Government Regulations (Openness).

Government Regulations (Openness). Government regulations are also a major
consideration in entry mode choices. In scores of countries, government regulations
heavily constrain the set of available options. A good example is the regulation of the
airline industry in the United States: airlines are classified as ‘‘strategic assets’’ and as a
result foreign airlines cannot acquire majority ownership of U.S. carriers. Trade
barriers of all different kinds restrict the entry choice decision. In the car industry, local
content requirements in countries such as France and Italy played a major role behind
the decision of Japanese carmakers like Toyota and Nissan to build up a local
manufacturing presence in Europe.
Competitive Environment. The nature of the competitive situation in the local
market is another driver. The dominance of Kellogg Co. as a global player in the readyto-
eat cereal market was a key motivation for the creation in the early 1990s of Cereal
PartnersWorldwide, a joint venture between Nestle and General Mills. The partnership
gained some market share (compared to the combined share of Nestle and General
Mills prior to the linkup) in some of the markets, though mostly at the expense of lesser
players like Quaker Oats and Ralston Purina. By the same token, the acquisition by
SABMiller, one of the world’s largest beer brewers, of Colombia-based Bavaria in a
$7.8 billion deal brought the company near-monopoly control in four South American
countries: Peru, Colombia, Ecuador, and Panama