As the world becomes more globalized, multinational corporations (MNCs) are obliged to spread and open subsidiaries in foreign countries. Unfortunately, some countries have unstable political systems that exist in a state of systematic crisis. For corporations whose subsidiaries are caught in the middle of a political crisis in foreign territories, this unrest presents high physical and economic risks. Thus, what types of threats do firms encounter, and how do they perceive them? Can their experience influence their perception of the crisis? The focus of this dissertation is to study the decision-making process of multinational corporations in times of political and economic crisis at a subsidiary level, utilizing the example of Mozambique. Two studies were conducted. The first was drawn on prior literature on threat perception, social embeddedness and MNCs’ reaction to external threats. A conceptual model of MNCs’ response to political crises in frontier markets was developed. The antecedents or predictors of exit included influences on exit decision, past experiences, crisis perceptions and the moderator effect of social embeddedness between perception and exit. The second study focused on MNCs that not only decided to stay in the foreign market, but seek for unique opportunities in an economic crisis. The conceptual model created is simple, and builds upon existing literature on social embeddedness, MNCs’ experience, and international staffing. Within the international staffing literature, it provides a strong contribution to the theories on parent country nationals and host country nationals, implementing new constructs such as parent company experience and subsidiary company experience. Both models were tested using a survey data from managers of 108 MNCs’ subsidiaries in Mozambique, some of which exited due to the economic and political crisis, and some of which remained. The results indicate that both models are mostly supported. These studies contribute to the literature involving MNCs in host countries, including threat perception, social embeddedness, local content, international staffing, expatriates and past experiences. In practical terms, they provide a tool for both policymakers and private MNCs to act preemptively in times of political and/or economic crisis. / Business Administration/International Business Administration

BACKGROUND: The general comprehension of the populace is that the continent of Africa is very deprived. However, South Africa, the economic powerhouse in the Southern African region, has a stock exchange that rates amid the twenty largest in the world. With a well-developed infrastructure as well as democratic political system, the area has become increasingly more unwavering for companies disposed to invest. Reasons are cheap labour and availability of natural resources where South Africa has an abundant supply. However, there are also drawbacks to consider before investing in South Africa. Examples can be high criminality, high HIV-prevalence, lack of skilled workers and huge socio-economic disparities. Increased foreign direct investments and developed international trade can be means for South Africa to accelerate growth and employment and thereby contribute to a changed distribution of wealth and income in the country. PURPOSE: The purpose with this thesis is to explore entering strategies of Swedish-related manufacturing companies that have entered South Africa. As a purpose extension our intention also includes exploring the organizational structure used in the subsidiary and whether any cultural circumstances affect the business climate. METHOD: In our thesis the method chosen is a qualitative approach with in-depth interviews of people in, and associated to, Swedish-related manufacturing companies in South Africa. An interpretivistic and abductive perspective is used throughout the completion of the thesis. CONCLUSION: Our study indicates that motives for investing in South Africa are merely on behalf of market penetration and utilization of the nation as a springboard towards the Sub-Saharan market. The entering strategy most frequently used is acquisitions and the organizational structure is multinational with an ethnocentric staffing approach. No cultural divergences between Swedes and South Africans interfere in the day-to-day business environment according to our study.

<p>BACKGROUND: The general comprehension of the populace is that the continent of Africa is very deprived. However, South Africa, the economic powerhouse in the Southern African region, has a stock exchange that rates amid the twenty largest in the world. With a well-developed infrastructure as well as democratic political system, the area has become increasingly more unwavering for companies disposed to invest. Reasons are cheap labour and availability of natural resources where South Africa has an abundant supply. However, there are also drawbacks to consider before investing in South Africa. Examples can be high criminality, high HIV-prevalence, lack of skilled workers and huge socio-economic disparities. Increased foreign direct investments and developed international trade can be means for South Africa to accelerate growth and employment and thereby contribute to a changed distribution of wealth and income in the country.</p><p>PURPOSE: The purpose with this thesis is to explore entering strategies of Swedish-related manufacturing companies that have entered South Africa. As a purpose extension our intention also includes exploring the organizational structure used in the subsidiary and whether any cultural circumstances affect the business climate.</p><p>METHOD: In our thesis the method chosen is a qualitative approach with in-depth interviews of people in, and associated to, Swedish-related manufacturing companies in South Africa. An interpretivistic and abductive perspective is used throughout the completion of the thesis.</p><p>CONCLUSION: Our study indicates that motives for investing in South Africa are merely on behalf of market penetration and utilization of the nation as a springboard towards the Sub-Saharan market. The entering strategy most frequently used is acquisitions and the organizational structure is multinational with an ethnocentric staffing approach. No cultural divergences between Swedes and South Africans interfere in the day-to-day business environment according to our study.</p>