Answer:
Before Kasapreko venture international, it might have fulfilled the following elements of eclectic paradigm:
1. Evaluation of Ownership Rights: Kasapreko might have evaluated the property rights laws and practices of the countries where it wants to establish its presence. The purpose is to assure the company that it can enforce its rights in a properly constituted court. If Kasapreko invests in a country that does not recognize, enforce, and protect intellectual property rights, it will probably be unable to assert its copyrights, brands, etc.
2. Assessment of Locational Advantages: If Kasapreko ventures abroad, it would naturally consider the advantages it may derive due to natural or man-made resources that are available at lower costs and in greater quality than elsewhere, including domestically. For example, a South African company can decide to invest in oil-rich Angola instead of investing in neighboring Botswana because of the ready access to crude oil and natural gas.
3. Analysis of Internalization of Production: The concept of eclectic paradigm is based on internalization of production capacity. What a company can produce more efficiently, and at lower prices, and in greater quantity should not be outsourced to another company, whether based domestically or in another country. Let us assume that Kasapreko can cheaply produce its products internally and perhaps at higher quality, why should it bother outsourcing.
Explanation:
The Eclectic Paradigm is an economic theory which compares the costs of transactions made within an institution and the transaction costs on the free market to enable the organization to strategically maximize its investments in a foreign market. It is also called the OLI model or framework.
The model proposes the three-tiered evaluation framework that companies can follow when attempting to determine if it is beneficial to pursue foreign direct investment (FDI). The assumption behind the paradigm is that institutions are expected to avoid transactions in the open market if the cost of completing the same actions internally, or in-house, carries a lower price.
