Question

Explain how the host government may affect strategic implementation in an alliance or another form of entry strategy.

Answer 1

While deciding an entry strategy for an alliance, the government plays an important role in facilitating or restricting the activities of the business entity. The factors used here are:

1. Taxation: The taxation system of the host country affects the entering business or alliance to a larger extent which is completely described by the host country's laws and taxation policies. Some countries have low taxation for the businesses, however, some of them solely rely on the taxation in their country.

2. Domain related economic policies: The economic (monetary and fiscal) policies both help and restrict the alliance entities and make a country attractive or restrictive for the business to step in. The government may choose to be open and let free trade happen or it may impose several restrictions and create a level of difficulty while transacting in the market.

3. Grants and allowances by the govt: The growth of a business and alliance in a host country depends on the involvement of the host country in the business activity. This is also affected by the grants and allowances of the govt for the domain or the level of foreign direct investment allowed by the govt for the firms abroad to enter and work in the country.