Analyzing Market Entry Modes in International Business Context

This report provides a detailed overview of market entry modes for international businesses, categorizing them into exporting, contractual, and investment modes. It discusses direct and indirect exporting, highlighting intermediaries like export commission houses, export/import brokers, export trading companies, and export management companies. Furthermore, it elaborates on various direct exporting methods, including representative offices, foreign agents, and distribution networks, outlining their advantages and disadvantages, such as market entry speed, financial exposure, logistical complexities, and potential conflicts. The report also examines alternative organizational arrangements for exporting, such as export groupings and piggybacking, along with cooperative exporting strategies, emphasizing the benefits of cost-sharing and resource leveraging for SMEs. Contractual and investment modes are also mentioned, offering a comprehensive understanding of the strategies available for businesses expanding internationally. Desklib provides students access to similar solved assignments and study tools.

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).

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