Entry Modes for Global Gear Ltd

Online Exam - International
Business Management.

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................3
Entry modes for Global Gear Ltd................................................................................................3
QUESTION 2..................................................................................................................................5
Considerations to be monitored by Global Gear related to legal systems...................................5
QUESTION 3..................................................................................................................................6
Political Risks to be monitored by Global Gear in Latveria........................................................6

QUESTION 1
Entry modes for Global Gear Ltd.
Every business needs to select a target market for providing goods and services but the
business does not limit itself to that target market only but strives hard to expand according to
the growth of the business. In order to expand the business for reaching the greater number of
customers in the global market, various businesses started entering the foreign market. There are
many different ways for entering the international market because no single strategy is able to fit
better because of the size and nature of business. There are various factors in which the selection
of the strategy depends upon such as adaptation cost, transportation cost, tariff rates etc. Global
Gear is a retailer company dealing in mattresses which is headquartered in South Korea. The
senior management of the company decided to expand itself in Latveria for increasing the
customer base and the profitability of the company. Following are the entry modes which can be
used by the company for expansion.
Direct exporting: In this mode of entry, the businessman deals in exporting the final goods to
the other country which is the host country by taking help of agents and distributors. These are
also considered as face of company in the foreign or international market. This is considered to
be the easiest method of expansion but the company needs to select the agents and distributors
very carefully as the profit and loss depends on them. Global Gear can use this method as its
reputation made in South Korea can help it in convincing the distributors and agents. This
company is the manufacturing company which is why it has many contacts with the people in
other countries like Latveria.
Licensing: In this mode of entry, the company needs to maintain contact with the businesses in
the host country for making them agree to sell the products of the business. The businesses like
Global Gear has earned greater revenues which is why, the company can easily convince the
foreign business to deal in their products as the country needs to ensure that the company did not
face the failure. This does not mean that the company sells the business to another country but
this means that the company gives some rights to the country for selling the products. The
company does not lose control in this case. Global Gear can use this mode of expansion for
expanding in Latveria as this becomes easy for the company to convince the country for selling
3