Market Entry Modes For International Businesses

This presentation discusses the different market entry modes for international businesses including exporting, contractual and investment modes. It covers the advantages and disadvantages of exporting and alternative organizational arrangements for exporting such as export grouping and piggybacking. The presentation also includes references for further reading. This resource is useful for students studying international business and related courses.

CHAPTER 7
Market Entry Modes For
International Businesses

EXPORTING, CONTRACTUAL AND INVESTMENT
MODES
Exporting Contractual Investment
• Direct export
• Indirect export
• Licensing
• Turnkey projects
• Management
contracts
• Licensing
• Franchising
• Strategic alliance
• Wholly-Owned
subsidiary
• Joint Venture

TYPES OF INDIRECT EXPORTING INTERMEDIARIES
 (ECH) the export commission house
 the export/import broker
 (ETC) the export trading company
 (EMC) the export management company
WAYS OF PERFORMING DIRECT
EXPORTING
 By an own representative office operating on a transfer of rights and
obligations of the parent company as because of its function is reduced
to marketing activities
 By a foreign agent that acts on the behalf of the exporter and its name
 By a foreign distributor acting on its own account and on its own behalf
 By its own distribution network abroad

ADVANTAGES AND DISADVANTAGES OF
EXPORTING
Advantages Disadvantages
• Permits gradual market
entry
• Relatively low financial
exposure
• Avoids the restrictions on
the foreign investments
• Acquires knowledge
regarding the local market
• Logistical complexities
• Potential conflicts with the
distributors
• Vulnerability to the NTBs
and tariffs

ALTERNATIVE ORGANISATIONAL
ARRANGEMENTS FOR EXPORTING

COOPERATIVE EXPORTING
 Export grouping-
 “the voluntary alliances companies gets tied with the foreign joint
promotion of the services and products of its members.”
 largest advantage is that of spreading the cost of exporting activities
for members of consortium that allows the SMEs for overcoming one
of the main barriers to internationalization that is the limited financial
resources.”
 Piggybacking

“the contract parties are the two different entities, namely the rider
and the carrier.”

“A carrier carries out the business in the foreign markets that offers to
rider its very own distribution network.”

REFERENCES
 Daszkiewicz, N. and Wach, K. 2014. Motives for Going
International and Entry Modes of Family Firms in
Poland. Journal of Intercultural Management, 6(2).

THANK YOU