Entry Modes and control … addendum

Entry Modes and control … addendum...

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Entry Modes and … Control and Risk and Potential Returns and Need for Expertise and Commitment
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Modes of Entry (in order of complexity) 1. Exporting / Importing 2. Licensing 3. Franchising 4. Strategic Alliances (SAs) 5. Joint Ventures (JVs) 6. Wholly Owned Subsidiaries (WOS)
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Entry Modes and Control and Risk and Potential Returns and Need for Expertise and Commitment The more complex the Entry Modes are: firms take more Risk, they can provide bigger potential Returns, they give the firms more Control over business abroad, they require more Expertise and Commitment. For example, W.O.S. as the most complex of the entry modes, requires from a firm a lot of Expertise and Commitment, but provides bigger Return ($$$) possibilities and offers more control that the other modes (100% ownership). On the other side, it is the riskiest.
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Unformatted text preview: Starting new business in a new country without a local partner can be risky and requires a lot of expertise in int’l business. Since the firms has 100% of shares, it has total control and will not share the profits with none. On the other side it makes the company to be fully committed since investment in manufacturing facility cannot be withdrawn quickly. Modes of Entry 1. Exporting / Importing 2. Licensing 3. Franchising 4. Strategic Alliances 5. JV (joint ventures) 6. WOS Increasing Risk, Return ($), Control and Need for Commitment and Expertise Modes of Entry 6. WOS 5. JV (joint ventures) 4. Strategic Alliances 3. Franchising 2. Licensing 1. Exporting / Importing Risk Return ($) Control Need for Commitment and Expertise or...
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  • Spring '12
  • Herst
  • Corporation, Subsidiary, entry modes, Parent company, Expertise and Commitment

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