Sivakumar, 2004). Foreign Direct Investment (FDI) involves Wholly Owned Subsidiary (Greenfield and Acquisition) and Joint Venture (minority, 50%/50%, and majority) (Bitzenis, 2012). According to information provided by the KPMG (2013), there are no minimum requirement of ownership and share of foreign equity investment in any sector. In order for Kraft to enter the unfamiliar soft drinks industry and take advantages to the natural
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Limitations

There are so many advantages for Kraft to receive from Mehran Bottlers in order to enter soft drinks industry in Pakistan. However, there are some limitations for JV strategy. Thus, Kraft should take into account in the planning, consideration and preparation before entering Pakistan and having partnership with local company - Mehran Bottlers.

First of all, it is high chance that the two partners will have argument over control as each of them has used to have control over their companies. To explain this, different directors from both companies have to make decisions about how to run the venture. There is high chance that internal conflict will happen over two partners. Therefore, more time consuming in terms of negotiation on different perspective.

Besides that, there is high chance that the cultural war will happen between two partners. Moat companies are proud about their culture built in their company. However, when two companies’ culture are merged into one enterprise, company pride will form arguments and conflict about using one company’s systems over another. For example, U.S is more likely in low-context culture, whereas Pakistan is high-context culture. The directors from Kraft will be straight spoken when it comes to meeting, whereas the directors from Mehran Bottlers will communicate with unspoken context. Hence, there will be misunderstanding or conflict happened during the meeting due to the different opinion about the

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