Question

can you explain or define those

. Foreign Entry modes

Answer 1

Globalisation has become very important now. It is the main factor which encourages different countries to start trade in other countries and thereby increasing their own profits and grow and develop. Factors such as relaxation in the import and export rules, taxation, removal of trade barriers, free trade agreements, increasing market share, profits and the will to become the global brand have helped the companies to globalize. For this they need different entry modes into the foreign markets which are called as the foreign entry modes. These are :-

Exports

Exporting is the process of goods selling into other countries. This was they will get an entry into other country markets. The goods can be those which are not available in other country or the goods that can be used as raw materials for production of some other goods. It is basically a kcross border sales activity. This helps the other country to get goods as raw materials, or goods that are not produced in their country. And the first country will get a chance to enter into this country's market.

Licensing

An agreement which is cross border and allows the target country to use the property of the licensor. It is like an international licensing. These include patents, trademarks and production techniques. The licensee which will be one country is required to pay a certain amount of fee to use the license in their country.

Franchising

Here the franchisee pays the fees to the franchiser to use the company's trademark and sell its foods and / or services. Franchising is very commonly used and is largely successful method for the cross border entry into the market. The benefit of franchising is that it already uses the name and face or already famous brand of other country.

Joint Venture

This is another way of foreign market entry as jointly they enter into each other's markets.Her the negative points will be equally understood and the positive points of each country will be used as benefits. The benefits of technology, knowledge sharing, acceptable level of risk etc will all be shared.

Subsidiary

This will be a wholly owned subsidiary, wherein an organisation enters the foreign market with full ownership of the foreign organisation. they have full rights. Acquisition and greenfield operation are two ways of whooly owned subsidiary. By acquisition they fully purchase a foreign organisation and greenfield operaion is creating a new organisation and legal entity in the other market.Both these ways are used to enter the foreing markets.