Modes of Entry Into an International Business

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Modes of entry into an International Business:-

There are some basic decisions that the firm must take before foreign expansion like: which markets to enter, when to enter those markets, and on what scale.

Which foreign markets?
-The choice based on nation’s long run profit potential.
-Look in detail at economic and political factors which influence foreign markets.
-Long run benefits of doing business in a country depends on following factors: - Size of market (in terms of demographics) - The present wealth of consumer markets (purchasing power) - Nature of competition
By considering such factors firm can rank countries in terms of their attractiveness and long-run profit.

Timing of entry:-
It is important to consider the timing of entry.
Entry is early when an international business enters a foreign market before other foreign firms. And late when it enters after other international businesses.
The advantage is when firms enters early in the foreign market commonly known as first-mover advantages
First mover advantage;-
1. it’s the ability to prevent rivals and capture demand by establishing a strong brand name.
2. Ability to build sales volume in that country. so that they can drive them out of market.
3. Ability to create customer relationship.
Disadvantage:
1.firm has to devote effort, time and expense to learning the rules of the country.
2.risk is high for business failure(probability increases if business enters a national market after several other firms they can learn from other early firms mistakes)

Modes of entry:--
1. Exporting
2. Licensing
3. Franchising
4. Turnkey Project
5. Mergers & Acquisitions:
6. Joint Venture
7. Acquisitions & Mergers
8. Wholly Owned Subsidiary

1.Exporting :
It means the sale abroad of an item produced ,stored or processed in the supplying firm’s home country. It…...

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