Question

Create a research paper that lists and explains the methods available to a business for opening a business in a foreign country. In other words, what avenues can be sued to enter the market in another country.

Do some research being attentive to APA source citation and referencing guidelines.

cite your sources with a reference page

Answer 1

Methods which are available to a business for opening a business in a foreign country/ avenues which can be used to enter the market in another country:-

This is the era of free trade. Each and every firm wants to expand its business operations across the national boundaries. But entering into international business is not as easy as it seems. But entering into international business is also not as daunting as it is being portrayed. It means a firm can be successful in international business and trading if it does proper research of the opportunities and threat posed by economic and non-economic factors before entering into a foreign market and selecting the most suitable ways of entering into the global market. There is no fixed way of entering into the global trading and becoming a successful enterprise. It all depends on the kind of business a firm is involved in and the country in which it wants to enter as the scenario of each country and industry (business) quite differs from each other. Following are the most important method for opening a business in a foreign country-

i. Exporting- Exporting is one of the most common method to enter into the market of another country. It is an advanced version of domestic selling. Under this method of opening a business in a foreign country, a producer produces its product in the home country and then directly sells the product in the foreign market. This avenue of entering into a foreign market has both pros and cons. Advantages of this method are easy to enter into the market of another country, most common method and less risky method as compared to the other available methods. But, it has also got its share of disadvantages like increase in cost due to the involvement of transportation cost and marketing cost. It also involves a lot of documentation process.

ii. Licensing- Licensing is another method to enter into international business. Under it, a parent company gives permission to other companies in the targeted country to use its intangible properties like brand name, manufacturing procedure, packaging, logo, name etc. In return, the parent company (licensor) receives money from the licensee. It has also its own advantages and disadvantages. Its advantages include a huge return on less investment, a cost-effective way to enter in international business, etc. Its disadvantages include less control over the licensee and its business operations, even these licensee can emerge as competitors in the future in that market and many more.

iii. Franchising- This method of entering the international business was emerged to remove the shortcomings of the “licensing method”. It is somewhat similar to the licensing method but under the franchising method, the terms and conditions of using the intangible properties of the parent company on the franchisee are very strict. Hence, it could be used as a substitute method licensing method.

iv. Joint Venture- JV is another method to enter into the international market. Under this method, two companies of different countries (one is usually local to the country) come to an agreement to invest in a venture and do business in that country and later they split the profit generated out of business activities. Under it, the share of both the companies is usually 50-50, but it is not necessary it could be negotiated between them. Its advantages include risk aversion, gaining access to the local supply chain, etc. Its disadvantages include usually there emerges a dispute between both the partners due to investment and profit split.

v. Foreign Direct Investment- FDI is another method to enter in the international business. Under it, a company directly invests in a foreign company and holds controls of a particular portion of that company. It is a very costly affair as a company has to invest a large sum of money to purchase a company and maintain employees and technological standards.

Hence, these are some of the most important method to enter into the foreign market.