MULTINATIONAL ENTERPRISE STRATEGIES TOWARDS INTERNATIONAL MARKET: A STUDY CASE ON HOW FOREIGN BANK COMPANIES SURVIVE THROUGHOUT INDONESIAN MARKET

• Main Author: Sabatian Susanto, Nathaniel
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/72157
• Institution: Institut Teknologi Bandung

The banking sector has contributed significantly to financial industry growth for decades and supports modern societies’ essential needs. Through globalization, banks competitively expand their business to new markets, benefiting them enormously. In making foreign investment decisions, companies must acknowledge the divergent benefits in different countries, including emerging markets, which have significant growth and have attracted foreign companies’ investment. However, the liability of foreignness problems may arise when firms expand to other countries. Much international business literature presented limited findings on how foreign companies survived in emerging markets, particularly Indonesia. After assessing the strategies of foreign bank companies in Indonesia using a qualitative approach, they developed an extra effort to reduce the effect of the liability of foreignness. They created a new business model called the “global subsidiary model” that merged their asset of foreignness and asset of multinationality and positioned themselves to not compete directly with local banking firms. This strategy benefits them much when operating in foreign countries as an addition to traditional strategies to overcome the liability of foreignness problem. Finally, this paper aims to guide foreign firms in reducing the liability of foreignness by learning from well-established foreign bank firms in Indonesia.