They are often characterised by immature markets and

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Unformatted text preview: them might face the challenge of an unreliable and immature supply industry. Compounding the problem is the fact that the bulk of research on internationalisation has focused on developed countries (Bhaumik & Gelb, 2005). A gap, therefore, exists on the internationalisation by developed country MNCs into emerging markets (Demirbag, Tatoglu, & Gleister, 2008). It is this gap this research seeks to narrow. This research is a study of one MNE’s (Wal-Mart) entry into an emerging economy (South Africa), focusing on one element of the entry strategy, that of stakeholder engagement. The researcher’s interest is on the manifestation of the strategy on implementation and not so much the formulation of the strategy. As discussed in Chapter One, Wal-Mart is the world’s largest retailer on many measures. Retailers are particularly close to the environment, given that their business involves daily contact with people and stakeholders. Retailers receive a good deal of attention from stakeholders because they sell what is basically an essential need, food, 14 directly to the consumers. For example, when food prices go up, retailers are often blamed, rather than the upstream industries in the value chain. Countries such as the United Kingdom, Australia and South Africa, have had their competition authorities scrutinise food retailers in response to public outcries, while many emerging markets of South East Asia historically restricted participation in the food retail market. Food is also regulated for safety reasons, as well as to monitor prices. Indeed, the world has seen sporadic food riots threatening state security in response to very high food prices. In addition to the above, retailers have an impact on other industries and sectors, as well as on employment in their host countries. They are the channel through which farmers get their produce to market. They employ local labour, particularly unskilled and semi-skilled. Indeed retailers are embedded in the communities in which they operate, unless they operate indirectly through agents or locally controlled joint ventures. Despite these challenges, global retailers have more recently increased their internationalisation, and as in other sectors in the current environment, this has largely involved developed country MNE’s moving into emerging markets. One of the key issues that inevitably face retailers entering new markets is how they relate to stakeholders such as government, regulators, suppliers and civil society organisations. The literature review will cover internationalisation with particular focus on the retail internationalisation process (RI); and stakeholder management literature with a focus on stakeholder management during retail internationalisation. Although the topics are discussed under the different headings, they are in fact integrated and should not be viewed in isolation from each other. Both retail internationalisation (RI) and stakeholder management are broad management study areas, and lessons need to be drawn from these general fields before focussing on the retail segment specifically. There are 15 different schools of thought on retail internationalisation, with one suggesting it be treated as part of internationalisation literature so that insights can be drawn from studies in other industries (Vida & Fairhurst, 1998), while others suggest that RI should be treated separately because of the peculiarities of the sector (Alexander & Myers, 2000). While Alexander and Myers (2000) are persuasive in submitting that RI be treated as a stand-alone study area, the researcher found insights in the general internationalisation theory that have relevance to the research topic. Consequently, this research covers both areas. 2.2 Internationalisation Literature 2.2.1 General Internationalisation Theory Internationalisation and Foreign Direct Investment (FDI) are the most researched areas of international management (Canabal & White III, 2008). Despite this, there is still a great deal of divergence on internationalisation theory and various authors have called for greater integration. The most prominent theories on international expansion are discussed below. Verbeke (2009) traces internationalisation theory to the early eighties with the appearance of articles on globalisation and its impact on MNEs. The starting point of this theory is that MNE’s go abroad to take advantage of their Firm Specific Advantages (FSA) that have made the firm successful in the home market (Rugman, 2009). These FSA are factors or strengths that are proprietary to the firm that give it a competitive advantage. Rugman (2009) defines it as a unique capability proprietary to the firm. They may be technological, knowledge, skills, management or marketing-based (Rugman, 2009; Verbeke, 2009). Verbeke (2009) further categorised FSA into internationally transferable FSA and non-transferrable (location bound) FSA. Pralad and Hamel (1990) 16 further narrowed this down by suggesting that managers of firms seeking international expan...
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This document was uploaded on 01/24/2014.

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