Entering New Markets-a Challenge in Times of Crisis

TL;DR

This paper examines the risks and outcomes of international market entry through acquisition during a global economic crisis, using a Romanian company's case to assess strategic success.

Contribution

It provides an empirical analysis of market entry risk during a crisis by studying a specific acquisition case in Romania's railway industry.

Findings

Assessment of acquisition success after two years

Insights into risk management during economic downturns

Evaluation of strategic decision outcomes

Abstract

After September 2008, the advanced economies severe decline caused demand for emerging economies' exports to drop and the crisis became truly global, much deeper and broader than expected. In these times of global depression, most countries and companies are affected, some more than others. The financial crisis has turned out to be much deeper and broader than expected. Entering new markets has always been a hazardous entrepreneurial attempt, but also a rewarding one, in the case of success. The paper aims to asses the market entry risk of a company trying to make a good acquisition, to buy shares of another company, activating in a foreign country. For this purpose, the case of Electroputere S.A., the old Romanian producer of railway equipment, has been chosen. The data were collected from the records of Bucharest Stock Exchange. After two years from the acquisition, one can draw a conclusion whether the strategy of the investor was a good one or a waste of money.