Modes of Foreign Entry Essay

Exporting, licensing, and using trading companies are preferred modes of international market entry for firms with a(n) ____ structure.

A foreign investor may enter into a joint venture by combining with a national of a host country to create a new entity or by acquiring a portion of an existing local entity.

Joint Ventures (JV)- an agreement under which two or more partners own or control a business.

International joint ventures is an overseas business owned and controlled by two or more partners; starting such a venture is often as an entry strategy (Deresky, H. 2014.p.377), while joint ventures refers to an independent entity jointly created and owned by two or more parent company.

Once an organization has decided to expand into the global marketplace, it must select a method of market entry. Companies may choose from five general options: (1) exporting, (2) franchising, (3) a strategic alliance, (4) a joint venture, and (5) direct investment. Deciding which option is right for an organization is based upon the level of financial commitment, risk,

The need for a solid market entry decision is an integral part of a global market entry strategy. Entry decisions heavily influence the firm’s other marketing-mix decisions. Company can enter International Market with many ways, some of them are as follows:

The 3 entry modes present different advantages and drawbacks, Franchising Strategy showed low control in the operations, low risk of exposure, low investment and high support from the local partner. Joint Venture entry mode indicated moderate-high investment, moderate risk, medium exposure and moderate control. Lastly, Greenfield entry mode denoted high risk, high investment, high control of the operations and high exposure.

Market entry mode is to create the possibility by arranging company’s products, technology, human skills, management or other resources to enter into a foreign country. The problem faced by the company is what kind of strategy should be used for the entry mode selection.

Entry modes are the strategic ways to enter a new country to achieve strategic goals of entering the target country. Thus an MNC deciding to enter a foreign market should decide upon which entry mode to choose.

A joint venture (JV) is a business agreement in which the gatherings consent to create, for a limited time, another element and new resources by contributing value. They practice control over the undertaking and thus share incomes, costs, and resources.

The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,

Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.

Subject : Appraisal of a MNE's recent market entry (2007-2010) ( 1. Firm Motivations for internationalization 2. Entry Strategy 3. Corporate Strategy)

• Companies can gradually separate a business from the rest of the organisation, and eventually, sell it to the other parent company. Roughly 80% of all joint ventures end in a sale by one partner to the other.

The reluctance of firms to change entry modes once they are in place, and the difficulty involved in doing so, make the mode of entry decision a key strategic issue for firms operating in today’s rapidly internationalizing market place.