Read the case study 2.2 on page 35, answer the following questions:

How has this Hong Kongbased retailer expanded?

What are their main markets and management strategies?

What can we learn from Giordano?

- Dunning's eclectic theory, to be elaborated on extensively ahead, explains conditions for expansion focusing on ownership, location, and internalization factors. 11 - Institutional theory explains the influences of macro-environment and micro-eni- ronment on a company's decision to internationalize. - Risk theory explains that retailers evaluate foreign markets according to their pereized. lesel of risk. Much of a retailer's in-country investment is for inventory and physical facilities-an investment that is not liquid and therefore not salvageable in the short or if there is civil war or unrest, or if the company simply not operate there anymore, STAGES THEORY The export stages literature views internationalization as a step-by-step process where higher-level stages represent a higher level of internationalization. This paradigm relies on characteristics of management to delineate the stages they are ready to assume. However, the stages available for retailers are different from those available to manufacturers. Retailers do not have an export option. The stages for retailers are based more on risk and knowledge. Multinational retailers will begin their international expansion in countries that are culturally similar to the home country. They will develop this area or region and then make a jump to another geographic area that is not culturally similar; there they develop area expertise through local expansion. As they gain experience in each country or region, they move into another area. An example of a retailer who expanded from a Hong Kong base is presented in Case Study 2.2, about Giordano, CHAPTER 2 STRATEGIC RETAIL EXPANSION