Furthermore the size of the economy as measured by

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Unformatted text preview: it impossible for some export goods to compete against local goods in the target country. Thus high transportation costs discourage export entry in favor of other modes that do not incur such costs. The target country’s economy can also influence the choice of entry mode. Equity entry modes are usually not possible in centrally planned sot economies, so companies wanting to do business in with sot countries must rely on nonequity exporting, licensing or other contractual modes. Furthermore, the size of the economy (as measured by gross national product), its absolute level of performance (gross national product per capita), and the relative importance of its economic sectors (as a percentage of gross national product) are of importance. Generally these features relate closely to the market size for a company’s product in the target country. The cultural distance also influences the choice of target countries, because companies tend to first enter those foreign countries that are culturally close to the home country (Root, 19...
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