Unformatted text preview: ender unbearable costs to ship heavy
or large goods due to the high shipping costs.
The amount of risk the company is willing to take when entering a new market is according to
Hollensen (2001) influencing the choice of foreign market entry mode, the scale of risk
connected to entry mode ranges from exporting, which is the least risky; to wholly owned
subsidiaries or production facilities which, involves the most risk due to the heavy resource
committed to such entry.
Somewhat connected to risk, mentioned above, is the flexibility of the chosen entry mode as it
according to Hollensen (2001) influencing the choice of entry mode, as it is crucial to a
company to be able to swiftly respond to changing market conditions or even withdraw
entirely from a market. This is, as the risk factor ranging from export being the most flexible
due to the low cost involved, to wholly owned subsidiaries due to the high cost of
withdrawing from such a high involvement entry. 2.1.4 Theory by Root (1994)
Root (1994) argues that how a company responds to externa...
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