International Market Entry Methods

ExportingExporting is the read sale of goods and / or services in an separate expanse. It is possibly the best-known method of entry a contrasted market, as well as the lowest risk. It whitethorn also be cost-effective as you stomach not fill to invest in production facilities in your chosen country any goods are still produced in your home country indeed displace to foreign countries for sale. However, rising transportation costs are likely to increase the cost of merchandiseing in the near future.The majority of costs complicated with exporting come from marketing expenses. Usually, you will need the involvement of quaternion parties your business, an importer, a transport provider and the g overnment of the country of which you wish to export to.LicensingLicensing allows another social club in your target country to use your spot. The property in question is normally intangible for example, trademarks, production techniques or patents. The licensee will pay a fee in order to be allowed the function to use the property.Licensing requires very little enthronement and can provide a high return on enthronization. The licensee will also take commission of any manufacturing and marketing costs in the foreign market.FranchisingFranchising is many(a)what same to licensing in that intellectual property rights are sold to a franchisee. However, the rules for how the franchisee carries bulge business are usually very strict for example, any processes must(prenominal) be followed, or limited components must be used in manufacturing.Joint ventureA joint venture consists of two companies establishing a jointly-owned business. One of the owners will be a local business (local to the foreign market). The two companies would then provide the new business with a management team and share deem of the joint venture.There are several benefits to this type of venture. It allows you the benefit of local friendship of a foreign market and allows you to share costs. However, there are some issues there can be problems with deciding who invests what and how to split profits.Foreign direct investmentForeign direct investment (FDI) is when you directly invest in facilities in a foreign market. It requires a lot of capital to cover costs such as premises, technology and staff. FDI can be done either by establishing a new venture or acquiring an existing company.Wholly owned subsidiaryA all in all owned subsidiary (WOS) is somewhat similar to foreign direct investment in that money goes into a foreign company but sooner of money being invested into another company, with a WOS the foreign business is bought outright. It is then up to the owners whether it continues to run as before or they take more(prenominal) control of the WOS.PiggybackingPiggybacking involves two non-competing companies working together to cross-sell the others products or services in their home country. Although it is a low-risk method involving little capital, some companies may not be comfortable with this method as it involves a high degree of trust as well as allowing the associate company to take a large degree of control over how your product is marketed abroad.Turnkey projectsA turnkey project refers to a project when clients pay contractors to visualize and construct new facilities and train personnel. A turnkey project is mode for a foreign company to export its process and technology to other countries by building a plant in that country. Industrial companies that qualify in complex production technologies normally use turnkey projects as an entry strategy. One of the major advantages of turnkey projects is the possibility for a company to establish a plant and earn profits in a foreign country especially in which foreign direct investment opportunities are limited and lack of expertise in a specific area exists.Potential disadvantages of a turnkey project for a company allow risk of revealing companies secrets to rivals, an d takeover of their plant by the host country. introduction a market with a turnkey project CAN testify that a company has no long-term interest in the country which can become a disadvantage if the country proves to be the principal(prenominal) market for the output of the exported process.