The different foreign market entry approaches between Mexico and the Netherlands

MÁSTER UNIVERSITARIO EN ESTUDIOS AVANZADOS EN DIRECCIÓN DE EMPRESAS THE DIFFERENT FOREIGN MARKET ENTRY APPROACHES BETWEEN MEXICO AND THE NETHERLANDS [LOS DIFERENTES ENFOQUES DE ENTRADA AL MERCADO ENTRE MÉXICO Y LOS PAÍSES BAJOS] TRABAJO FIN DE MÁSTER Tomas Johannes Meenhorst. Junio de 2019 Máster Universitario en Estudios Avanzados en Dirección de Empresas Facultad de Ciencias Económicas y Empresariales Departamento de Economía Financiera y Dirección de Operaciones The different foreign market entry approaches between Mexico and the Netherlands [Los diferentes enfoques de entrada al mercado entre México y los Países Bajos] Trabajo Fin de Máster presentado para optar al Título de Máster Universitario en Estudios Avanzados en Dirección de Empresas por Tomas Johannes Meenhorst, siendo la tutora del mismo la doctora Macarena Sacristán Díaz. Vº. Bº. de la Tutora: Alumno: Dª. Macarena Sacristán Díaz D. Tomas Johannes Meenhorst Sevilla, junio de 2019 - III - MÁSTER UNIVERSITARIO EN ESTUDIOS AVANZADOS EN DIRECCIÓN DE EMPRESAS FACULTAD DE CIENCIAS ECONÓMICAS Y EMPRESARIALES TRABAJO FIN DE MÁSTER CURSO ACADÉMICO [2018-2019] TÍTULO: The different foreign market entry approaches between Mexico and the Netherlands [Los diferentes enfoques de entrada al mercado entre México y los Países Bajos] AUTOR/A: Tomas Johannes Meenhorst TUTOR/A: Dra. Macarena Sacristán Díaz LÍNEA DE TRABAJO: Emprendimiento RESUMEN: This research displays market entry approaches for all kind of businesses in the case of Mexico and the Netherlands. It shows a general up-to-date country and market (risk) analysis for both countries by applying a DESTEP analysis. In addition, the outcome of this research can be seen as a guidebook for businesses that are thinking, but do not know how to begin with the idea, of expanding their current business operations. Throughout the research the biggest differences regarding the characteristics of both countries have been outlined while, at the same time, implementing the best possible market entry strategy approaches for each kind of country and business characteristic. For any type of entity willing to expand its current business operations it should take into consideration the nation as well as the local market entry barriers, and giving each single element a level of importance that will help to decide which market to enter and by what market entry strategy. PALABRAS CLAVE: Market entry strategies; Market industry; DESTEP; Mexico; The Netherlands The different foreign market entry approaches between Mexico and the Netherlands - V - List of abbreviations Notation Description CPI Corruption Perceptions Index CSR Corporate Social Responsibility DESTEP Demographic, Economic, Social/Cultural, Technologic, Ecological, Political EFTA European Free Trade Association ERP Enterprise Resource Planning FDI Foreign Direct Investment G20 An international forum for the governments and central bank governors from 19 countries and the European Union GDP Gross Domestic Product HRW Human Rights Watch IMF International Monetary Fund IT Information Technology NAFTA North American Free Trade Agreement NFIA Netherlands Foreign Direct Investment Agency OECD The Organization for Economic Cooperation and Development is forum with over 100 members that try to promote economic growth, prosperity, and sustainable development R&D Research & Development WEF World Economic Forum WTO World Trade Organization The different foreign market entry approaches between Mexico and the Netherlands - VII - INDEX CHAPTER 1. INTRODUCTION ........................................................................ 11 JUSTIFICATION ............................................................................................................. 11 OBJECTIVE .................................................................................................................... 11 METHODOLOGY ............................................................................................................ 12 STRUCTURE .................................................................................................................. 12 CHAPTER 2. MARKET ENTRY STRATEGY .................................................. 13 2.1. REASONS FOR EXPANSION ........................................................................................ 13 2.2. HOW TO ENTER A NON-NATIVE MARKET ................................................................. 14 2.2.1. Factors affecting the decision and timing ............................................................. 14 2.2.2. Market Entry Strategies ........................................................................................ 15 2.2.2.1 . Direct Export ........................................................................................... 15 2.2.2.2 . Indirect Export ......................................................................................... 16 2.2.2.3 . Foreign Direct Investment ....................................................................... 17 2.2.3. Entry Barriers ........................................................................................................ 18 2.2.3.1 . Political Barriers ...................................................................................... 20 2.2.3.2 . Economical Barriers ................................................................................ 20 2.2.4. Marketing Strategies ............................................................................................. 21 CHAPTER 3. MEXICO DESTEP ...................................................................... 23 3.1. DEMOGRAPHY .............................................................................................................. 23 3.2. ECONOMIC ..................................................................................................................... 24 3.2.1. International Agreements ..................................................................................... 25 3.2.2. Form of companies ............................................................................................... 26 3.2.3. Independent helping parties ................................................................................. 26 3.3. SOCIOCULTURAL ......................................................................................................... 27 3.4. TECHNOLOGICAL ......................................................................................................... 28 3.5. ECOLOGICAL ................................................................................................................. 28 3.6. POLITICAL ...................................................................................................................... 29 3.6.1. Legal System ........................................................................................................ 29 3.6.2. Business operations in Mexico ............................................................................. 29 3.6.3. Corruption ............................................................................................................. 30 3.6.4. Avoiding Mexican Corruption ................................................................................ 30 Meenhorst, Tomas Johannes - 14 - 2.2. HOW TO ENTER A NON-NATIVE MARKET 2.2.1. Factors affecting the decision and timing A number of theories and entry mode surveys have been investigated and introduced to interpret the foreign entry mode decision. The decision to properly apply a market entry strategy at the right time is not easy to make, nonetheless they are crucial to compete in the global market (Domazet etc al., 2010). Managers should consider a number of internal and external factors. According to Hollensen (2004), a group of four factors could be distinguished that are believed to affect a decision throughout the process of a foreign market entry. All four factors will be considered and described in further detail throughout the report. 1) Micro factors (examples are: company size, product complexity, international expertise). It is investigated that having employees with international assignment experience helps to diminish the uncertainty associated with international expansion. In addition, for businesses it is interesting that more international experience creates and increases the awareness of (other) international opportunities (Erramilli, 1991). 2) Macro factors (examples are: socio-cultural difference between origin country and entry country, political, market uncertainty, direct or indirect trade barriers). All macro differences between countries could affect the decision on deciding what international market entry mode to use. It could even be of great impact throughout the implementation of a market entry strategy. 3) Desirable entry characteristics (control, risk, flexibility). Each different market entry mode involves a different level of control, risk and flexibility. For this reason, the business needs to have a clear image in mind with regard to its level of involvement. For example, as a rule, highly controlled foreign business operations imply a big commitment and a relatively bigger risk than a less controlled foreign operations. On the other hand, a higher risk generally comes along with a higher return on investment (Kwon & Konopa, 1993). At the same time, a low market entry control mode needs to be elected in case of a lack of available resources in a foreign country. These different types of entry modes, which will be described in section 2.6, brings also less commitment and risk along for the firm. Nevertheless, it is important that sometimes, low control entry modes like a joint-venture or a franchise could bring in relatively more risk than other similar intermediate entry modes (Hollensen etc al., 2011). 4) Business-specific factors (corporate behaviour, transaction costs). Important factor are the transaction costs and the way foreign business partners are able to connect with your business environment and upside down. Transaction costs could be seen as all the costs involved during the process of transferring information and goods as well as the purchase of foreign assets. Each distinct market has different transaction costs due to the size of the market, product and/or service. Any type of business must be aware of the fact that choosing the right market entry strategy as well as sequencing it in the right time could give the enterprise a certain level of competitive advantage in the market. It can make the firm a pioneer – a first mover, second mover, a follower, or the late mover (Magnusson etc al,. 2012). For any type of organization that is going, for example, to the Dutch or Mexican market, in order to be most profitable, it wants to be an early (first) mover. It is to be said that a first mover achieves a better performance compared to late movers (faster ROA, greater The different foreign market entry approaches between Mexico and the Netherlands - 15 - probability and market share). On the other hand, late movers are more superior than first movers with respect to the risk and the amount of initial investment necessary during the initial period of the international expansion (Lieberman & Montgomery, 1998). Again, it is important the amount of risk you would like to take as a firm. 2.2.2. Market Entry Strategies Making the right decisions is key when entering a new foreign or international market. It could help the firm creating its inputs into great outputs. The correct decisions could help the company prosper; on the other hand, taking the wrong step by applying a wrong market entry strategy could result in a very bad brand image as well as in the worst case scenario, bankruptcy. There are a variety of ways businesses could enter a foreign market. The three most common ways are by direct or indirect export or production in a foreign country (Dhingra, 2018). Figure 2.1 highlights common market entry strategies that could lead businesses to success. Figure 2.1. Overview of Market Entry Strategies Source: Dhingra (2018) 2.2.2.1 Direct Export Exporting It is the most traditional and commonly used form of entering a foreign market. Basically, it is the marketing of goods and services produced in the domestic country which are directly or indirectly being sold to the host country. A big advantage applying exports is that there is need for opening a foreign manufacturer which could, eventually, bring along some risk. Next, to a business it gives the opportunity to learn from the foreign markets before highly investing into it (Dhingra, 2018). It can use the data obtained from customers to better understand the market while eventually implementing a more risky form of market entry, like for example a foreign direct investment method. The big disadvantage of this international entry strategy is that an agency problem could arise because of the possibility that a foreign (marketing agent) lacks the right vision, •Exporting •Piggybacking •Counter Purchase Direct Export •Licensing •Franchising •Partnering •Joint Venture Indirect Export •Merger & Acquisition •Turnkey Projects •Greenfield Investments Foreign Direct Investment Meenhorst, Tomas Johannes - 16 - discipline and/or control. In all market entry cases, a firm has to weigh the pros of the strategy against the cons. For example, an American firm wanting to export beverages to Mexico could experience a Mexican agent that has different plans and strategy towards the product, distribution etc. The culture plays a big role in this case as well. It is to be said that a using exporting, the risks of failure are highest in the early stages. A helpful tip is to, for instance, achieve a partnership between importer, exporter, transport and government. By including the four participants the risk associated are substantial decreased. Piggybacking It is an innovative way of entering a market that is difficult to enter and conquer. Applying this strategy, a firm (rider) is producing good and/or services and is using businesses (carrier) in the host market that are willing to add your product to their inventory. It is highly applicable for enterprises with limited exporting activities, limited resources and a lack of knowledge of the foreign market. It is low-risk strategy since you are basically riding on the marketing of the foreign firm (Terpstra & Yu, 1990). Counter Purchase This entry strategy is quite similar as bartering. As a firm you sell goods and/or services to a foreign business and agrees to also purchase goods and/or services from the importer under separate sales contracts. Typically, the goods being sold and exchanged by the two parties are unrelated but may be of equivalent value (Dhingra, 2018). 2.2.2.2 Indirect Export Besides exporting, other useful international market entry strategies exist. Below are highlighted and outlined the following four indirect export strategies including licensing, franchising, partnering and joint venture. Licensing This international market entry strategy is an agreement where your business (the licensor) agrees to let another company abroad (the licensee) the (partial) use of some of your resources, as for example: • Patents and Trademarks • Inventions • Formulas • Manufacturing processes • Design and Copyrights • Know-how • Trade secrets It is a fast and easy way to start in foreign operations and opening the door to low risk manufacturing. The only cost is signing the agreement and policing its implementation. In return, the licensor does receive a loyalty fee from the licensee (Dhingra, 2018). A shorthand definition of a license agreement is a promise by the licensor not to sue the licensee. In any agreement should include a term (length of time), territory (to what territory the right pertain to), renewal provision, and any other limitations deemed important to the licensor. The different foreign market entry approaches between Mexico and the Netherlands - 17 - Franchising Franchising is another easy concurrence for penetrating a foreign market. It works well for business whose business model is facile repeatable and that for those who can easily transferred into other international markets. It goes one step further than licensing. In a franchise agreement, franchisors, you as business granting the license to a third party, not just specify the products and/or services that will be offered by the franchisees (the foreign business who is granted the license to operate under the franchisors trademark and trade name), but also will provide the franchisees with an operating system and support (Lafontaine, 1992). Partnering Partnering is establishing a long-term strategic win-win relationship between two different businesses or entities. It is based on focusing on what each party does best, by sharing financial and other resources. You, as a business could look for possible opportunities that might another business/entity work with you and share information and resources. It will diminish the overall risk since the risk is divided between multiple parties. The agreement can take a big variety of forms from a plain co-marketing arrangement to a strategic alliance for manufacturing. The choice to partner up is a highly useful strategy when international markets where the culture, both business and social, significantly differ from your own domestic manners (Dhingra, 2018). Joint Venture In this market entry agreement at least two parties agree to pool their resources to accomplish a specific task and create a third independently managed company. It is to be said that it is not the same as partnering. It is the 1+1=3 process (Dhingra, 2018). A joint venture can be described as a contractual arrangement between two companies that aim to undertake a specific task. Whereas, a joint venture involves an agreement wherein both parties agree to share profits and any possible loss. In addition, a joint venture will last only for a limited period until the objective of the agreement is achieved. Advantages of a joint venture are the possibly new insights and expertise it gains. For example, the market then could be easier for you to understand afterwards. Also, you will build possible long-term relationships and networks. Disadvantages are that the objectives of a joint venture are not 100 percent known nor communicated to all the people involved in the project. In addition, there will not be an equal involvement. It is unlikely for all parties to be working together to share the same involvement and responsibilities. It is to be said that there is a great imbalance, meaning an imbalance of expertise, assets, and investment. This could create a negative atmosphere to the different businesses who are working together (Hill etc al.,1990). A big hint is to carefully map out in advance what they expect to achieve and how, this could avoid a lot of trouble. 2.2.2.3 Foreign Direct Investment The last type of entry mode in the international market entry is the FDI. In this type of entry mode, the firm gets and will hold full control of its foreign operations. Therefore, this mode will bring along a lot more risk and higher cost than the different types of direct and indirect export strategies. Meenhorst, Tomas Johannes - 18 - Merger / Acquisition Applying this strategy a firm selects a foreign business and merge itself with a foreign investment firm or joins with another firm in order to perform cross-border business operations is merger/acquisition. Normally, mergers are created whenever two different businesses join together to form a new business under a new name etc. In an acquisition, the acquiring company obtains a majority stake in the new acquired business, and does not change its name nor its legal structure. Most research suggests that M&A activity has an overall success rate of 50%. Various research suggests that this is due to mismanagement of risk, price, strategy, culture or management capacity (Sher, 2012). Turnkey Projects This is a strategy highly applicable for companies that offer services such as environmental consulting, construction, architecture etc. Using the turnkey project entry strategy a facility will be built from the group up and then turned over by the foreign party. In most cases, the facility or manufacture will be ready to go and, thus, operations could kick off right away. It is a great manner to start operating in a foreign country since normally the government of the foreign country is the one who is planting and building up the facility from scratch. Furthermore, turnkey projects are highly likely to being financed by an international finance agency, like for example, the World Bank. This will make sure that any risk is eliminated of not being able to pay (Dhingra, 2018). Greenfield Investments Greenfield investments is another way of entering a foreign market using a FDI. As a business, you start operations in a non-native market from ground zero. During the process, you build your operation without any acquisition ideas but with initial investment cost. It requires the purchase of local property and manpower in the country of destination. Some businesses prefer a greenfield investment over an acquisition since they rather start new operations instead of changing a long-established business operations. It will give the enterprise a full control of each of its operations and will diminish the possible risk of losing technical competence to its competitors. On the other hand, a lot of new jobs will be created using this international market entry strategy. Nonetheless there is a high initial cost involved, and the process of a greenfield investment consumes a lot of time beginning from zero. Also, as long as the firm does not possess a blue ocean strategy, the business will face a lot of competition from wellestablished firm. 2.2.3. Entry Barriers Some vital behaviour that any type of business willing to invest in Mexico and/or The Netherlands should comprehend are the lifestyle and culture of both nations. A lot of information needs to be gathered, by a local market research, whether or not the company’s product or service would be seen as a basic need, commodity etc. Some products and services could even be seen as culturally unacceptable. Local market research towards its potential market niche could also detect possible challenges regarding translation, marketing and or advertising. It needs to be understood that, for example, Mexicans do not always require the same package colours, size, styles and product functions as European consumers do. The cultural and lifestyle information that should be retrieved from the local market research should include the following points; The different foreign market entry approaches between Mexico and the Netherlands - 19 - - Cultural preferences, each international market will have different preferences for food, quality level etc. These cultural differences have to be considered in order to understand the demand for the people which, in turn, will help your business apply the best possible market entry strategy. - Materials, it needs to be looked at whether or not the non-native market offers the same available resources as you are used to for creating your product/service. Personal transport and the accessibility of resources like natural gas and electricity are key. For example, if a firm is not able to freely access any key raw materials it could apply an entry market mode called joint-venture where a business is joining up with another business who does have produces or has freely access to this required vital raw material. Nevertheless, more information regarding marketing entry strategies will be discussed in section 2.6 - Languages, the spoken language in a foreign country has an impact on marketing, brand names, the gathering and the interpretation of information through interviews and surveys, advertising and the performance of business relationships. In most cases, the amount of different languages spoken within a nation indicates a plain level of diversity in society and behaviour. Nevertheless, nations where there is only one language spoken could still have areas of extensive culture diversity. - Education, it is a good indicator of the quality of potential work force and the position of the consumers. Moreover, it plays an important role in the growth of a country’s economy and society. In general, education gives people the skills they need in order to help themselves out of poverty or, in other words, into prosperity. - Religion, it plays a crucial factor in most countries since it affects many elements of life within a certain society. For example, it affects the role of women in society, manners/traditions regarding food and beverage consumption, clothing habits and holiday endeavours. In the case of Mexico and the Netherlands, it will be explained by employing a DESTEP country analysis. - Ethics and Values, very important when conducting international business. Almost every province has its own traditions and habits. They normally depend on status, zone, ethnicity and belief. They have to be understood to avoid possible business problems. - Social organization, the cultural composition of families, the preponderance of special-interest groups, racial diversity are also points to be investigated for any type of firm who is interested in entering a potential foreign market. In the end, for any type of product and service the nation requirements are different. Therefore, in addition to this report, your business needs to invest time and money into finding the specific requirements and/or wishes for your specific product and service. This could be done by hiring a local marketeer or by talking to the local people through a survey/interview. Throughout the report a DESTEP country analysis will be presented for Mexico and the Netherlands. It is to be said that it should be a basis for your international expansion. All this gathered information from cultural research will indicate whether or not a nonnative market could be promising or not. In case a foreign market appears to be a great fit for your business to operate in, all information needs to be gathered that could pose an opportunity for a level of risk that is too high or the return on investment will be down to compensate for the incurred business costs. In case a firm has great variety of products and services, a local culture research could also help identify which product(s) or service(s) has the greatest potential of being a success. Meenhorst, Tomas Johannes - 20 - For some businesses a foreign market entry is considered to be a key strategy in order to grow and survive over a longer period of time. At any time they have to take into consideration the key market entry barriers. The following entry barriers have been playing a key role in the arising problems for companies that are looking for opportunities in foreign markets. First of all, it is to be said that in studies it is shown that around 80 to 90 per cent of small and medium-sized enterprises fail their foreign market entry campaign within the first tenyear mainly due the lack of positive entrepreneurship traits. A lack of commitment, limited knowledge, shortcoming of devotion and a scarcity of flexibility (Thomas, 2008). 2.2.3.1 Political Barriers In addition to the (cultural) local market entry barriers seen in section 2.2.3, there are also economic and political entry barriers. Normally, a government of a foreign country develops laws and procedures for the day to day life through its political system. For this reason, your business can not avoid this legal system since it is integrated as being part its nation daily life. Consequently, any company is obligated to act according to the law without avoiding it. There are numerous manners that the political and legal environment could affect foreign business operations. First of all, a nation could directly have a direct impact by changing or by introducing new regulation(s). In addition, the government determines the fiscal and monetary policies that instantly could impact the business cash flow (Rahman etc al,. 2017). Thirdly, it needs to take into consideration the level of political stability. It is a common feature of developing countries (Yeganeh, 2016). A negative relationship is found between political instability and the easiness of doing business. Political instability could also result in higher cost which, in turn will result in a higher risk and a competitive disadvantage. Corruption could also be classified as political instability. It is the abuse of public power for private benefits. The most common forms of corruption are bribery and extortion (Yeganeh, 2016). According to some, there is a negative relation between corruption and potential expansion of business in both for developed as for developing countries, though developing countries are for the most part affected by the existence of corruption (Okpara et al., 2010). On the other hand, like described later in the DESTEP analysis, a nation’s government could also favour foreign business to their economy by opening up and easing its regulation towards foreign investments. This is also referred to as setting up export zones and/or signing international (free trade) agreements (Rahman et al., 2017). 2.2.3.2 Economical Barriers Economical entry barriers is also referred to as the barriers of business in non-native markets where there is a high level of technology, resources, competitive advantage etc. to a level where it is difficult to compete in the market (Robinson, 2005). The most common economical entry barriers are the following; - Cost advantages - Capital requirements - Resources - Competitive advantage - Exchange rate fluctuations - Difficulty in obtaining payments - Comparative market distance The different foreign market entry approaches between Mexico and the Netherlands - 21 - Additionally, a business needs to be aware of past and future lack of tax incentives for companies. An easy cost for any type of firm to reduce is its tax. It does not require an immediate internal change nor does it need a lot of time even though it has a great impact on the profitability of a foreign project (Hollensen, 2004). Also, civil strikes, revolution and wars disrupting foreign markets could have a huge impact of non-native operations, and thus, should be considered as well by any type of firm that is thinking of expanding its current operations (Hollensen, 2004). 2.2.4. Marketing Strategies Whenever an organization makes a behavioural decision to enter a new foreign market is has to decide how to target the market in order for the firm to know where it stands. This will be one of the last steps. The company will be deciding which specific marketing strategy to choose from after having taking into consideration its market entry mode. In case when the business has already a business partner (joint-venture) it could let the local business partner do all the marketing since he is more aware of local market conditions (demand etc.). The same counts for a new foreign supplier. It could be helpful to ride along an already existing firm to take advantage of his supplier connections. The investment and risks involved in establishing a new foreign relationship could be quite high, therefore, a clear plan has to be made for the company’s strategic development. However, once market entry is obtained the enterprise’s new main objective should be developing and consolidating customer relationships. In 1986, five specific ways to target an unknown non-native market were identified by Cunningham and Homse, which are shown in Table 2.2. I. Technical Innovation Strategy Applicable whenever a firm either has a truly imperious product and/or service or is easily able to convince its target market that they do. II. Product Adap ta tion Strategy Is modifying current products/services to its new foreign market. This strategy is driven by different cultures, market development, competition, foreign laws. III. Availability & Security Strategy When determining the availability of a product, and a firm keeps all of its product information secure in order to pursue a higher sense of quality. IV. Low Price Strategy Offering a similar product as the competition, however, offering it a much lower rate. V. Tot al Adaptation and Conformity Strategy A foreign producer is in charge of all the possible needs of the costumer in terms of product, development, delivery, and handling. Table 2.2. Methods to target audience Source: Cunningham & Homse (1986) Some theories proposed by Cunningham require some sort of specific action in the foreign market. For example, in case of utilizing the technical innovation strategy for building a long-term customer relationship the company needs to have or find a supplier that offers products/materials at a high level of excellence. Another example, the total adaptation and conformity strategy requires a highly functional cooperation within supplying firm as well as strongly based customer orientation. A look have to be looked at all possible and enterprise resource planning (ERP) software’s in order to find the right fit for you as well as for the foreign producer. The different foreign market entry approaches between Mexico and the Netherlands - 23 - CHAPTER 3. MEXICO DESTEP This section will give a general DESTEP overview of Mexico as a whole in order for the reader to understand Mexico’s economy and business environment. Next to that, the purpose of this chapter is to outline all factors that could have an effect on foreign business wanting to enter the Mexican market. It will also show the potential Mexico has, and why it should or shouldn’t be considered a reason for your business. This part of the research will be described using the DESTEP analysis. It is a tool which gives a comprehensive overview of a country. It involves the examination and interpretation of a nation’s Demographic, Economic, Social, Technological, Ecological and Politic aspects. 3.1. DEMOGRAPHY Table 3.1 shows the demographical facts of Mexico. Like can be seen, Mexico’s population is really growing it’s touted to soon overtake the population of Japan. Mexico’s population makes it the highest populated Spanish-speaking country in the world. Another very interesting fact is the median age; 28.6 years as of 2019. It is to be said that there is a lot of supply of young people on the market. As a result of a national survey of 2013 held by Roy Campos commissioned by the Mexican government, the Mexican habitants that speak English represents a 12.9% of the total population (Campos & Hernández, 2013). 2019 Population 131,856,135 2019 Population Rank 10 2019 World Percentage 1.72% 2019 Growth Rate 1.20% Age Structure 0-14 years: 26.61% (male 17,143,124 /female 16,378,309) 15-24 years: 17.35% (male 11,072,817 /female 10,779,029) 25-54 years: 40.91% (male 24,916,204 /female 26,612,272) 55-64 years: 7.87% (male 4,538,167 /female 5,375,867) 65 years and over: 7.26% (male 4,079,513 /female 5,063,903) (2018 est.) Total Median Age 28.6 Years Total Life Expectancy 74.4 Years Capital Mexico City Language Spanish Religion Roman Catholic 82.7%, Pentecostal 1.6%, Jehovah's Witness 1.4%, other Evangelical Churches 5%, other 1.9%, none 4.7%, unspecified 2.7% (2010 est.) Literacy Total population: 95.1% Urbanization Urban population: 80.2% of total population (2018) Rate of urbanization: 1.59% annual rate of change (2015-20 est.) Major Cities 21.581 million Mexico City, 5.023 million Guadalajara, 4.712 million Monterrey, 3.097 million Puebla, 2.354 million Toluca de Lerdo, 2.058 million Tijuana (2018) Table 3.1. Mexico Demographic Facts Source: CIA (2019) Mexico has a great number of hydrocarbons and minerals reserves. According to the BP’s Word Energy Review of 2016, Mexico had 10.8bn barrels of oil reserves, a 0.6% of Meenhorst, Tomas Johannes - 30 - National Immigration Institute. The petitioner will receive a reply from the immigration entity within the legal term of 35 calendar days (Instituto Nacional de Migración, n.d.). Nonetheless, it is helpful to first take a look at the page of the Instituto Nacional de Migración to see whether or not you need a visa for your country. All registration and regulation are held by the Foreign Investment Office at the Ministry of Economy. Any company aiming to perform any type of business activity in Mexico needs to obtain authorization from the Ministry of Economy. The same counts for any type of foreign entity that are setting up new businesses using a turnkey investment, greenfield investment, merger and acquisition (ProMexico, n.d.). 3.6.3. Corruption Most people have a negative image towards Mexico because of its corruption. There is no way that we can go around it and skip it in this investigation. It is normal and it should be one of the key deciding factors whether or not investing or doing business in Mexico. It is to be estimated that corruption costs Mexico between 2 and 10 percent of gross domestic product (Warf, 2018). Developing countries, Mexico for example, do not have specific strategies or legal systems to dissuade corruption and, in some cases, it is even being perceived already as normal behaviour (normalized), nonetheless, it has a significant impact on economic growth (Rodriguez-Sanchez, 2018). According to the world Corruption Perceptions Index (CPI), an index that measures the level of corruption, Mexico scores very low. It scores 28 out of 100, putting it on the 138th place of the list that consist of 180 nations. This is quite worrisome level due to the fact that a score of 0 means that a country is highly corrupt and a 100 means a country free of corruption (Rodriguez-Sanchez, 2018). The former president of the United Mexican States, Enrique Peña Nieto, always affirmed that ‘’the Mexican corruption is a culture issue’’ which is deeply integrated in the country’s imagination. However, the new president of Mexico, López Obrador, actually believes that Mexico can change its level of corruption. One of the big projects he is realizing throughout the beginning of 2019 is the reduction of positions available in the government. On top of that he is consecutively increasing wages of those government officials in the lower ranks, who beforehand earned no more than $600 a month. It will make room for those positions who are redundant and fight corruption right where it should start, through the creation of a smaller and more centralized public service (Gómez Farías Mata & Farías Pelcastre, 2019). The Mexican corruption is not to be estimated to be a small influencing factor on the decision to start doing business with Mexicans. There are ways to avoid corruption like, for example, doing business with modern businesses. Normally, they tend to be more educated and ethical. Next will be explained possible ways to avoid corruption in Mexico. 3.6.4. Avoiding Mexican Corruption There are different ways to decrease the level of corruption within foreign operations as well as within a company. In the present day more and more enterprises are having a zero tolerance of corruption while still generating a huge amount of profit. According to Goocher (2018), there are four ways, besides patience, to avoid corruption: The different foreign market entry approaches between Mexico and the Netherlands - 31 -  Align the workforce and build trust. It is essential to hire native employees and then training and developing them. Big companies build national staff groups to guarantee participation in management decisions in order to escape the ‘’them and us’’. It is key to build a culture in which openness and disclosure are the key points. Additionally, it is helpful to have all staff sign an updated code of ethics and/or anti-corruption policy on an annual basis. Another good policy can be to give out long-term stock options to its employees in order to decrease the short term temptation some employees might have (Gocher, 2018).  Creating a relationship with the Government. Get a relationship with local policymakers and leaders who value your brand and investment above selfinterest. Also be tax-compliant. Furthermore, use the relationship to unstrung possible bottlenecks as well as to lobby in order to get to know other entities like NGOs, embassies etc. (Gocher, 2018).  Local Partner(s). Try to find business by applying, for instance, a joint-venture market entry mode. It could provide you with important market information as well as immediate access. Both parties will have to benefit from it so the native Mexican party will not make unethical decisions. In any case, it is recommendable to take board seats and to have the veto right on vital decisions (Gocher, 2018).  Take a look into the supply chain. Lastly, in order not to be perceived as an unethical company, it is helpful to take a right down look into the supply chain. Make sure all suppliers and sub-contractors comply with your health, safety and quality standards. It could also be helpful to give support by giving training and random conferences. As is it the case with partners, look for alignment and total disclosure if deciding for local suppliers. In most cases it is better to do business with those (local) suppliers instead of finding perfection. In addition, note that sometimes local suppliers may not have yet the experience of your type of business standards. Especially, this could be the case in some less developed areas in Mexico (Gocher, 2018). The different foreign market entry approaches between Mexico and the Netherlands - 33 - CHAPTER 4. THE NETHERLANDS DESTEP This chapter will give a general analysis of The Netherlands using the DESTEP metrics. It will outline all indirect and direct factors that should be considered and looked at before deciding whether a business wants to enter the market. 4.1. DEMOGRAPHIC The Kingdom of the Netherlands, which is the official name for the Netherlands is located in Western Europe. It is neighbouring to Germany and Belgium. It is a small country, to give you an accurate example, it is slightly less than double the size of New Jersey. It is known for its canals, tulip fields, cheese etc. The country has 12 provinces from which the provinces, North Holland, South Holland and North Brabant make up for more than half of the entire Dutch population. During the first decade of the 21th century the relative population growth in the Netherlands has been higher than in the European Union as a whole. The total population can be found in the table below. With its country’s density of 488 people per km 2 , the kingdom of the Netherlands is the most densely populated country in the EU. 2019 Population 17,119,415 2019 Population Rank 69 2019 World Percentage 0.22% 2019 Growth Rate 0.28% Age Structure 17.4% in the 0-14 Age group 67.7% in the 15-64 Age group 14.9% in the 65+ Age group Total Median Age 42.6 years Total Life Expectancy 81.4 years Capital Amsterdam Language Official Language is Dutch Majority of People speak English (80%+) Religion Roman Catholic 23.7% Protestant 15.5% Islam 4.9% Other (Hindu, Buddhist, Jewish etc.) 5.7% No affiliation 50.1% Literacy 99% Urbanization 91.5% of total population Major Cities Amsterdam 1.091 million Rotterdam 993.000 The Hague (Seat of Government) 650.000 Table 4.1. The Netherlands Demographic Facts Source: OECD (2018) Meenhorst, Tomas Johannes - 34 - 4.2. ECONOMIC The kingdom of the Netherlands has the six-largest economy in the European Union. With an GDP of 826.2 billion USD and a GDP per capita of $54,423 it is one of the big wealthy nations in the Europe (OECD, 2018b). Throughout the last 4 years the Netherlands is experiencing a trade surplus meaning it exports more goods for more money than it imports. This is mainly due to the amount of goods that come in the country and are being re-exported all throughout Europe (DNB, 2018). 2019 Unemployment Rate 3.6% 2019 Inflation Rate 1.8% Corporate Tax 20% (up to €200,000) 25% (above €200,000) GDP Growth 3.2% Table 4.2. The Netherlands Economic Facts Source: International Monetary Fund (2019) Since the Netherlands is a wealthy and well-developed country is does not immediately imply that the nation is the best possible investment opportunity for any firm. There are always some negative sides which will be discussed starting from here. As of 2019, the current interest level is 0.00%. This brings along a big advantage for foreign firms willing to start up operations from zero. Now, these companies are able to borrow money at a very low interest rate. However, on the other hand is, the low interest rate continues to support rapid house price growth, high levels of household debt and high exposure of mortgages defaults. Basically, it could also be seen as a vulnerability of the Dutch financial system. At the moment the Dutch economy is very stable and growing, but if the EU comes in a new financial crisis, like it did in 2008, it is very vulnerable for all those individuals who will not able to pay off their (private) debt anymore (OECD, 2018). At the moment, the household debt in the Netherlands is 242% of its disposable income. Additionally, since 2010, the unemployment rate has been decreasing reaching a very low percentage of 3.6%. Low unemployment and increasing labour market shortages are putting upward pressure on labour costs and kick in to the ongoing trend towards hiring more works on permanent contracts(OECD, 2018). The World Bank and the International Finance Corporation (IFC) classify the Netherlands on the 117 th place out 185 worldwide economies in terms of investor protection. This score is relatively very low for a European country. 4.2.1. Infrastructure As might be expected, since the Dutch population is the most densely population of the EU, the Dutch infrastructure is highly efficient and specialized in the urban areas. One of the most important facts you need to know of the country’s location is that over 160 million consumers are located within 24 hours of Amsterdam and Rotterdam. This implies that businesses could have a perfect advantage in the European market. Next to that, the three big European rivers (Rhine, Meuse and the Schelde) reach the ocean via the Netherlands. Rotterdam has the world’s 3 rd largest seaport and handles more tonnage than any other harbour in the world. In addition, the Dutch can count on six The different foreign market entry approaches between Mexico and the Netherlands - 35 - international airports. Amsterdam Airport Schiphol, being the largest in the nation it is also the third largest airport in Europe. In the 2018 Global Competitiveness Report presented by the World Economic Forum (WEF) the Netherlands was ranked the best European country in terms of its transport network, water and energy supply. A total of 140 countries were investigated by the WEF. Therefore, it is safe to say that the Netherlands has a very well-integrated logistic network connecting goods, services and people from all over the world (Schwab, 2018). In addition, in 2015 the IMD Business School ranked Holland 1st worldwide in terms of the quality of its water transport infrastructure. 4.2.2. International Agreements The Netherlands is, like any other country within the EU, part of the World Trade Organizations. The WTO is an intergovernmental organization concerned with the regulation of international trade between nations. Holland, is also part of the international monetary fund (IMF), an organization with 189 member countries that works to foster global monetary cooperation within countries in order to facilitate international trade. 4.2.3. Types of companies When deciding doing business in the Netherlands it is important to look at available types of legal business forms. In the most common cases foreign companies after starting business operations choose to create a private company with limited liability (besloten vennootschap met beperkt aansprakelijkheid – BV) or a limited liability company (naamloze vennootschap - NV). The only difference between BV and NV is that shares of a BV are not freely transferable, as it is the case with a NV. This makes BV generally preferable to privately-held companies. If an enterprise is willing to start up a partnership, and therefore, apply the partnership or joint-venture market entry strategy it should apply one of the following legal business entities; General Partnership – (Vennootschap onder firma - VOF) Private Partnership – (Maatschap) Limited Partnership – (Commanditaire vennotschap – CV) It is to be said that a general partnership is most common and less difficult to set up. All business forms must have a trade and should be registered with the Trade Registry of the Chamber of Commerce. A business could also set up a sole proprietorship (eenmanszaak) if the person working alone and starting from zero. An interesting point is that these type persons could apply for a one-year visa which will be discussed in Section 4.5. 4.2.4. Independent helping parties As there are organizations willing to help your foreign business with in Mexico, there are parties in Holland. The Netherlands Foreign Investment Agency (NFIA) is an entity of the Dutch Ministry of Economic Affairs and Climate Policy that helps and advises foreign enterprises (big and small) on the establishment, entering and exploitation of their Meenhorst, Tomas Johannes - 36 - activities within the Netherlands and it does not charge anything for their services. It is a party that has been created over 40 years ago and up till now has helped over 5.000 companies worldwide. Its headquarter is located in The Hague, however it has also offices in the UK, Turkey, Brazil, South Africa, North America, Middle East and Asia. 4.3. SOCIOCULTURAL The culture of the Netherlands is very diverse but it is known for being liberal and tolerant. A multicultural cultural is the right word to refer to all people living and working in the Netherlands. There are just over 2 million individuals who live in the Netherlands but were born there. They represent a total of 200 nationalities, most of them coming from Turkey, Morocco, Suriname and Poland (NU, 2015). The culture of the Netherlands is known for its freedom of speech. People are allowed to say what they want as long as it is not against the criminal laws. For foreign businesses no used to being argued or protested by its employee it could result in severe conflicts. The Dutch will be explored more in detail by using Hofstede six culture dimensions. It will help understand the effects of a society’s culture and the values of its members, and how to relate to their behaviour. The following six dimensions will be outlined in the case of the Netherlands: - Power Distance - Individualism - Masculinity - Uncertainty Avoidance - Long Term Orientation - Indulgence Power Dimension, First of all the Power Dimension. It explains the extent of acceptance to which members who are less powerful in a society and accept that the power is distributed unequally. Basically, it deals with the fact that in some societies individuals are not equal in terms of power. However, The Netherlands scores 38 out of 100. That’s quite low and, thus, suggest that the Dutch prefer equal rights across organizations. Consequently, the power should be decentralized and managers should respect and appreciate their employees. It follows that the attitude towards managers is informal and direct and, in most cases, will be on first name basis. One has to understand that the people can be very direct and straightforward towards other people. This, however, could be seen as an offense in some countries, even though in most cases, it is not meant this way (Hofstede, 2018). Individualism, the second dimensions tackles the question whether people have a preference of being left alone to look after themselves or if they want to be in a closely collective network. Holland has a score of 80 out of 100 and is, as a result, an individualist society. People tend to look after themselves and their direct family instead of their (social/work/sport etc.) groups (Hofstede, 2018). Masculinity, This dimensions implies a masculine side and a feminine side. A low score (Masculine) indicates a society’s preference for success, heroism, achievement and material rewards. On the other hand, a high score (Feminine) represent a nation that cares for others and quality of life. In the case of the Netherlands, it scores 14 on this dimension and accordingly is a feminine society. Holland is a society in which decisions within organizations is achieved through involvement. Next, managers are supportive to their personnel by helping them out when problems arise. Any type of conflicts between people and/or businesses are normally resolved by compromise and negotiation (Hofstede, 2018). The different foreign market entry approaches between Mexico and the Netherlands - 37 - Uncertainty Avoidance, It deals with the level of uncertainty a society has towards not knowing its future. It shows the extent to which people of a culture feel scared by unknown situation and have taken actions in order to avoid all possible type of problems. As stated by Geert Hofstede, the Netherlands ranks 53 on this dimension and therefore, has a slightly preference for avoiding uncertainty. There is an emotional need for rules in these type of societies where time is money. People also tend to have an internal impel to be active and work hard. Exactitude and promptness are key in Holland (Hofstede, 2018). Long-Term Orientation, Checks how a society maintains links with its own past while dealing with the challenges of the present and future. The Netherlands receives a high score of 67 meaning that is has a pragmatic society. Authenticity and certainty depends highly on the circumstances and the moment. They don’t take anything for granted. Also, thriftiness and persistence are key in reaching results (Hofstede, 2018). Indulgence, The last dimensions refers to the level that controls people wishes and incentives, based on the manner they were raised. With a high score of 68, the Dutch culture is evidently one of indulgence. People tend to show and display their devotion to realizing their wishes and impulses. All with the goal of having a good life. The Dutch own in general a positive attitude of optimism (Hofstede, 2018). 4.3.1. Business easiness in the Netherlands Doing business in Holland does not have to be hard. Of course, a lot has to be negotiated in order not to increase your operation costs and lose money. According to the Doing Business Report of 2018 from the World Bank, the easiness of doing business in the Netherlands is not too difficult, for the reason that Holland ranks 36 out of the 190 countries. Mexico, for example, is positioned at the 54 th place meaning that there is in theory not much difference between doing business in Mexico as is to doing business in the Netherlands (The World Bank, 2019). Like it is the case in Mexico, starting new foreign operations, regardless of the market entry mode, brings along some complex and time-consuming challenges. Examples of the possible difficulties are; unfamiliar work culture and business environment, different audit requirements, facilitating revenue growth and expansion facilitation. This could be a great reason for a business to decide starting up a partnership in order to enter a nonnative market. Likewise, it could be a very good reason for a company to decide to work and hire with as much as local employees as possible. 4.4. TECHNOLOGICAL The Netherlands is considered to be one of the best wired nations around the world. It has leading information and communication technology companies. Many companies like Microsoft, Cisco, Intel, Oracle or Google all have business offices in Holland to take advantage of the peerless IT infrastructure. To be precise, around 60% of all Forbes 2000 companies that are active in IT sector have already created business offices (PWC, 2017). Also according to the World Economic Forum Europe 2020 competitiveness report, the Netherlands is the number one country in Europe for outstanding use of Information Technology (World Economic Forum, 2014). This is mainly due to the great universities and enterprises that are located in the Netherlands. For example, Wi-Fi, Bluetooth, Cd’s and DVD’s have all been developed further by Dutch businesses and universities over the last 25 years. Meenhorst, Tomas Johannes - 38 - 4.5. ECOLOGICAL In 2012, the Netherlands had one of the worst ecological footprints in the world. Since then, it has been complying a lot of the new global rules. The ecological footprint indicates the amount of area of biologically land and water an individual requires to produce all the resources he/she consumes and to assimilate the waste that is being created. A normal distribution amongst the global population implies an ecological footprint of 1.8 global hectares (gha). At the moment, according the Radboud University in Holland, we use on average 2.7 gha per person globally. Consequently, each year humankind uses an equivalent 1.6 planets in order to provide the resources we consume and to absorb our waste. In other words, it indicates that it takes the Earth one year and six months to regenerate what we use in a year (van Gemert, n.d.). In 2018, the Dutch parliament signed a new law requiring the Netherlands to cut greenhouse gas emission by 95 percent by 2050. This is necessary in order to comply with the global standers as well as to reduce the risk of a water flooding in the country taking into account that over one third of the Netherlands lies below sea level. The new law that will come in effect throughout 2019 will have established more deeply integrated rules regarding reducing the environmental impact that businesses have (Van den Berg, Meijer, & Potter, 2018). There are many ways for companies to be and act more environmentally friendly. It will show what they are more ethical by trying to protect the environment. Easy ways to do so are by providing filtered water, reduce paper waste, switch to LED light bulbs, or reduce travel and power off computers. 4.6. POLITICAL The Dutch government is a parliamentary democracy, which consists of the King as the head of state and the Council of Ministers. It is to be said that the monarch’s role is very limited. The prime minister is the head of the government. The king acts more as a symbol for maintaining foreign relations. According to the World Bank, the Netherlands is ranked 37 out of all 195 countries as one of the more stable nations in the world, thus making it easier for companies to make medium and long-term decision when deciding to start doing business and participating in the Dutch economy (The World Bank, 2019). Mexico is ranked 147 th in terms of political stability. For any person willing and able to start up a business in Holland has to make sure he/she is able to enter into the country. European Union, European EA and Swiss nationals are allowed to live and work freely around the country. If you do not belong to any of those areas you have to apply for a provisional residence permit (MVV) and in some occasions a work permit (TWV). However, if you’re planning to open up a business in the Netherlands than you can apply for a start-up visa which is a new law that’s in place since 2015. It will allow you to stay in The Netherlands for at least one year. The different foreign market entry approaches between Mexico and the Netherlands - 39 - CHAPTER 5. COMPARATIVE ANALYSIS OF MARKET ENTRIES This section of the report will outline the different findings of the DESTEP analyses that have been performed for both Mexico and the Netherlands. For each single element of the DESTEP analysis, a qualitative data comparison will be made taking into account all possible market entry modes that have been outlined earlier. 5.1. DEMOGRAPHIC In terms of demographic characteristics both nations are completely different. Mexico is an enormous country, to be exactly, the 14 th largest of the world. Though, the Netherlands is just a small country will a lot less citizens, but with the most highly densely populated population in the European Union. This portrays a huge ‘’local market potential’’ since all people live close to each other. On the other hand, Mexico is a huge country with a lot of space between the major cities. This suggests that a big logistic firm will most likely be contracted in order to eventually target multiple Mexican cities. Consequently, the total transaction cost of the market entry strategy will most likely increase substantial. For a business to quickly saturate the Dutch market it, by taking advantages of the fact that most people live very close to one another and the fact that the big cities (Amsterdam, Rotterdam, The Hague, Utrecht) all are within a 25 minutes distance of each other, it could be a good approach to implement the market entry mode called partnership. You will be partnering with between importer, exporter, transport and government. There is a low risk involved for the foreign firm who is starting its business operations in the Netherlands since the local partners know the market very well and will also do their out most best in order to generate more money for themselves. This being said, it is advice able for the international company to, while convincing the government to be in on it, make sure it presents the spokesperson of the Dutch government all advantages for the Dutch society as well as showing that it is a long-term project. Knowing that Mexico is a huge country and by targeting as much potential customers from all the country it could do so by putting into effect piggybacking. It could benefit and ride on distribution channels of already existing nationwide business operations that provide a similar product or service. Also, it should not be mistaken that Mexico also has quite a strategic demographical location. The nation consist of 63 international airports and it could be a great starting point to afterwards enter the Latin America and the North American markets. As presented earlier, the percentage of English speakers in Mexico is just 12.9%. This requires employing Spanish-speaking personnel internally in order to be able to fully interact with its foreign Mexico business operations. Another options could be to secure a Mexican partner who is willing to partner up or help you out with exporting, market researches, negotiations etc. Though it is to be understood that for any type of domestic business it is favourable to speak its own national language. It will break a big socialcultural barrier. The Netherlands is a country with a high level of English. It has one of the highest rates for English proficiency in the world. A lot of business in the day to day life in the Netherlands is being done in English. Therefore, if a business speaks a high level of English, there should not be any problem conducting business in the Netherlands. In this case, if the business is thinking of an investment in the form of a controlling ownership in a business (FDI) it could easily do so without having to take care of big language entry barrier. Meenhorst, Tomas Johannes - 46 - In any case companies still need to seek advice from (local) country experts to understand the local conditions since, in the case of Mexico, a huge country includes a lot of provinces that have local government entities that are not as governed as much by the national government due to distance and economical importance. In addition, any type of business should always make sure it has the approval from the government entities. This does not only apply for market entry strategies in Mexico or the Netherlands, it does apply for any type of nation. Table 5.5 summarises the principal issues of the political comparison. Analysis: Consequences: Mexico Unstable Country - For now still seen as a corruptive country (Use a joint venture or partnership to avoid corruption for a certain part). The Netherlands Stable Country - Seen as a tax heaven by European Parliament due to tax advantages for Dutch businesses (Therefore, start from scratch applying a FDI) Table 5.5. Political Comparison Summary Source: The Author The different foreign market entry approaches between Mexico and the Netherlands - 47 - CHAPTER 6. CONCLUSION AND RECOMMENDATIONS By now we are aware of the general country conditions of both Mexico and the Netherlands. They show the key indicators that could play a big role within the country together with your final decision. In the end, there are companies that are planning to instead of entering one market, to enter various nations at the same time. Some enterprises believe that they need more than one foreign market in order to guarantee an adequate sales figure, with the aim of justifying alterations to its product/services and production procedures (Domazet et al., 2010). First of all, it needs to be made clear that in not all cases the business could implement the same market entry strategy due to all the differences (cultural, political, demographical, economical, etc.) that have been made clear throughout this master thesis. As described earlier in Section 2.2.3, a local market barrier research has to be conducted for both countries by any type of businesses to know whether the company’s product or service would be seen as a basic need or as a commodity. Some products and services could even be seen as culturally unacceptable. Local market research towards its potential market niche could also detect possible challenges regarding translation, marketing and or advertising. Next, the DESTEP country analysis has to be understood and a choice has to be made between a Direct, Indirect or a Foreign Direct Investment as a market entry strategy. In any type of firm different market entry nodes apply to the two countries due to the nature of their product and/or service. Generally, as described in Section 2.2.2, each single entry strategy relates to different type of enterprises. The biggest different foreign market entry approaches between Mexico and the Netherlands mainly relate to political, demographical, economic and sociocultural factors. Both countries are completely different to one another, and therefore it needs to be understood by businesses the purpose of its product and whether or not there is a need for those type of business/products. As described in Chapter 5, each DESTEP analysis factor proposes a different market entry approach for each country. It has to be internally understood within a firm which aspects are being considered as more important and whether or not the business is capable of exploiting that specific factor. A lot of different market entry nodes have been presented throughout this research while analysing various different country characteristics. It is to be said that for each single company other key point indicators have a different level of importance. Likewise, each company provides a different kind of product/service, meaning it should always first take into consideration the level of importance the company has towards all various country characteristics as well as the country’s product/service requirements. To summarize and to conclude, in all cases, if a business is deciding to expand their current operations and, for example, is thinking of opening up operations in Mexico or in the Netherlands it should proceed as follows: 1. First of all, a list has to be made by the firm to come across the vital characteristics that a country or region must have. 2. A business should look at all the possible countries that could be a potential country of interest. 3. All different market entry modes that have been presented throughout this master thesis should be analysed in order to understand a potential entry node fit for the company. 4. A local market research has to be conducted in order to understand any prospective (local) entry barrier(s). Meenhorst, Tomas Johannes - 48 - 5. As a result, a list should be made with pros and cons in order to know what characteristics your business is giving more importance to, and to know what specific country fits best for the firm. It has to be investigated while understanding the local needs for its product or service within its given industry. 6. 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