INTERNATIONAL ENTRY MODESSHIKHA SHARMABasic Foreign Entry DecisionsWhich foreign markets to enter? When to enter them?What scale?Which entry mode?There are no right decisions.just decisions that are associated ith di!erent le"els of risk and reardBasic Foreign Entry DecisionsWhich foreign markets to enter? When to enter them?What scale?Which entry mode?Which Foreign #arkets With o"er $%% nations in the orld. and they do not all hold the same &ro't &otentialThe decision to enter hich market ill (e (ased on the assessment of the nation)s long*run &ro't &otential The 'rm needs to consider the (ene'ts+ costs and risks of doing (usiness in that countryBut (e careful of this generali,ation..a 'rm may enter a market due to multi*&oint com&etition and may not (e seeking &ro'ts in this s&eci'c marketWhich Foreign #arkets-ong*run economic (ene'ts of doing (usiness in a country are a function of.si,e of the market&urchasing &oer of consumersfuture ealth of consumersfuture economic groth rates suita(ility of the &roduct for the marketindigenous com&etition&olitical sta(ilityWhich Foreign #arketsFa"ora(le /olitically sta(le de"elo&ed and de"elo&ing nationsFree market systems0o dramatic u&surge in in1ation or &ri"ate*sector de(t2nfa"ora(le/olitically unsta(le de"elo&ing nations ith a mi3ed or command economy Where s&eculati"e 'nancial (u((les ha"e led to e3cess (orroingEntry #odesE3&ortingTurnkey /rojects-icensingFranchising4oint 5enturesWholly 6ned 7u(sidiariesDeterminants of Which Entry #odeThe o&timal mode "aries for each market situation de&ending on the.trans&ortation coststrade (arriers&olitical riskseconomic risks(usiness riskscosts and re8uired in"estment'rm)s strategyDi!erent 'rms may enter the same market ith di!erent entry modesE3&orting9d"antages9"oids cost of esta(lishing manufacturing o&erations#ay hel& achie"e e3&erience cur"e and location economiesDisad"antages#ay com&ete ith lo*cost location manufacturers/ossi(le high trans&ortation costsTari! and non*tari! (arriers/ossi(le lack of control o"er marketing and sales (y delegating to agentsTurnkey /roject9llos a 'rm to e3&ort &rocess technology:ontractor agrees to handle e"ery detail of &roject forforeign clientdesignconstructiontrainingconsultation and technical su&&ort9t com&letion of contract+ the foreign client is handedthe key to the &roject#ost common in &rocess technology industrieschemical&harmaceutical&etroleum re'ningmetal re'ningTurnkey /rojects9d"antages9 means of e3&orting &rocess technologies:an earn a return on "alua(le knoledge assets :an o"ercome FD; restrictions-ess risky than con"entional FD;Disad"antages0o long*term interest in the foreign country#ay create a com&etitor7elling &rocess technology may (e selling the 'rm)s core com&etency and com&etiti"e ad"antage-icensing9greement here licensor grants rights to intangi(le &ro&erty to another entity educe &olitical risk 6"ercome in"estment (arriersDisad"antages>isk gi"ing control of technology to &artner#ay not ha"e the necessary control to reali,e e3&erience cur"e or location economies-imits a(ility to engage in coordinated glo(al strategy7hared onershi& can lead to con1ict o"er goals and controlWholly 6ned 7u(sidiaryThe 'rm ons D%% &ercent of the stock and esta(lishes their &resence "ia a green'eld "enture or an ac8uisition of an e3isting 'rmWholly 6ned 7u(sidiary9d"antages0o risk of losing control of core com&etency or technology to a com&etitorTight control o"er o&erations in di!erent countriesBel&s reali,e learning cur"e and location economiesDisad"antagesBear full cost and risk of foreign market entry-ack of local knoledgeculture and consumercom&etition and consumers&olitics and las9c8uisitions9d"antages?uick to e3ecute/reem&t com&etitors/ossi(ly less risky than green'eld "entures (ecause the 'rm is (uying assets that are &roducing re"enue and local knoledge Disad"antages6ften &roduce &oor results due too"er&ayment for ac8uired 'rm)s assetso"erestimate of the &otential for "alue creation