chapter  6
26 Pages

Entry Strategies

In deciding to go international, a company must choose an entry strategy to achieve its international expansion goals. Entry strategies set the stage for an international company’s success in its expansion into overseas markets. Choosing the right entry strategy saves money and time, provides strategic advantages, and lessens the risks associated with international operations. The choice of a particular entry strategy is most often a result of a thorough analysis of the company’s strengths and weaknesses and a comprehensive external environment analysis that includes the market potential. Some key internal factors that are considered include a company’s core competencies and its risk threshold, or how much financial risk the company is willing to take. In entering a foreign market, a company can choose from a minimal investment option to one that requires a large investment. International companies can choose from four

distinct entry strategies: exporting/importing, licensing/franchising, joint ventures, and wholly/fully owned subsidiaries. Licensing/franchising, joint ventures, and wholly owned subsidiaries require direct investments in the foreign country. Each strategy is designed for gaining entry into foreign markets under varying conditions. These entries are not necessarily unique to large international companies; small and medium-sized companies also use them.