Entry Strategy in International Business

1616 words 7 pages
9.0 Entry Strategy

9.1 Introduction

Entry strategy is about the decision to enter which foreign market, when in what scale and regarding the choice of entry mode. In our case we have already decided to enter the UK market and offer our products to a selected niche initially. It is the case of entry mode we should address in this chapter.

The various modes to enter foreign markets are vast. A few popular methods are, exporting, licensing or franchising to host country firms, establishing joint ventures, setting up wholly owned subsidiaries or acquiring an established enterprise

Other key factors like transport cost, trade barriers, political risk, economic risk, business risk cost and firm’s strategy plays a key role in determining the
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|Able to circumvent trade |Licensee may become competitor.|
| |Low sales potential in target country. |barriers | |
| |Large cultural distance |High ROI |Knowledge spillovers |
| |Licensee lacks ability to become a | |License period is limited |
| |competitor. | | |
|Joint Ventures |Import barriers |Overcomes ownership restrictions|Difficult to manage |
| |Large cultural distance |and cultural distance |Dilution of control |
| |Assets cannot be fairly priced |Combines resources of 2 |Greater risk than exporting a &|
| |High sales potential |companies. |licensing |
| |Some political risk |Potential for learning |Knowledge spillovers |
| |Government restrictions on foreign |Viewed as insider |Partner may become a |
| |ownership |Less investment


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