Entry Modes
Definition
A mode of entry into an international market “is the channel which organisation that want operate in international markets employ to gain entry to a new international market. The choice for a particular entry mode is a critical determinant in the successful running of a foreign operation”. (European Journal of Science, 2011)
Doole and Lowe (2008) argued that there are different types of entry mode relative to the level of investment:
Non-equity mode: exporting (direct and indirect) such as direct marketing, franchising and licensing, which involves selling some regular production overseas and require little investment. As a result, the risk is relatively small.
Equity modes require large investment and risk: wholly-owned subsidiary, acquisition, strategic alliance, joint-venture
Factors influencing the decision to enter a foreign market
There are many factors to consider in order to select the right market entry method (Doole and Lowe, 2008):
To start with, the macro environment of our target market: Singapore; needs to be assessed through a PESTEL analysis:
Political
Policies favorable to foreign investment
Least corrupted government of Asia
One of the safest city-state low entry barriers and regulations for foreign investment Economic
GDP increase of 5.2% from 2007 to 2012
Well-developed and successful free market economy system
One of the worlds highest GDP per capita
Well-developed and efficient infrastructures
Sociocultural
Increasing population abundance of young and healthy workforce diversity of population: many foreigners Technological
Global recognition of IT city-state
Environmental
Not relevant to our project Legal
Strong intellectual property laws
Favorable tax policies to foreign investment
This analysis indicates that the Singaporean market is favorable and attractive for foreign investments. In addition, according to a report edited by the World Bank and the International Finance
A mode of entry into an international market “is the channel which organisation that want operate in international markets employ to gain entry to a new international market. The choice for a particular entry mode is a critical determinant in the successful running of a foreign operation”. (European Journal of Science, 2011)
Doole and Lowe (2008) argued that there are different types of entry mode relative to the level of investment:
Non-equity mode: exporting (direct and indirect) such as direct marketing, franchising and licensing, which involves selling some regular production overseas and require little investment. As a result, the risk is relatively small.
Equity modes require large investment and risk: wholly-owned subsidiary, acquisition, strategic alliance, joint-venture
Factors influencing the decision to enter a foreign market
There are many factors to consider in order to select the right market entry method (Doole and Lowe, 2008):
To start with, the macro environment of our target market: Singapore; needs to be assessed through a PESTEL analysis:
Political
Policies favorable to foreign investment
Least corrupted government of Asia
One of the safest city-state low entry barriers and regulations for foreign investment Economic
GDP increase of 5.2% from 2007 to 2012
Well-developed and successful free market economy system
One of the worlds highest GDP per capita
Well-developed and efficient infrastructures
Sociocultural
Increasing population abundance of young and healthy workforce diversity of population: many foreigners Technological
Global recognition of IT city-state
Environmental
Not relevant to our project Legal
Strong intellectual property laws
Favorable tax policies to foreign investment
This analysis indicates that the Singaporean market is favorable and attractive for foreign investments. In addition, according to a report edited by the World Bank and the International Finance