Question

Write one page paper and decribe three of the five entry modes that firms consider as paths to use to enter international marketa

Answer 1

International business can be described as the trade and investment activities by a firm across national borders. It is also said as Global business. All commercial transactions that take place between two or more regions, countries, and nations beyond their political border are included in international business.

The five common expansion modes are- Exporting, Licensing, and Franchising. Partnering and Strategic Alliance, Acquisition, Greenfield Venture.

Exporting	This is the fastest mode of entry into the international market. Exporting is said as direct selling or marketing of the domestically produced goods in another country. It is the most traditional method of reaching foreign markets and is being in practice since ages. The biggest advantage of exporting is that firms avoid the expense of establishing operations in the new country. Hence the investment factor is low, low control is required but a negative impact of transportation is there as the exporter has no control on it.
Licensing and franchising	Licensing and franchising is characterized by Fast entry, low cost, low risk. It can be said as an agreement with foreign companies. An international licensing allows a foreign company to sell its product or use intellectual property in exchange for royalty fees. For example, McDonald's is a franchise that is spread all over the world. People are opening the outlets by giving the royalty fee to use its name and brand. This is how MacDonalds has become a worldwide fast-food chain.
Acquisition	It is said as an activity where the ownership of the organization is being transferred or in simple terms acquisition can be explained where one company buys most of or a maximum of the shares of another company. The benefit of the acquisition is when a company acquires other organizations in other nations then the entry into the market is fast, local employees are available to meet the objectives, the acquirer gets everything set and need not build things from scratch. For example when TATA acquired Jaguar. Everything remained as it was except the ownership.