12. Entry Strategies and Strategic Alliances

There are several advantages associated with entering

a national market early before other international businesses have established themselves. This is known as First-mover advantage which is ...

• ...the ability to use technology and financial investment in a new market.

• ...the ability to preempt rivals and capture demand by establishing a strong brand name and customer satisfaction.

The most attractive foreign markets tend to be

found in politically stable developed and developing

nations that have free market systems.

• True

• False

The next are entry modes to foreign markets

• Exporting

• Franchising

• Owned subsidiary

• All of them

Exporting

• Direct exporting involves selling directly to the customer in the target country, while indirect exporting uses intermediaries.

• Exporting allows a firm to grant its technology, patents, or trademarks to a foreign company for a fee.

Disadvantages of exporting

include high transport costs, trade barriers, and

problems with local marketing agents.

• True

• False

Franchise allows a firm to grant its technology, patents, or trademark, business method, and brand su to a foreign company for a fee.

• True

• False

Joint venture mode involves the highest level of investment but provides full control over operations. It can be established either by setting up a new operation (Greenfield investment)

• True

• False

Joint venture

• Involves finding a local partner to share costs and risks.

• It offers the advantage of local knowledge but requires sharing control and profits.

• Non of them

This mode involves the highest level of investment but provides full control over operations. It can be established either by setting up a new operation (Greenfield investment) or by acquiring an existing business in the host country.

• Exporting

• Franchise

• Wholly owned subsidiary

• Licensing

...involve a company buying an existing firm in the target foreign market.

• Acquisition

• Greenfield Ventures