Modes of Foreign Entry Essay

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All research fully carried out on Entry nodes on the long run remain limited to large manufacturing firms. The foreign market selection and the choice of its entry modes drastically ascertain the performance of a specific firm. Entry mode can be defined as an arrangement for an organization that is organizing and conducting business in foreign countries like contractual transfers, joint ventures, and wholly owned operations (Anderson, 1997). Internationalization is part of a strategy which is going on for businesses and organizations transfers their operations across the national borders (Melin, 1992). The firm that is planning to have the operations across the border will have to choose the country that they are planning to visit.…show more content…
Joint venture is an arrangement where the firm is required to share the equity and control with the host. There is another alternative to this, called full ownership where the parent company takes 100 percent equity stake in the operation in the foreign country. It can take two forms: one is acquiring the existing business and secondly is bringing in new facilities to the company. In evaluating the entry mode that a firm should take, there are factors affecting the choice of entry mode, therefore there a options that should be considered. One is the level of control that the firm will have in the overall operation. Control is the ability to influence systems, methods and decisions (Anderson, & Gatigno, 2006). In a general note, when a firm moves from licensing/franchising to joint venture to full ownership, the level of control increase. There is no way that exporting mode of entry and full ownership can trade places. Exporting deals more with the product industry while licensing and franchising deals with service industry. MNCs that have the strategy of entering into foreign markets have the desire to own the technology that enables them to have a smooth running of the organization. It follows then that the organization will strive to ensure that it does not lose control of the technology. Given the processes of going into partnership where
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