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International Entry Mode

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II. THEORETICAL BACKGROUND
A) Choice of Entry Modes There are several choices of entry modes for firms trying to globalize, however it should be kept in mind that there is no one method suitable for all the firms under a specific set of conditions. Although there are various entry modes which firms should consider before entering foreign a market? We have a global market and with this we get global competition. This means that more and more firms have decided to go in to new markets and this demands the right type of action in order to be successful (porter 2004:287). ''Foreign market entry mode is an institutional arrangement that makes possible the entry of a firm's products , technology , human skills, management or other resources in …show more content…

For example exporting firms have two alternative modes: exports through independent intermediaries, and exports via integrated (company-owned) channels (Anderson & Coughlan 1987). Alternatively firms can produce their products overseas either through contractual modes (e.g., licensing and franchising) or via foreign direct investment (joint venture and wholly owned subsidiaries). Entry modes differ from each other dimensions, one of which is, the degree of control they allow the foreign market entrant (Root 1987). Control has been perceived by researchers as flowing from ownership. Thus the greater the firms level of ownership, the greater the control it enjoys over its international transactions (Anderson &Gatignon 1986). For this reason, company-owned channels, wholly owned foreign subsidiaries and branches are designated as full-control modes. On the other hand, exports through outside intermediaries, contractual transfers and joint ventures are termed shared-control …show more content…

It determines whether a firm has full control over the foreign unit or is sharing control with the partner (Arregle et al, 2006). Additionally, once a firm establishes a mode of entry it is difficult to change it because a change would have long-term consequences for the firm (Brouthers and Hennart, 2007). Modes of entry into international market is the third most researched field in international management (werner, 2002). This demonstrates the importance of choosing the correct entry mode when joining the international business

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