Question

Describe in detail the several common entry strategies for international operations.

Answer 1

Answer:

International Entry Strategies:

The entry mode strategy encompasses how an organization plans to enter the new market. The most common entry points for overseas markets are:

Export as Entry Strategy:

Export directly sells goods from one country to another. Export may be either direct (no-talk; goods sold at corporate headquarters directly) or indirectly (goods sold to a mediator responsible for the sale of these goods in foreign markets). Indirect exports carry a low risk to the company in general, but direct export is recommended for companies that expect overseas marketing to be an important part of their strategy.

This may be the fastest way to enter the international market, and it protects the intellectual property of the company, but shipments and shipments can add additional costs to the product and problems in the process. In this case, very little investment is needed, as there will be no production in the new region, but a large investment in sales must be made in order for export to be successful. Export can be a great test for exploring foreign markets, and online business travel can help speed up the process, but it will require preparation by vendors and vendors to ensure success.

Licensing as Access Mode:

Licensing allows a third party to use local company strategies, technologies and / or trademarks to produce a home company product under specific terms. The licensing agreements allow the company the benefit of getting physical labor in the new region without having to build production facilities from the ground up.

To be successful, licensing relies on the exchange of confidential information, which could put the company's strategic benefits at risk, but agreements can be changed to protect both parties. The license holder provides for another capital, assumes some of the risks and has to provide an independent cash cycle, because it pays the fees associated with the license itself. The negative is the loss of control over the operation of the asset.

Collaboration as an Entry Mode:

Participation can also be called a joint venture or strategic alliance and occurs when two or more companies agree to invest in a foreign market. This allows the affected investors to utilize their financial and R&D resources, sensitive information and available information. This often happens when a home company reaches an existing company in a foreign region and offers a new opportunity. This gives the home company access to the foreign market and gives the affiliate company a new opportunity in its existing markets.

Getting involved can be difficult if the firms involved eventually want to go their separate ways or if the agreement moves and leaves the foreign company as a new competitor. In some countries, in order to enter the market, a multinational company must form a partnership or partnership with an existing company in that country to avoid foreign businesses holding 100% ownership in certain markets. It's good to check the laws of each country when deciding how to get into international markets.

Acquired as Access Mode:

The acquisition involves purchasing an existing company in a new district and integrating it as a subsidiary within the parent company. Finding a competitor, supplier or related business around the world can be a great way to introduce a company's products to a new market. Local business acquisition is one of the fastest ways to enter the international market.

It can be difficult to integrate business culture, and adapting an adoption product to fit a company's strategy can take time. The benefits lie in the knowledge of regional cultural acquisitions, markets and strategies and its already established management and business structure. The acquisition may also provide new opportunities for innovation and expansion of the company's portfolio, especially if the asset-based strategy fits within each market.

Franchising as an Entry Mode:

Franchising gives the independent business owner the rights to operate the franchise using company strategy, business format and technology. Franchising is similar to a license, even though a franchise usually offers a whole package of common company functions, while the licensee can have his or her own business methods.

Franchising allows a home company to share the risk with a private business owner and can better protect trade secrets, but the success of the franchise will depend heavily on the decisions made by the Franchise team. The Franchisee comes to the table with investment capital, but the home company contributes a portion of the control of the international franchise.