Determinants of the Performance of Foreign Brands in Taiwan: Theoretical Framework and Evidence

The strategy use of MNEs to enter the host country or regional market is an important issue in international business strategy. Under different environment and industry structures, different strategies will result in different competitive performances. In international business literature, foreign market entry strategy is no more a new issue. However, with the opening market of Soviet Union, East Europe and China, facilitating MNEs to enter these new markets to exploit economics of scale becomes the interest of research again. The introduction of MNE’s new products to the local market of host country is not the same as the introduction a new local brand. It is quite difficult for local firms to overcome the comparative advantages of MNEs in resources, technology and brand images. Therefore, how to use response strategies while facing the fierce competition also becomes an important issue for incumbent firms in local markets. To fulfill this purpose, we survey the related literatures and try to make an integrated framework uncovering the relationship between foreign market entry strategy and performance of MNEs and the effect of local firm’s response strategies. Furthermore, we use consumer goods to do the empirical study. Some suggestions were made for local firms about how to enter the foreign market and defend themselves from MNEs more effectively