Modes Of Entry Analysis

2. Discuss different levels of market involvement and various modes of entry.
Most of the companies start by producing and marketing in their own country. It is because the environment in the home country is better known thus the difficulties in the home country can be over come easily. But over time as the home market become saturated or in other words the market potential is fully occupied due to other players in a particular industry, a company seeks market elsewhere. A company in the starting usually export the products in the same form as in the home country to other countries. With time as the demand for their product increases, a company may seek to set up production in the host country as it will help the company understand their customers

The major modes of entry used by firms are:
1. Exports
This is the most basic and easy mode of entry as the risks involved in this are the minimum. In this the manufacturer exports his products to other countries. He may himself export the products directly or may use intermediaries such as export trading companies, export merchants, confirming houses to export his products.

2. Licensing
It is a mode in which a firm from the home country gives license to a person or a firm in the host country for operating the frim’s operations on its behalf. The time for which the license is provided is decided by the home country firm. All the strategies and the way in which various tasks will take place are decided by the home country and the host country firm is to function accordingly. The revenues for the home country firm come from fee for giving the license and in form of royalties.
Various advantages of this mode are taping new markets not available by exports, obtain additional investment, low risk is involved and reduced costs

But as in the international market a lot more factors are to be considered that make the task more complex, there needs to be some customisation of the four P’s according to the international environment. So we take these four P’s one by one at an international level
Product
The basic purpose of a product is to satisfy the needs of consumers in a most efficient and suitable manner. So while launching a product in the global market there is always some need to adapt the product according to the local public as there are certain characteristics of people which can’t be changed. Eg. In India beef eating is avoided due to cultural preferences which can’t be changed. So McDonald’s has to remove the beef burgers from its menu.
Also it is not always that one need to adapt the product according to the local environment as it involves a lot of cost. Whenever there is proper acceptance of a standardised product, adapting the product should be avoided. Brands like Nike, Levis market their standardised products to all the