Other examples of successful international acquisitions are FirstGroup's (UK) purchases of Ryder Transportations in 1999 and Laidlaw in 2007. FirstGroup was already the leaser in bus transportation in Great Britain and used the 1999 deal with Laidlaw as a way to enter the North American Market. Interestingly, from the information that I've reviewed, there was little integration of the day-to-day operations, but the merger allowed FirstGroup to achieve gains through economies of scale.

While Peng's assertion that 70% of international M&As fail seems excessive, I did find it hard to find examples of success stories. Whether that is because the information is not available, there are many measures of success/failure, or there are truly few success stories, I am not certain.

In general, high engagement entry modes will allow a firm to maintain a higher level of control over their new venture than a less engaged mode. It may also allow the firm to gain the required market experience when entering a new region, which it may be able to utilize in future ventures, rather than utilizing another firms expertise through a less engaged alliance but not reaping any long term benefits. Additionally, greenfield developments which utilize a localized labor force may lessen any local resistance to purchasing foreign products from foreign-owned companies.

I do agree with the fact that there is a need for cultural flexibility as Strategic Alliances are formed. The degree to which a firm must focus on this blending may depend largely on where on the alliance spectrum that their specific alliance falls.

When firms have alliances that are closer to the market transaction side of the spectrum, cultural blending would not likely be as crucial to the alliance. The two (or more) firms would likely be able to fulfill their part of the alliance without a high level of interaction between employees of the firms.
The level of interaction of firms and their employees would increase, however, as an alliance moves along the spectrum towards strategic investment and joint ventures.

It is also important to note that a "blending" of cultures would not likely be successful as a 50/50 split or "meeting in the middle." The firms involved must look at what the long term goals are, which company (if either) would be handling the day-to-day operations of the venture, and where those operations will be located. For example, if operations are to be in an Asian society, one would expect that the cultural integration would tend towards the Asian business culture, tweaked by Western European or American business practices only when required to truly attain an operational advantage.

Bart -

I think that you've hit my thoughts right on the head. I don't think that there is any one model that is the "right" one to use. Using one model (like the Clear Model) as a screening mechanism or analyzing using two models independently and then comparing results for final decision may be more appropriate.

Of course, more analysis is going to cost more money, and there is some point of diminishing returns. While a com[any must weigh a decision like market entry very carefully, there is never going to be a model that gives all of the right answers (if there was, this would all be too easy!), instead, they are there to point a company in the right direction and *hopefully* the right decision.

That said, if I was forced to pick a single model, it would be Scott's Country analysis. The explicit component that is in this model that makes it stand out in my mind is that it tries to account for context rather than strict statistics.

The inclusion of National Strategy (including vision and goals) as a factor is one that has me split against myself. While I agree with Scott's reasoning in including this factor, it is something that is difficult to quantify. While a country’s current leaders may have a long term vision for the future, that vision could change as political tendencies change. (As Scott states “Competing visions are also the stuff of election campaigns.” ) This is one point that makes me hesitant to completely buy into this measure.
Few countries have detailed, singular visions of their role for the future. Oddly, it seems that the countries with the visions that are most explicitly dictated to the world are also countries that are not democratic (think about China’s Five-Year Plans), and therefore have more control over long-term planning.
Finally, while I can that long term vision may be vital to get a country to focus its goal and move forward together, it is often spoken of in lofty rhetoric. Most countries are going to state that they’re going to focus on energy independence, or help the poorest among them, or making life better for the average citizen. These goals and visions may be admirable, but they mean little without also seeing evidence that the country is actually taking steps to reach those goals.

There is, of course, a great political-economic debate as to whether NAFTA has been beneficial or harmful to the involved countries. I found the following article, which compiles some interesting data on both sides of this argument:

Is Free Trade Good for Working Americans: Lessons from North American Free Trade Agreement .
Ki Hee Kim. The Business Review, Cambridge. Hollywood: Summer 2010. Vol. 15, Iss. 1; pg. 33, 6 pgs

In part it states:
"U.S. employment increased over the period of 1993-2007 from 111.8 to 137.6 million people, a 24% increase... The U.S. experienced a 48% increase in real GDP form 1993-2005. The unemployment rate over his period was an average of only 5.1%, compared to 7.1% from 1982-1993, before NAFTA was implemented... The numbers of workers in the manufacturing industry with job loss actually decreased from 13.8% in 1991-1993, per-NAFTA years, to 11.8% in the years from 1993-1995 (Ibid.)."

"Since NAFTA took effect, employment in Mexico has become ever more precarious: of all new salaried positions generated between the second quarter of 2000 and the second quarter of 2004, only 37% have full benefits, and 23 percent have no benefits at all (The Archives, 2007). NAFTA increased employment in the low-wage “maquiladora” industries of Mexico, with the benefits flowing mainly to large companies, the financial sector, and a thin layer of administrative and professional workers earning high salaries."

Overall, I agree with prior responders to this question, that while NAFTA has had mixed results in its relatively short-term (15 year) history, the long-term benefits of free trade will prove its value.

Shawn -

While you are correct that the WTO doesn't have direct enforcement capabilities, through monetary fines, etc. I think that the impact of tariff retaliation is actually one that is effective and is appropriate. It ensures that the country that "wins" a favorable decision has a direct course of action against the offending country if changes aren't made. It seems to work according to the old adage "Let the punishment fit the crime."

According to an article in the Economist earlier this year:
"If a country fails to comply with a ruling, the WTO can permit the complainant to hit back, for instance by restricting its adversary's access to its own market. Crucially, even when it does give permission to strike back, the WTO limits the amount of retaliation based on the damage caused, preventing small skirmishes over a few million dollars of trade from becoming outright trade wars."
(Finance And Economics: When partners attack; Settling trade disputes
Anonymous. The Economist. London: Feb 13, 2010. Vol. 394, Iss. 8669; pg. 77)

This is actually a very informative, short article you might want to take a look at. :)

I can understand why the average citizen would be alarmed by this scenario - particularly when our 24-hour-news-cycle media focused on it for several days in February of 2006. When the alarm has been rung, it is difficult for any politician to appear week on security, even when the facts don't support it. There is a place for protectionism when it comes to matters of national security (weapons production, nuclear power plants, etc.), however I also believe that since the September 11th attacks, National Security has become somewhat of a buzzword that politicians on both sides of the aisle use to raise the alarm, even if it is not appropriate.

This is definitely a case where my mind knows one thing but my heart understands the concerns that others may have. FDI can be a sticky scenario in industries that have, or are perceived to have, a direct impact on national security. Analytically, I agree with Mitch and Danielle. There does not seem to be any evidence that DP's management of the US ports would have led to any security issues. All US laws in regards to security and cutoms would still be in play. The plan was vetted by several government agencies. The employees (and likely local management) would be Americans.

I agree that the fact that JVs are not required in the US is a major component in the high level of FDI here. Other institutions, both formal and informal, may have an equal or greater impact, however. As citied above, Property Rights (both physical and intellectual) and enforcement of contract laws are two of these institutions. Availability of highly educated employees from the US educational institutions is also important, espcially in these industries that operate in the early stages of the PLC.