ENTRY STRATEGY INTO VIETNAMESE ENVIRONMENTAL MARKET A CASE STUDY OF ALTECH ENVIRONMENT PTE LTD

ENTRY STRATEGY INTO VIETNAMESE ENVIRONMENTAL MARKET
A CASE STUDY OF ALTECH ENVIRONMENT PTE LTD

by

Dang Tran Bao Hanh

A research study submitted in partial fulfillment of the requirements for the degree of Master
in Business Administration

Examination Committee

Dr. Do Ba Khang (Chairman)
Dr. Fredric W. Swierczek
Dr. Lalit M Johri

Nationality
Previous degree

Vietnamese
Graduate Diploma in Business Administration SAV
Program

Scholarship Donor

Government of Switzerland/ Swiss Agency
Development and Cooperation (SAV program)

Asian Institute of Technology
School of Management
Bangkok, Thailand

April, 2000

i

for


Acknowledgment
It is a rare pleasure for me to express my profound gratitude and thanks to Dr. Do Ba Khang,
advisor to this research, for his valuable guidance, explicit direction, and encouragement
throughout this research.
I also want to give my sincere thanks to Dr. Fred and Dr. Johri for serving as members of the
examination committee together with their constructive and useful advice.
My acknowledgements are due to Swiss - AIT - Vietnam Management Development Program
and Swiss Government who gave me a great chance to participate in MBA study by providing
financial support.
My special thanks also go to the management of Altech Pte Ltd Company, especially Mr. Goh
Boh Chung, for providing me helpful information and giving critical comments on this
research.
My thanks are also extended to the companies and organizations in Vietnam for their help
and cooperation during period of my data collection in Vietnam.
Thank all SAV5 members and those who have made my MBA study an unforgettable
memory.
To all my lovely friends, I give my sincerest appreciation for their warm encouragement,
friendship and help at all times, especially their motivation during my studying time.
I shall forever remain grateful to my beloved parents and my elder brother who want to see a
constant progress in my life for their eternal love and enduring encouragement during my
whole life.

ii

Abstract

Throughout the world, communities are confronted with evidence of environmental pollution.
A growing number of environmental problems are global in scope and face all communities.
Developing countries, including Vietnam, therefore have to cope with the dual problems of
poverty and the consequences of environmental and natural resource degradation.
Development policies and strategies therefore need to be designed and implemented to both
alleviate poverty and improve community living standards, and to protect the environment.
Besides that, Vietnam has adopted a policy strategy that encourages and is dependent upon
foreign investment. A crucial priority for the development plans of the Vietnamese
government to the year 2020 is attracting and utilizing a significant infusion of foreign capital.
Coming form the demand of expansion business overseas, especially to developing countries
such as Vietnam, Laos, Myanmar, a case study was undertaken to devise market entry
strategy for a Singaporean company to enter the environment sector in Vietnam. The study
was conducted to examine the business in environment industry and to determine whether
the industry is attractive for foreign companies to enter Vietnamese environmental market.
The company situation analysis was carried out to determine the strengths, weaknesses,
opportunities and threats for Altech Company. Moreover, the strategic audit withdrawn from
company reports has helped further understand the current situation and strategic posture of
the company.
Finally, various options for entering the market were analyzed and the choice of most suitable
entry strategy was proposed with their advantages and disadvantages as the outcome of this
research.

iii


Table of contents

ACKNOWLEDGMENT ..............................................................................................................................................II
ABSTRACT .................................................................................................................................................................III
LIST OF FIGURES......................................................................................................................................................VI
CHAPTER 1 ...................................................................................................................................................................1
INTRODUCTION ..........................................................................................................................................................1
1.1. BACKGROUND.................................................................................................................................................1
1.2. PROBLEM STATEMENT.....................................................................................................................................1
1.3. OBJECTIVES.....................................................................................................................................................1
1.4. METHODOLOGY...............................................................................................................................................2
Stage 1: Preliminary study of Vietnamese environmental market.....................................................................2
Stage 2: Company analysis...............................................................................................................................2
Stage 3: Action plan design...............................................................................................................................3
1.5. RESEARCH FRAMEWORK.................................................................................................................................3
1.6. STRUCTURE OF THE STUDY..............................................................................................................................3
CHAPTER 2
...........................................................................................................................................................................................5
LITERATURE REVIEW .............................................................................................................................................5
2.1. ENTRY STRATEGY............................................................................................................................................5
2.1.1 Entry strategy...........................................................................................................................................5
2.1.2. Elements of Entry Strategies...................................................................................................................6
2.1.3. Mode of Entry..........................................................................................................................................7
2.1.4. Advantages and Disadvantages of each entry mode .............................................................................11
2.2 DISCUSSION: PROBLEMS AND SOME EXTENSIONS OF THE STATE OF MARKET ENTRY THEORY........................12
2.2.1 Introduction............................................................................................................................................12
2.2.2.Country of Origin-Specific Effects on the Market Entry Decision..........................................................12
2.2.2.1. Comparative Advantages.....................................................................................................................................13
2.2.2.2. Cultural................................................................................................................................................................13
2.2.2.3. Organisational and Institutional...........................................................................................................................14
2.2.2.4. Political-Economic..............................................................................................................................................14

2.2.2.5. Governmental Strategy........................................................................................................................................15

2.3. ENVIRONMENTAL TECHNOLOGY INDUSTRY..................................................................................................16
2.3.1. An era of environmental awareness......................................................................................................16
2.3.2.Overview of environmental technology..................................................................................................17
CHAPTER 3..................................................................................................................................................................20
EXTERNAL ENVIRONMENT ANALYSIS ...........................................................................................................20
3.1. MACRO ENVIRONMENT ANALYSIS.................................................................................................................20
3.1.1. Economic trends and outlook................................................................................................................20
3.1.2. General remarks on the regulatory environment...................................................................................23
3.1.3. Major Political Issues affecting the business climate............................................................................24
3.2. ENVIRONMENTAL INDUSTRY..........................................................................................................................26
3.2.1. Background on Vietnam’s environment and its biological resources....................................................26

iv


3.2.2. Environmental issues in Vietnam...........................................................................................................27
3.2.3. Environmental management in Vietnam................................................................................................28
3.2.3.1 Legal framework in environmental management in Vietnam..............................................................................28
3.2.3.2. Institutional framework in environmental management in Vietnam...................................................................29
3.2.3.3. Environmental strategies and plans in Vietnam..................................................................................................30

CHAPTER 4..................................................................................................................................................................32
COMPANY SITUATION ANALYSIS .....................................................................................................................32
4.1. COMPANY PROFILE........................................................................................................................................32
4.1.1. History..................................................................................................................................................32
4.1.2. Background of Business........................................................................................................................32
4.1.3. Scope of activities-Product and services...............................................................................................33
4.2. STRATEGIC AUDIT OF ALTECH PTE LTD........................................................................................................34

4.2.1. Altech’s vision......................................................................................................................................34
4.2.2. Altech’s business strategy.....................................................................................................................34
4.2.3. Altech’s corporate objectives................................................................................................................35
4.3. PERFORMANCE..............................................................................................................................................35
4.3.1. Projects performed................................................................................................................................35
4.3.2. Financial data.......................................................................................................................................36
4.4. STRATEGIC MANAGERS.................................................................................................................................38
4.5. MAIN CHARACTERISTICS OF THE TOP MANAGEMENT...................................................................................38
4.6. ALTECH’S ORGANIZATION STRUCTURE..........................................................................................................39
4.7. INTERNAL AND EXTERNAL ENVIRONMENT: STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS
(SWOT) ANALYSIS...............................................................................................................................................40
4.7.1. Internal environment.............................................................................................................................40
4.7.1.1. Strengths of Altech..............................................................................................................................................40
4.7.1.2. Weaknesses of Altech..........................................................................................................................................41

4.7.2. External Environment...........................................................................................................................42
4.7.2.1. Opportunities for Altech......................................................................................................................................42
4.7.2.2. Threats for Altech................................................................................................................................................44

4.7.3. Altech’s competitive advantage.............................................................................................................44
4.8. TOWS MATRIX..........................................................................................................................................45
WO Strategy....................................................................................................................................................46
ST Strategy......................................................................................................................................................46
WT Strategy.....................................................................................................................................................46
CHAPTER 5..................................................................................................................................................................47
PROFILES OF MAIN COMPETITORS IN VIETNAM .......................................................................................47
5.1. CHI MEI INTERNATIONAL TECHNOLOGY CO.,LTD........................................................................................47
5.1.1. Company background and philosophy..................................................................................................47
5.1.2. Overview of Chi Mei International Technology Co.,Ltd........................................................................48
5.1.3. Overview of Chi Mei Entech Co., ltd.....................................................................................................48

5.1.4. International Technology corporation (IT Corp.).................................................................................49
5.1.5. Goals.....................................................................................................................................................49
5.1.6. Scopes of services..................................................................................................................................50
5.1.7. Business expansion and market entry....................................................................................................51
5.1.8. Market Entry Mode...............................................................................................................................51
5.2. SALCON LIMITED...........................................................................................................................................51
5.2.1. Salcon Pte Ltd: Overview......................................................................................................................51
5.2.2. Company background...........................................................................................................................52
5.2.3. Scope of activities..................................................................................................................................52
5.3. OTHER CONSTRUCTION COMPANIES DEALING IN ENVIRONMENTAL INDUSTRY..............................................56

v


5.3.1. Construction Company..........................................................................................................................56
5.3.1.1. Investment and Construction Development Company (INVESCO)...................................................................56
5.3.1.2. Water construction company limited (WACO)...................................................................................................58
5.3.1.3. Viet Chau Construction Co.,ltd...........................................................................................................................59

5.3.2. Treatment technique company-P&G Engineering Pte Ltd....................................................................60
CHAPTER 6
.........................................................................................................................................................................................62
DESIGN OF ACTION PLAN .....................................................................................................................................62
6.1. PHASE I : SET UP REPRESENTATIVE OFFICE IN HOCHI MINH CITY.................................................................62
6.1.1.Objectives...............................................................................................................................................62
6.1.2. Activities................................................................................................................................................62
6.1.3. Duration................................................................................................................................................62
6.1.4. Human resources..................................................................................................................................63
6.1.5. Budget...................................................................................................................................................63
6.1.6. Advantages............................................................................................................................................63

6.1.7. Challenges ............................................................................................................................................63
6.2. PHASE 2: SET UP A BUSINESS ENTITY............................................................................................................64
6.2.1. Alternative 1: Joint venture with local companies.................................................................................64
6.2.2. Alternative 2: Altech’s wholly-owned company.....................................................................................65
REFERENCES .............................................................................................................................................................66

LIST OF FIGURES

Figure

Description

Pag
e

2.1

Elements of in International market entry strategies

4

2.2

Factors in entry mode decision

13

4.1

The projected sales and profit for 2000 to 2005

43

4.2

Chart on projected turnover and profit before tax form 2000-2005

43

vi


Chapter 1

Introduction

1.1. Background
Issues of environmental pollution increase day by day. Many countries are concerned with
this matter, and try to sustain the environment from the damage. There is an increasing
awareness in both the municipal and industrial sectors on the importance of the water and the
environment. Legislation is continually imposed to control the quality of supply water and
wastewater that is discharged. Awareness is slowly but surely being placed on contamination
of soil/groundwater on land used by industries. This trend will continue in the Asian region
until standards are compatible with or exceed present U.S. and European standards.
In the pursuit of ISO 14000 accreditation, increasingly more companies are looking at the
responsible discharge of wastes from their manufacturing facilities. In order to minimize the
wastage and high costs of disposal, an emerging market in resource and recycling is also
made available to companies like Altech Environment.
Altech Environment Pte Ltd is a specialist environmental engineering company in the fields of
water and wastewater treatment, contaminated soil/groundwater remediation, air pollution

control and resource recovery and recycling. It possesses expertise and experience in water
recycling, heavy metals recovery, composting, biogas-from-waste generation etc. which all
contribute to waste minimization and resource recovery.
This research work aims to provide some information about environmental market in Vietnam
to countries which are attracted by this potential market from the perspective of entry strategy
in general; and to give some recommendations on the most suitable entry strategy for Altech
Environmental Pte Ltd in particular.

1.2. Problem statement
This research is dealt with these two following problems:


What are the business environments trends in Vietnam for the environment industry?



What kind of entry strategy should be adapted by the Altech Environmental Pte Ltd in
order to expand its business into Vietnam Environmental market?

1.3. Objectives
The overall goal of this study is to help the Altech Pte Ltd with the most appropriate entry
strategy when entering Vietnamese environmental technology market. The study also help to
provide the management of Altech Pte Ltd a business environment in Vietnam through:

1




the macro environment in Vietnam, involving its politics, legal, culture and economy



the environmental sectors in Vietnam



the advantages and disadvantages of various international entry strategies

The study of external environment, competitive advantages of the company, its strengths and
weaknesses, opportunities and threats is also conducted to come up with the best
alternatives. Then, an action plan for Altech Environmental Pte Ltd is designed.

1.4. Methodology
This research is conducted in 3 stages:
Stage 1: Preliminary study of Vietnamese environmental market
A preliminary study of Vietnamese environmental market was carried out to understand the
external and internal environment conditions such as the political, economical, social,
business:


economic trends and outlook



general remarks on the regulatory environment



major political issues affecting the business climate



background on Vietnam’s environment



environmental issues in Vietnam



environmental management in Vietnam

The above details were obtained through reports from UNDP, from European commission,
the socio-economical statistical (1998-1999) and through interviews with Mr. Tran Nguyen
Hien, Vice Director of the Management Department of the Department of Science,
Technology and Environment.
Stage 2: Company analysis
A comprehensive study was carried out in Altech Pte Ltd and a strategic audit of the company
was conducted. The study included the


Overview of Company



Technology capabilities of the company



Organizational strengths, weaknesses, opportunities and threats along with its
competitive advantage and core competencies

2


The company’s analysis was done based on the information to be collected during personal
discussions with the respective company’s Project Directors: Mr. Goh Boh Chung and based
on the information of the company’s business plan.
Stage 3: Action plan design
Following company analysis and a study of market environment, the identification and
evaluation of various strategic options are suggested to Altech.

1.5. Research Framework
Literature Review

Environment:
Economic

-

Industry:

Policies
Political
factors
Socio
factors
-

Segmenta

-

s

Market:
l

Companie

-

Competiti

-

Strategies

-

-

s
-

Structur

e

Deman
d

on
-

Potentia

-

tion

Company
profiles:

Capabili

ty

Segme
nt

Resour

Share

ces

Alternatives Entry Strategies

Action Plan Design

1.6. Structure of the study
Chapter 1: Presents the research background, targeted problems, research methodology,
research framework and limitation of the study
Chapter 2: Introduces the literature review of relative previous researches and theories
Chapter 3: External environment analysis

3


Chapter 4: Internal environment analysis
Chapter 5: Profile of competitors in Vietnam
Chapter 6: Designing action plan for strategic choice

4


Chapter 2

Literature Review

This literature review consists of three parts. The first part is overview of the theories of entry
strategy. The second part is the discussion on some problems and the extension of the
theory. Then in the third part, some notion and scope on environmental technology are
presented.

2.1. Entry strategy
2.1.1 Entry strategy
Entry strategy for international markets is a comprehensive plan. It sets forth for the

objectives, goals, resources, and policies that will guide a company’s international business
operations over a future period long enough to achieve sustainable growth in world markets
[Root,1994]

5


2.1.2. Elements of Entry Strategies
Figure 2.1.: Elements of in International market entry strategies
Source: Root, entry strategies for International Markets, 1994
Choosing the entry
mode
Assessing foreign
markets/products

Setting

in selected target

objectives

countries

and goals

Licenses
Contractual
argreements
FDI
JV

Wholly owned
subsidiary

Entry
operation
s

Designing the
marketing
plan

Target
Market

Control system
Monitoring operations/
Revising entry strategies for other market

Entry strategy is a composite of several individual product/market plans. Managers need to
plan the entry strategy for each product in each foreign market. Once the individual
product/market plans are completed, they should be brought together and reconciled to form
the corporate international entry strategy.
The constituent product/market entry strategies require decisions on:
1. The choice of a target product/market;
2. The objectives and goals in the target market;
3. The choice of an entry mode to penetrate the target market;
4. The control system to monitor performance in the target market.

6

The design of a market entry strategy is iterative, with many feedback loops. Evaluation of
alternative, for instance, may cause a company to revise target market objectives or goals or
even to initiate the search for a new target market. Again, the formulation of the marketing
plan may call into question an earlier preference for a particular entry mode. After operations
begins, variances in market performance may lead to revisions in any or all of the first four
elements, as indicated by arrows emerging form the Control system box. In short, planning for
international market entry is a continuing, open-ended process.

2.1.3. Mode of Entry
After deciding which target market to enter, the next step to select an entry mode is a
complex decision mainly because of different internal and external variables involved. One
important internal variable is the degree of control the company wants to have in the
operations in the target market. About external factors, one of the important external variables
is the governmental policy towards foreign investments. These internal and external factors
are further explained in the rest of the discussion on mode of entry for the firms as discussed
below.
This business strategy approach is well explained by Root (1987) who mentions a wide range
of external and internal factors influencing the choice of market entry mode (see figure 2.2).

7


Figure 2.2. Factors in entry mode decision
Target country
market factors

Target country
environmental
factors

Target country
cost factors

Target country
factors

Foreign market
entry mode
decision

Company product factors

Company
resource/commitment factors

The most important external factors include the following:
1. Target countries environmental factors (risk factors)- the political, economical and socialcultural characteristics of the target market, including government policies regarding
inputs and inward direct investment, geographical distance, economic growth and
performance, the countries external relations (including exchange rate influences),
cultural distance and political risk.
2. The target country market factors (rate of return factors) – market size, growth prospects,
competitive structure, marketing infrastructure, etc.
3. Target countries cost factors (rate of return factors) – the availability, quality and cost of
inputs, labour and other cost factors together with economic and technological
infrastructure.
4. Home country factors (rate of return factors) – the market, cost of services, competitive
and environmental conditions of the home country which will influence the entry mode
decision through their impact on firm size, competitiveness and reasons for expansion.
The most important internal factors influencing the choice of foreign market entry mode are

the following:
1. Company product/service factors – the extent of the product differentiation, the service
content, technology intensity, and the ability to standardize products globally.
2. Company resource/commitment factor – management, capital, technology resources,
services and marketing skills, companies over all commitment to international business

8


From an economist’s perspective, a company can arrange entry into a foreign country in only
two ways. First, it can export its product to the target country from a production base outside
that country. Second, it can transfer its resources in technology, capital, human skill, and
enterprise to the foreign country, where they may be sold directly to users or combined with
local resources to manufacture products for sale in local markets. From a
management/operations perspective, these two forms of entry can be broken down into
several distinctive entry modes that offer different benefits and costs to the international
company. The classification of entry modes is as follows [Root, 1994]:
*

Export Entry Modes

-

Indirect

-

Direct agent/distributor

-

Direct branch/subsidiary

-

Other

*

Contractual Entry modes:

-

Licensing

-

Franchising

-

Technical agreement

-

Service contracts

-

Management contracts

-

Construction/turnkey contracts

-

Contract manufacture

-

Counter-trade arrangements

-

Other

*

Investment Entry Modes

-

Sole venture: new establishment

-

Sole venture: acquisition

-

Joint venture: new establishment/acquisition

-

Other



Exporting is the most traditional and quickest way to enter a foreign market, which is
confined to physical products. Exporting is often identified as a low-cost alternative

9


because it requires no investment in manufacturing operations abroad. However, if it is
done effectively and well, exporting needs significant investments in marketing, Port [1994]
defined the indirect exporting by using middlemen who are located in the company’s own
country and who actually do the exporting. In contrast, direct exporting may use target
country middlemen, which leads to a distinction between direct agent/distributor exporting
and direct branch/subsidiary exporting. The former depends on target-country middlemen
to market the exporter’s product while the latter depends on the company’s own operating
units in the target country.


Contractual entry modes are long-term non-equity associations between an international
company and an entity in a foreign target country that involves the transfer of technology
or human skills.



In a licensing arrangements, a company transfers to a foreign entity for a defined period
the right to use its industrial property (patents, trademarks, product or process
technologies or company name) in return for a royalty or other compensation. Licensing
avoids the risks or product or market development by exploiting the experience of firms
that have already developed and marketed the product. It also provides a good vehicle for
the internationalization of small firms that might not have the capital or the foreign
experience to establish a joint venture or a wholly owned subsidiary [Carstaira and Welch,
1983]. It possesses the advantage of reducing firm’s exposure to financial risk as fixed
asset investment is minimized due to the utilization of another’s existing investment
[Bradley,1991]



Franchising is form of marketing and distribution in which the franchiser grants individual
or small company, the franchisee, the right to do business in a prescribed manner over a
certain period, in a specified place [Ayling 1988]. Adams and Mendelsohn (1986) deem
franchising at a particular form of licensing of intellectual property rights and view
franchising as a marketing method with four distinct characteristics as follows:

1. A contractual relationship in which the franchiser license the franchise to carry out
business under a name owned by or associated with the franchiser and in accordance
with a business format established by the franchiser.
2. Control by the franchise over the way in which the franchisee carries on the business.
3. Provision of assistance to the franchisee by the franchiser in running the business both
prior to commencement and throughout the period of the contract.
4. The franchisee owns his/her business that is a separate entity from that of the franchiser;
the franchisee provides and risks his own capital.


A contract manufacturing arrangements has two major options: a firm can either supply a
manufacturer with parts or have the manufacturer assemble them, or it can have the
manufacturer fabricate the whole product according to the specifications. The business,
however, retains marketing responsibilities [Akhter,1995].



In management contracting, a firm provides management expertise and technical knowhow to another concern or to the government. Although the management team basically
acts as consultants, it may also get involved in operational activities [Akhter,1995].

10




Under turnkey operations, a firm agrees to complete a project before handing it over to
the owner. The responsibilities of the company generally include the design, construction,
and operation of the project. Turnkey agreements are usually made with governments who
have large public service and construction projects [Akhter,1995].



A joint venture is formed when two or more firms form a third to carry out productive
economic activity [Harrigan,1985]. More specifically, Weston, Chung and Hoag (1990)
provide a joint venture’s characteristics:

1. Contribution by partners of money, property, effort, knowledge, skill, or other asset to a
common undertaking.
2. Joint property interest in the subject matter of venture.
3. Right of mutual control or management of the enterprise.

4. Expectation of profit, or presence of adventure.
5. Right to share in the profit.
6. Usual limitation of the objective to a single undertaking or ad-hoc enterprise.


A sole venture is the most extensive form of participation in the global markets, which
may be achieved by new establishment or acquisition. Ownership requires the greatest
commitment of capital and managerial effort and offers the fullest means of participating in
a market. It assumes full responsibility for strategic and operational functions, exclusively
assumes the risks, and enjoys the financial rewards.



Strategic alliances allow firms to share their resources to gain a competitive edge in the
marketplace, Unlike joint ventures that require companies to contribute specified amounts
of resources to create an independent business organization, strategic alliances promote
cooperation between firms without creating a new business organization [Lynch,1990].
The alliances are motivated by a desire of sharing technology, production, and marketing
resources. Root (1998) classifies risks associated with alliance agreements on the basis of
whether they are fiduciary or environmental. Fiduciary risk refers to the probability that the
partner will fail to honor elements of the agreement, Environmental risk is the amount of
the firm’s assets that would be directly affected by changes in the political, economic,
competitive environment. According to Root, there is a trade-off between the two types of
risk. The acquisition of control is often at the expense of increased exposure to
environmental risk.

2.1.4. Advantages and Disadvantages of each entry mode
Source: Charles W.L.Hill, Gareth R.Jones, 1999

11

Entry mode

Advantages

Exporting



Licensing



Disadvantages

Ability to realize location and
experience-curve economies
Low development costs and risks








Franchising

Low development costs and risks



Joint Ventures 


Wholly owned 
subsidiaries 


Access to local partner’s
knowledge
Shared development costs and
risks
Political acceptability
Protection of technology
Ability to engage in global
strategic coordination
Ability to realize location and
experience-curve economies








High transport costs
Trade barriers

Problems with local marketing
agents
Inability to realize location and
experience-curve economies
Inability to engage in global
strategic coordination
Lack of control over
technology
Inability to engage in global
strategic coordination
Lack of control over quality
Inability to engage in global
strategic coordination
Inability to realize location and
experience-curve economies
Lack of control over technology
High costs and risks

2.2 Discussion: Problems and some extensions of the state of market entry
theory
2.2.1 Introduction
Market entry theory is increasingly attracting attention as interest in international business
also increases. However, the theory is not yet fully developed. Despite recent contributions to
the body of theory, market entry strategy literature is still deficient in a number of areas.

2.2.2.Country of Origin-Specific Effects on the Market Entry Decision
One particularly area which has not been fully investigated in the literature is that of the
country-of-origin of the internationalizing firm upon the market entry decision. A particular
problem with this area is the difficulty in many cases of determining the ownership of the firm.
A related issue is that even when ownership resides in a particular country, it is not

necessarily the case that the country of ownership determines the cultural and organizational
factors that shape country-of-origin effects. For example, a company that has been
established for a significant period is taken over by a firm from another country. Establishing
at what point the firm will act like a firm from the overseas country can only be properly
achieved through close attention to firm-specific conditions. An additional point to raise is the
danger of cultural stereotyping. For example, it is possible to gain an impression of the ways
those firms from, for example, Japan, will behave and then assume that all firms will exhibit

12


the same characteristics. In reality, research has shown that market-specific and industryspecific conditions have significant impact upon market entry decisions. Nevertheless, it is
apparent that this form of analysis does have some valency.
In discussing country of origin-specific effects on the market entry decision, it is convenient to
group comments into the following five areas:


comparative advantages;



cultural issues;



organizational and institutional issues;



political-economic issues;



Governmental strategy.

Each of these will now be dealt with individually

2.2.2.1. Comparative Advantages
Countries are endowed with different levels and types of inputs. These may be in the form of
natural resources such as minerals, fishing grounds and timber or in labour or capital. They
may also be in the form of created assets such as intellectual property or a well-developed
infrastructure. Although in some cases it may be more sensible to speak in terms of regions
and even cross-border regions, it is nevertheless apparent that countries possess unique
configurations of such inputs. According to Porter, the nature of such a configuration is an
essential part of the forces that determine the comparative advantages that a state
possesses. It helps to determine, for example, those industries in which firms of that country
are likely to be particularly good or bad and it can influence the ways in which firms do
business. For example, Korea had a significant labor pool of hard working, well-educated
individuals prepared to sacrifice their immediate interests for long-term goals and work for low
wage levels. It is not surprising, therefore, that Korean firm were able to prosper in light
engineering industries in which labor costs were the determining feature. Consequently and,
of course, not by accident, Korean firms could successfully export their goods while firms
from countries without equivalent labor inputs would have to look to joint ventures or firm
acquisition in order to be able to compete effectively.
In many cases, the boundaries of resources providing advantages of these sorts will not
neatly coincide with national or political boundaries. Cross-border regions can give rise to
areas known as "growth triangles," which have been demonstrated as providing effective
promotion of economic development in, especially, East Asia. This idea is now being
deliberately pursued as a means of stimulating industrialization in suitable regions. Market
entry strategy in such situations is, consequently, considerably modified by the need to use

the resources that are available most effectively.

2.2.2.2. Cultural
Although it is notoriously difficult to provide a satisfactory definition for culture or arrive at an
understanding of what it means, there can be little doubt that it has been considered a
relevant factor in explaining business behavior. Hofstede’s seminal work divided individuals

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from different countries in terms of such dimensions as uncertainty avoidance and power
distance. Subsequent efforts have sought to demonstrate that such cultural differences are
reflected in terms of firm level behavior. As examples of this, cultures that are thought to
exhibit low levels of tolerance to uncertainty would therefore be expected to adopt market
entry strategies that emphasize control of the overseas unit. Another strand of the literature
has focussed on areas such as religion and philosophy to try to explain variations in firm
structure, the structuring of relationships within firms and, consequently, the impact these
variations have upon strategy and strategy-making processes. There is a danger here that
selective use of sources can be used to adduce a range of different arguments. However,
there does seem to be genuine reason to believe that cultural factors will cause firms to
behave differently.

2.2.2.3. Organisational and Institutional
Whitley has described how the institutional and structural characteristics of a country impact
upon the nature of business units and how, in the case of some East Asian states, this can
lead to significant differences between them. An example of how this can be relevant here is
in the case of firms’ ownership structure. In Britain, for example, many firms are effectively
controlled by large, institutional shareholders, who see their responsibility as ensuring that
their investment is handled primarily in terms of the returns that can quickly be made from it.
They have, therefore, an incentive to influence management to behave according to a shortterm timescale. Meanwhile, the board level ownership of German firms is subject to a rather

greater level of responsibility as to the future of the firm and, so, has incentives to ensure
profitable, long-term security. Similarly, those Korean firms that remain under strict family
ownership may adopt strategies exactly as owners’ demand and, as has now become well
known, in the case of Korea that generally has meant long-term market share. While the
ownership structure of chaebol may well be required to change as a result of recently
imposed IMF conditionally, it is still apparent that there is more than one viable model of
capitalism. This diversity is reflected in the goals that are desired to be achieved and this, in
turn, structures the strategies that are chosen to enact those goals.

2.2.2.4. Political-Economic
Relations between governments of different states of course vary. States, which maintain
powerful positions vis-à-vis, other states generally wish to pursue policies, which retain that
power differential. After all, "international political economy is the study of the inequality or
asymmetry between nations and peoples and collective learning and positioning patterns that
preserve or change this asymmetry." Relations between the USA and states of NorthEast
Asia - notably Korea, Japan and Taiwan - have been primarily conditioned by the American
perception of a strategic imperative in the region. In another way, the relations existing
between Britain and countries around the world are determined to a large extent by whether
those countries are part of the Commonwealth.
Such relations can have an important impact on market entry strategy. In Korea, research
has shown, for example, that American firms are significantly more likely to be older and
larger than British firms and to operate in a different range of industries. Not only does the
length of time influence the amount of specific market knowledge gained and, hence, the
range of market entry decisions that are feasible, it is also significant in Korea in particular
because the number of industries in which foreign participation has been permitted has been
strictly controlled and, although increasing, remains subject to regulation.

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American firms enjoy some advantages in Korea with respect to firms from other countries
and these result mostly from:


the greater level of pressure that can be applied by US administrations compared to
others;



the long-term presence of US troops in the country and their desire to be serviced by
firms providing US goods and services.

American firms have been presented with market entry opportunities that have not been
available to their rivals from many other countries. A similar reason also helps explain the
prevalence of Japanese-US partnerships in the semi-conductor sector as compared to those
involving firms from other places. Currently, the dominant idea in the world economic order
supports the increasing prevalence of overseas trade and investment conducted under a
variety of free market economics. Simultaneously, there exists almost as an undercurrent a
threat of the increasing difficulty for outsiders of being successful in regional trade blocs, such
as the EU and NAFTA. States will, therefore, tend to act to promote freedom of action for their
firms in overseas markets while looking to restrict that freedom in domestic markets. While
this is unlikely to appear as a simple dichotomy, there is certainly a tension involved. In such
a situation, the more power that a firm has, deriving both from itself and from its government,
the more it can influence and shape the overseas environment to allow it the freedom of
action it might desire to possess. This is a variation of an argument used against multinational
corporations in what were then called Third World countries. Those corporations still wield
considerable influence: after all, the ability to provide employment, especially when combined
with the possibility of raising levels of skills and technology in otherwise unfavoured areas,
has been considered sufficiently appealing as to inspire governments to provide huge
financial incentives to attract them.

2.2.2.5. Governmental Strategy
For firms from East Asian states in particular, the government-business relationship has been
of considerable importance in shaping not only the strategies that they have followed but also
the ways in which they have been able to do business. The relevance of this relationship
persists in many aspects of market entry strategy in the ASEAN region. A particular example
of this is the attempt of the government of Singapore to create an external economy in
countries such as Vietnam, China and India in order to compensate for the small size of the
domestic market and to provide a low cost offshore manufacturing base, as well as investing
capital in long-term growth projects that help to knit together the disparate elements of the
region. This policy has featured extensive investment in industrial parks and economic zones
in places such as Suzhou and Ningbo in China and Bangalore in India. Analysis of 822 cases
of investment in Vietnam during 1995-6 indicates that projects from Singapore were
significantly larger than those from other countries and also that contracts were likely to be
significantly longer than those from other Asian countries, which perhaps indicates that longterm planning is more prevalent in those cases.
Investment in parks and zones of this kind constitutes an advantage to Singaporean firms
and those able to enjoy cultural affinity with them in that the costs of doing business are
reduced when a stable and psychically cognate infrastructure has already been put in place.
Consequently, such firms are enabled to invest in production facilities, for example, while
rivals from firms from other countries might only be able to export and, hence, unable to
exploit the competitive advantages of low wage costs afforded to investors in the country.

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Another example might be the case of Taiwan, where the government has taken steps to
upgrade the competitiveness of the economy and provide positive externalities through a
combination of support for the IT industry and ensuring that all sectors of society benefit from
it. Taiwanese firms have, therefore, been able to perform international operations through IT
with a facility that firms from competing countries cannot afford. This tends to widen the range

of options available to such firms. Table 5 illustrates the significant variations recorded in
Vietnam for market entry choice with country-of-origin of the firm. According to the literature,
selecting a joint venture rather than 100% foreign owned firm, assuming that meaningful
choice is possible, entails choosing a mode which offers less control and more uncertainty. It
would be expected that this choice would be more popular, therefore, amongst firms which
are more familiar with specific local conditions or which generally have a more sanguine
attitude towards doing business in the overseas market. The results reveal that, among other
things, joint ventures are more frequent among Vietnam’s erstwhile communist allies,
American, and Singaporean firms, which have developed their knowledge of international
business. They are less frequent in the case of geographically distant European countries
and in the comparative newcomers of Korea and Taiwan.
In short, it is considered that an extended analysis of the impact of country-of-origin effects on
the market entry decision would constitute a useful addition to the literature.

2.3. Environmental Technology Industry
2.3.1. An era of environmental awareness
In the 1960s, a broad awareness of environmental pollution problems developed among the
general public. Many people came to realize the value and importance of protecting
environmental quality. Clean air and clean water were worth rallying about, and public
demonstrations were held. People wanted streams and lakes that could be used for
swimming and fishing, for safe drinking water supplies as well.
The word ecosystem and biosphere became popular buzzwords, and newspaper articles
about local pollution problems become more common. Educational programs that focused on
environmental issues were developed for grade school through the university level and grew
in popularity.
In addition to stopping air and water pollution, solving problems related to garbage disposal,
radiation, noise, pesticides, and wildlife preservation became important in the modern quest
for environmental quality. Although infectious diseases like typhoid and cholera had virtually
disappeared in the United States, people became aware of other types of problems caused
by human and ecosystem exposure to industrial toxic chemical substances.

The emergence of an environmental awareness on the part of the general public in the 1960s
was apparently more than just a passing fad. It was a genuine concern that served to focus
the attention of politicians, lawmakers, and governmental agencies on the need for an
appropriate legal and regulatory framework for environmental quality control.
Unfortunately, the objectives of environmental protection often seem to be at odds with those
of industrial growth and economic “progress”. In the long run, however, the “external
diseconomies” caused by environmental degradation will be far greater than the costs of

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regulation and control. This simply means that if our environment is damaged now in the
interest of maximizing profits, we will have to “pay the piper” in the future, either in the form of
expensive clean-up operations and increased health problems and medical costs, or in a
generally lower quality of life with respect to our natural surroundings.
Although there is controversy on just what steps to take and how much to spend for
environmental protection, most people agree that the problems cannot be ignored altogether.
A certain amount of governmental regulation will always be necessary. Eventually, a balance
will be reached in which environment, energy, and social problems will be solved without
preempting or overshadowing the others. Meanwhile, there will be a need for technical
personnel at all levels of training and education to plan, design, build, and operate
environmental control systems.

2.3.2.Overview of environmental technology
Environmental technology involves the application of engineering principles to the planning,
design, construction, and operations of systems for:


Drinking water treatment and distribution



Sewage disposal and water pollution control



Storm water drainage and control



Solid and hazardous waste disposal



Air and noise pollution control



General community sanitation

The structure and facilities that serve these functions, including pipelines, pumping stations,
treatment plants, and waste disposal sites, comprise a major portion of society’s
infrastructure-the public and private works that allow humanities to thrive and function
productively.
The practice of environmental technology encompasses two fundamental objectives:


Public Health Protection-to help prevent the transmission of diseases among human
beings.



Environmental Health Protection-to preserve the quality of our natural surroundings,
including water, land, air, vegetation, and wildlife.

Actually, there is considerable overlap of these two objectives because of relationship
between the quality of environmental conditions and the health and well being of the general
population. In fact, the terms public health and environmental health are often used
synonymously.
Environmental technology is usually considered to be part of the civil engineering profession,
which has traditionally be called upon to plan, design, build, and operate the facilities required
for public and environmental health protection. This particular specialty field within civil
engineering is also called:

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

Sanitary engineering



Public health engineering



Pollution control engineering



Environmental health engineering

Whatever the profession is called, a knowledgeable and skilled team of engineers,
technologists, and technician is needed to accomplish its fundamental objectives.
Environmental technology can be characterized as an interdisciplinary field because it
encompasses several different technical subjects. In addition to such traditional civil
engineering topics as hydraulics and hydrology, these include biology ecology, geology,
chemistry, as well as others. This variety makes the field an interesting and challenging one.
To present overview of such a broad subject, we can consider a fictious project involving the
subdivision and development of a tract of land into a “newtown”, which will include residential,
commercial, and industrial centers. Whether the “project owner” is a governmental agency or
a private developer, a wide spectrum of environmental problems will have to be considered
and solved before the construction of the new community can begin (in this paper we limit just
to the water/waste water pollution part). Usually the project owner retains the services of an
independent environmental consulting firm to address these problems.
WATER SUPPLY:
One of the first problems the project developers and consultants must consider is the
provision of a potable water supply one that is clean, wholesome, safe to drink, and available
in adequate quantities to meet the anticipated demand in the new community. Some of the
questions that must be answered are as follows:
1. Is there an existing public water system nearby, with the capacity to connect with and
serve the development? If not,
2. Is it best to build a new centralized treatment and distribution system for the whole
community, or would it be better to use individual well supplies? If a centralized treatment
is selected,
3. What type of water treatment processes will be required to meet federal and state drinking
water standards? (Water form a river or a lake usually requires more extensive treatment
than groundwater does, to remove suspended particles and bacteria.) Once the source
and treatment processes are selected,

4. What would be the optimum hydraulic design of the storage, pumping, and distribution
network to ensure that sufficient quantities of water can be delivered to consumers at
adequate pressures?
SEWAGE DISPOSAL AND WATER POLLUTION CONTROL
When running water is delivered into individual homes and businesses, there is an obvious
need to provide for the disposal of the used water or sewage.

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Sewage carries human wastes, wash water, and dishwater, as well as a variety of chemicals
if it comes from an industrial or commercial area. It also carried microorganisms that may
cause disease and organic material that can damage lakes and streams as it decomposes.
It will be necessary to provide the new community with a means for safely disposing of the
sewage, to prevent water pollution and to protect public and environmental health. Some of
the technical questions that will have to be addressed include the following:
1. Is there a nearby municipal sewerage system with the capacity to handle the additional
flow from the new community? If not,
2. Are the local geologic conditions suitable for on-site subsurface disposal of the wastewater (usually “septic system”), or is it necessary to provide a centralized sewage
treatment plant for a new community and to discharge the treated sewage to a nearby
stream? If treatment and surface discharge are required,
3. What is the required degree or level of waste water treatment to prevent water pollution?
Will a “secondary” treatment level, which removes al least 85 percent of the pollutants, be
adequate? Or will some form of advanced treatment be required to meet federal and state
discharge standards and stream quality criteria? (Some advanced treatment facilities can
remove more than 99 percent of the pollutants.)
4. Is it possible to use some type of land disposal of the treated sewage, such as spray
irrigation, instead of discharging the flow into the stream?
5. What methods will be used to treat and dispose of the sludge or sewage solids, than are
removed form the wastewater?

6. What is the optimum level and hydraulic design of a sewage collection system that will
convey the wastewater to the central treatment facility, with a minimum need for
pumping?
SOLID AND HAZARDOUS WASTE MANAGEMENT
The development of a new community (or growth of an existing community) will certainly lead
to the generation of more refuse and industrial waste materials. Ordinarily, the collection and
disposal of solid wastes is a responsibility of the local municipality. However, some of the
waste form the industrial sources may be particularly dangerous, requiring special handling
and disposal methods.
Hazardous wastes, such as poisonous or combustible chemicals form industrial processes,
must receive special attention with respect to collection, transport, treatment, and final
disposal. This is particularly necessary to protect the quality of groundwater, which is the
source of water supply for about 100 million people in the United States. In recent years, an
increasing number of water supply wells have been found to be contaminated with synthetic
organic chemicals, many of which are thought to cause cancer and other illnesses in humans.
Improper disposal of these harzadous materials, usually by illegal burial in the ground, is the
cause of the contamination.

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