Entering Foreign Market

What are the characteristics of favorable markets for firms entering foreign markets?

• Speculative financial bubbles

• High inflation and high private sector debt

• Politically stable with free market systems

• Politically unstable with mixed economies

What are the advantages of early entry as a basic entry decision?

• Creating switching costs for customers

• Reducing risks associated with large-scale entry

• Building up sales volume ahead of rivals

• Avoiding costs of business failure

What is the main disadvantage of first-mover advantages?

• Costs of preempting rivals

• Costs of educating customers

• Costs of promoting and establishing a product offering

• Costs of business failure

What is the advantage of small-scale entry into a foreign market?

• Avoiding costs of business failure

• Learning about the market with limited exposure

• Building market share quickly

• Reducing risks associated with large-scale entry

Which entry mode is often the first method firms use to enter foreign markets?

• Turnkey Projects

• Licensing

• Franchising

• Exporting

What is a key advantage of turnkey projects as an entry mode?

• Great economic returns

• Long-term interest in the country

• Creating a competitor

• High risk

What is the main advantage of licensing as an entry mode?

• Avoiding risks of entering overseas markets

• Maintaining tight control over manufacturing

• Bearing development costs

• Potential loss of technological expertise

What is a disadvantage of franchising as an entry mode?

• Engaging in global strategic coordination

• Engaging in global strategic coordination

• Eliminating costs and risks of opening a foreign market

• Detecting poor quality

What is an advantage of joint ventures as an entry mode?

• Shares the costs and risks

• Benefit from local partner's knowledge

• Maintain tight control over subsidiaries

• Minimize risk of government interference

What is a key advantage of wholly owned subsidiaries as an entry mode?

• Reduce the risk of losing control over core competencies

• Achieve location economies

• Maintain maximum control over operations

• Share costs and risks