Abstract
As the opening case shows, increasing globalization has captured the attention not only of entrepreneurs and businesspeople, but also of government officials who are searching for international
business advantages in an ever-changing world. The active pursuit of FDI for the first time in
Japanese history is a signal that the rules of the game have changed under globalization. The message is clear: markets are moving toward international competition and, to prosper, nations need
to tap the resources and opportunities available beyond their borders. To this end, they need to
not only attract FDI to their shores but also to engage in outward investment in foreign markets.
However, as we will see in this chapter, as well as in Chapters 4 , 6, 7, and 10, among others,
investment in foreign markets is full of potential pitfalls. The complexities involved in controlling
and coordinating foreign affiliates that are situated far from headquarters and from each other,
and the uncertainty of operating in unfamiliar environments that differ from each other and from
the home environment culturally, legally, and politically, represent major challenges to firms. Failed
international expansions such as Swissair (which collapsed as a result) and Gateway Computers
(which retreated to its domestic US market) serve as reminders of the difficulty of investing and
operating abroad.