This website uses cookies to ensure you have the best experience. Learn more

Business’s Choice Of Entry Modes In International Market And Its Advantages And Disadvantages

2095 words - 9 pages

Working title:
Business’s choice of entry modes in international market and its advantages and disadvantages

Introduction
Well known companies like Nike, Microsoft, Sony, Shell Group are just some of the big companies that went global and expanded their trading around the world, they are large businesses that operate internationally in many countries. Development of worldwide integration urges companies to reach out international markets and interact with foreign customers. Businesses focus on fulfilling the demand of the market by its products or services, besides their target is increasing profit, in order achieve these goals they favor to expand their work in a foreign market. Other ...view middle of the document...

How these modes were established and by whom will be defined in the following part.

In 1977 Swedish researchers at Uppsala University came up with a model/theory how businesses should grow their activities in foreign market, this model explains that companies should select an entry mode by taking into consideration their own resources and exploring costs, and risks based on market nature. (Johanson and Vahnle, 2009) Researchers at Uppsala University in their empirical study found that Swedish firms mostly started their process of internationalization by exporting, initially companies had agents that represented them in foreign market, but these firms exported in countries that had little differentiation in culture, language and political systems from their home country, this was labeled in their model as physically close countries. Uppsala Model considers two types of knowledge objective and experience based knowledge, the model describes that after first entrance in foreign market businesses understands how to work in external country, and later they step by step increase level of internationalization to physically distant countries. (Johanson and Vahnle, 2009) But, can Uppsala model be applied to services? This model was mainly reliable for manufacturing industries; a paper with contrary arguments was published in 2008, providing two variables; environment-related and service specific, to question whether Uppsala model can be used for service firms. (Jorge Carneiro, da Rocha and da Silva, 2008) Psychic distance and uncertainty in environment, need for quality, face-to-face contact with clients in service delivery, capital intensity are some of the arguments that contradicts Uppsala Model. The results from this study stated that services mainly would choose a mode to internationalize that has higher control like licensing. (Jorge Carneiro, da Rocha and da Silva, 2008) However this analysis is limited because it is sourced on previous studies and not on evidence based on real research.
Franchising as a method to internationalize their businesses was generally used by business service companies in 1990s, to determine the issue of franchising as mode of entry in foreign market, in those years an analysis was outlined with purpose to find out what are the factors that push professional business services to franchise in process of internationalization. (Alon and McKee, 1999) The sample of the research was 71 US firms with combination of 7 years (1990-1997), they found out that franchising was the best choice to internationalize because there were several barriers for the service firm to choose other mode of entry, like; professional licensing issues, transfer of the technology in other country and it required high level of human capital in the production in service firms. (Alon and McKee, 1999)
Strategic Alliances is another mode of entry in international market which is defined in Das and Teng (2000) journal called “A resource-based theory of...

Find Another Essay On Business’s choice of entry modes in international market and its advantages and disadvantages

International market entry and development in Russia Personal Computers

3644 words - 15 pages world. Undeveloped infrastructure and Russian geographic position is favourable for market entry in Moscow area. Strong brand and trendy items are preferred choice of Russian customers. Before coming to the Russian market it is recommended to develop a strong brand in the home country. Market entry is recommended by starting a joint venture which can reduce political risk, help dealing with corruption and is more adopted to deal with Russian

Advantages of technology in the international market

654 words - 3 pages Technology plays a major role in international trade. Databases, overnight delivery and faxes have opened the world market to not only larger companies but small ones too. To add to this globalization, companies and even competitors are combining and forming alliances to cut cost and increase the profit margin. Chrysler, General Motors and Ford have formed an alliance in research and development to avoid duplication. These alliances are not only

Television, what it is, how it works (in term of physics) and its impact on society, including advantages and disadvantages

1293 words - 5 pages has also frequently rewarded viewers with outstanding presentations in drama, documentary, and the arts, and it has made such programming available to millions of people across the globe.The television is quite a new piece of technology, but its preparations started much earlier. It was 1873 when the Scottish scientist James Clerk Maxwell predicted the existence of the electromagnetic waves that would make it possible to transmit ordinary

What is functionalism? Critically assess its main advantages and disadvantages

4011 words - 16 pages philosophy, and provides the conceptual underpinnings of much work in cognitive science.In more detail, functionalism is the view that the physical realization of a functional component is not, in some sense, its essence. Rather, what makes a functional component the type it is, is characterized in terms of its role in relating inputs to outputs and its relations to other functional components. Functionalism says that mental states are understood

International Business What are the advantages of outsourcing? What are the disadvantages of outsourcing? Discuss why these are advantages and disadvantages and to whom

652 words - 3 pages over to some other external party.""Thus before a company decides to outsource its business process, it must examine allthe factors carefully. It may not happen that outsourcing becomes a reason for companyto regret later."In closing there are pros, and cons, advantages and disadvantages of outsourcing, but itcannot be ignored. The pros, most economists are sure that this condition is justtemporary one and will die down as conditions develop and

Define the four main approaches to staffing within International Human Resource Management.What are the advantages and disadvantages of each approach to international management

1236 words - 5 pages used when implementing a multinational approach.Polycentric staffing can have certain advantages. By hiring HCN's language barriers are overcome, there is perfect knowledge of the market, legal and political structure and culture. Also there is no delay in the adjustment process when assigned to new posts compared to expatriates. By using local staff labour turnover can be decreased and productivity rises. In addition, HCN managers receive lower

Genetic Screening what are its uses, advantages, disadvantages and ethical issues

927 words - 4 pages information received is kept confidential. This is because genetic screening, although has its advantages has helped many families in a lot of ways mentioned above, therefore, it should be acceptable, however the choice of whether to do it or not rely on the individual and should not be pressured to do so. All in all, genetic screening is a great type of biotechnology that has prevented a lot of genetic disease.How it worksGenetic screening is

What is Management by Objectives (MBO)? What are its advantages and disadvantages?

927 words - 4 pages IntroductionThe use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. MBO (management by objectives) methods of performance appraisal are results-oriented seeks to measure employee performance be examining the extent to which predetermined work objectives have been met.Usually the objectives are established jointly by the supervisor and subordinate. An example of an objective for a

MANAGEMENT BY OBJECTIVES How does MBO complement the planning function of management? What are its advantages and disadvantages? What are your conclusions on its use

1349 words - 5 pages -control' on the basis that they have a clear idea of what is expected of them in the form of objectives that they participated in setting.When implemented effectively (which is problematic in itself; discussed later) MBO has definite advantages for an organisation. A major one relates to goal congruence and the fact that all employees' efforts are geared towards achieving certain objectives that have been determined to be the most positive for the

Colmate: A market entry assessment. Students were to select a locally owned consumer godd and conduct an international market entry study

8256 words - 33 pages factorsHong Kong is a free market economy highly dependent on international trade. Imports and exports exceed the GDP in dollar value (Wikipedia [i], 2006). International trade is almost duty free in Hong Kong and due to the transparency of its regulatory system and fewer market access barriers for overseas business; Hong Kong is an extremely attractive market to enter in the Asia region.Hong Kong is also a major international banking centre, and serves to

International Market Entry For The Mobile Telecommunications Market In The Russian Federation

4194 words - 17 pages significant bearing on the results as risk and returns are both likelyto increase along with increasing commitment to Russia, and to be greatest in the case ofinvestment entry modes. Fallon and Jones (2004) outlined what should motivate the choice of aparticular entry mode in the Russian market.All top five mobile manufacturers entered the Russian market primarily by means of exporting.Exporting is the marketing and direct sale of domestically

Similar Essays

Understand And Critically Evaluating Entry Modes Of Businesses In International Market

1209 words - 5 pages international market and whether that choice is a good or bad decision for the future of the company. The first part of the paper will explain in the details types of entry choices, the second part will be about advantages and disadvantages of chosen mode and at the end after researching and evaluating literature review a conclusion will be reached. Part One In 1977 Swedish researchers at Uppsala University came up with a model/theory how businesses

Advantages And Disadvantages Of Free International Trade

1468 words - 6 pages 1a) Advantages of free international trade 1. Increasing the production. Countries are enabled by free international trade to specialise or to focus in the production of the goods in which they have a comparative advantage. Specialisation countries can take the benefit of efficiencies generated from increased output and economies of trade. The size of the firm’s market are increased by the international trade which results in lower average

Advantages And Disadvantages Of Giving International Aid To Poor Countries

2324 words - 9 pages Advantages and Disadvantages of Giving International Aid to Poor Countries Poor countries have been receiving aid from the international community for over a century now. While such aid is supposed to be considered an act of kindness from the donor nations or international bodies, it has led to over dependence among the developing countries. They have adopted the habit of estimating and including international aid in their national budgets to

Existentialist Theory, Its Features, Advantages And Disadvantages

908 words - 4 pages Existentialist Theory, Its Features, Advantages and Disadvantages For introduction purposes, Existentialism is the philosophical theory that holds that in order to grasp human existence, then further set of categories governed by the norm of authenticity are necessary (Steven Crowell, 2010). Existentialism is a philosophy which stresses on human existence as opposed to the movements that submerge man's existence. Normally, if emphasis of