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Modes of Entry Into an International Business

In: Business and Management

Submitted By fahd
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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.
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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