Entry Modes for GlobalGear Ltd. in Latverian Market

TABLE OF CONTENT
Question 1........................................................................................................................................1
recommendation to GlobalGear Ltd. for an entry mode to use when entering the Latverian
market..........................................................................................................................................1

Question 1
recommendation to GlobalGear Ltd. for an entry mode to use when entering the Latverian
market.
There are many entry modes which GlobalGear Ltd can use while entering in Latverian market
some of them are as follows:
Direct exporting:
It is famous and easy method while entering international market. As company can direct export
its goods and services to other global market. It is considered as the fastest mode when entering
the oversea market. As GlobalGear Ltd has seen that there is the demand of mattress in the
Latverian market. As company can opt this option of suppling products to the importer rather
then establishing retail store in the international market. This option is the cost effective option
as there is no need for company to establish factory or store in global market. As online sales is
also the option but company should have not adopt that as in latveria majority of mattress sales
happens via physical retail store and it has observed that only 23% of sales are happening
through online websites. The another reason why company should ignore delivering online
mattress in latveria is the lengthy delivery time and companies are doing marketing which is
concentrated on physical stores only. As this mode of entry will take more time for offline
product and less time for online but preferring online mode is of no use in latverian market.
Licencing and franchising:
This is the another most famous entry mode. This option comes with less risk. This strategy will
allow other business taking the risk on behalf of other company. In the licencing agreement, the
oversea business will use the company’s brand name, products, intellectual property, trademarks
etc. and will pay royalty and commission to them. Here the franchisee will take all risks and have
to bear all losses. As the licensee will share the portion of the profits with the brand. It requires
low cost when have to enter in the foreign market. Licencing partner have complete knowledge
and understanding about the local market. Through this mode global gear ltd will get continuous
source of income. It also helpful in eliminating or reducing the political risks because the
franchising partner is the domestic or local business. With less investment it allows company to
expand in many regions. It has some limitations also like there are some cases in which company
does not have complete control on franchising. Here the reputation of brand is on stake. As
incompetence of the licencing can tarnish or destroy brand image in the oversea market.
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