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Liability of Foreignness and Regionalism

Define Liability of Foreignness and Regionalism. Discuss how it relates to and how it impacts international strategies.

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On Liability of foreignness:

Design and Marketing Dictionary (2009) notes that Liability of Foreignness describe foreign companies' lower survival rate than local companies for many years after they begin operations.

Doing business in foreign countries nearly always leads to higher costs and risks than domestic business activities. This is referred to as liability of foreignness by Zaheer (1995).

However, these problems can be mitigated by taking up change strategies. Foreign companies experiencing liability of foreignness by studying the culture and economy of the host country. It can build partnership and alliances with established local businesses. Doing this strategy will enable foreign companies to survive.

On Regionalism:

Regionalism means two or more nations forming into an alliance to promote common institutions, identity, and economy. It is an integration of ...

Solution Summary

The solution defines Liability of Foreignness and Regionalism. It discusses higher costs and risks when doing business in foreign lands. However, these impact can be minimized through government support, differentiation and brand advantages.