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Size is far less critical than previously assumed regarding the establishment of an initial presence or beachheads in new markets. Understanding strategic options by performance-to-price relationships serves to identify both competitive opportunities and threats in given products and/or markets. Organizations have two clear choices: 1, Entering the market's main segment; 2, Substitution of a main segment's products from a subsidiary segment. Many MNCs enter markets using the brute force technique, hoping to win through a war of attrition by forcing competitors to surrender market share in the hope of pressure from an MNC being eased. More subtle techniques such as invisibility or segmentation, which exploit a competitor's weak areas, can be used to shield the entrant's actions from the more powerful competitors in a market and are strongly associated with success. These techniques are not only relevant to new entrants, but also to existing competitors in the relevant market and geographic location. These techniques can be utilized by firms regardless of size and resources, for example use by multinational companies (MNCs) of these techniques may achieve a level of invisibility with a different but still important group - political leaders. If an MNC does not appear to threaten local firm or state owned interest, the ability to muster strong political support to prevent the entry will be diluted.

Legislation that requires multinational corporations to dilute their equity in overseas subsidiaries will never be welcome on the fortieth floor. At best it heralds shared ownership and perhaps control; at worst it can mean a reluctant departure from the country. Yet the consequences of such legislation are often surprisingly favorable, as this study makes clear. New product lines and markets, risk diversification, and higher earnings are among the benefits MNCs operating in India enjoyed in the wake of that country's "hostile" equity laws. They did so, in large part, because their managers were prepared to be flexible--and imaginative--in responding to the government's demands. Some, for example, negotiated for manufacturing licenses and other valuable permits in exchange for "Indianization." Others increased exports or introduced high-technology products and thereby fostered the government's economic plans. But whatever strategies they chose, these executives signaled their willingness to strike a balance between their companies' goals and those of their host. And in the end, that may be the most important lesson their experiences teach. [ABSTRACT FROM PUBLISHER]

In this article, Sushil Vachani develops four propositions about how multinationals' operations are affected by differences in the environments of lessdeveloped countries(LDCs), middle-income countries(MICs), and developed countries(DCs).First, LDCs will be less inclined to host multinationals that have advertisingbased assets than those which have R & D based assets. Second, the proportion of multinationals' subsidiaries formed through acquisition will be smaller in LDCs than in DCs and MICs. Third, within LDCs (and MICs and DCs), the size of the country's industrial base is a contributing factor in the formation of multinational subsidiaries by acquisition. Fourth, the size of the local market has an important bearing on the proportion of export-oriented subsidiaries in a country.Vachani examines each of these propositions using a database of overseas subsidiaries of Fortune500 multinationals. Drawing implications for managers of multinationals, the author emphasizes the importance of taking into account the differences in the political and econpmic environment of LDCs, MICs, and DCs when formulating business strategy.

Some authorities in international business have suggested that international markets are becoming increasingly homogeneous, causing more firms to offer global products. Vachani and Wells based on a study of the product decisions of Indian subsidiaries of five multinationals argue that there remain important consumer segments that have special needs which are not met by global products.According to Vachani and Wells, decisions of multinationals and local firms to cater to the special needs of various consumer segments in developing countries depend on four variables: the structure and competitive conditions of their industry segments, the ability to use their traditional competitive advantage in different segments, the ease with which their usual product lines can be extended into new segments, and the availability of more special products elsewhere within the multinational enterprise.