Entry Strategy in International Business
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 entry mode.
9.2 Basic Entry Decisions
• Which foreign markets • Time of Entry • Scale of Entry and Strategic Commitments
9.3 Entry Modes in Brief
I) Exporting
Exporting is a business model where goods are produced in one country and shipped through distribution channels to another country’s economic market. Companies often use this international market entry strategy to reduce risk and the costly investment of setting up business operations in a foreign country. Exporting may also allow a company the advantage of sending goods to multiple locations from one advantageous shipping location.
II) Licensing
Licensing allows an international company the rights to produce the goods or services owned by another company. This market entry strategy offers companies a low investment market entry strategy for conducting international business. Companies may select one or a few foreign companies for licensing the product rights for the production and distribution of goods or services in the foreign economic market. Licensing helps companies minimize risk, create a quick market entry and allow companies to avoid trade barriers or tariffs.
III) Joint Venture
Companies may decide to create a joint venture
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 entry mode.
9.2 Basic Entry Decisions
• Which foreign markets • Time of Entry • Scale of Entry and Strategic Commitments
9.3 Entry Modes in Brief
I) Exporting
Exporting is a business model where goods are produced in one country and shipped through distribution channels to another country’s economic market. Companies often use this international market entry strategy to reduce risk and the costly investment of setting up business operations in a foreign country. Exporting may also allow a company the advantage of sending goods to multiple locations from one advantageous shipping location.
II) Licensing
Licensing allows an international company the rights to produce the goods or services owned by another company. This market entry strategy offers companies a low investment market entry strategy for conducting international business. Companies may select one or a few foreign companies for licensing the product rights for the production and distribution of goods or services in the foreign economic market. Licensing helps companies minimize risk, create a quick market entry and allow companies to avoid trade barriers or tariffs.
III) Joint Venture
Companies may decide to create a joint venture
References: Charles W Hill, Arun K Jain (2009): International business, Competing in the international market place 6th edition: Tata McGraw Hill Alan M.Rugman, Simon Collinson (2009): International Business 5th Edition: Prentice Hall