Unformatted text preview: ountries where competition is judged too strong for both export and
equity modes, a company may turn to licensing or other contractual modes (Root, 1994).
Target Country Production Factors
Root (1994) also states that the quality, quantity, and cost of raw materials, labor, energy and
other productive agents in the target country, as well as the quality and cost of economic
infrastructure (transportation, communications and port facilities) have an evident bearing on
entry mode decisions. Low production costs in the target country encourage some for of local
production as against exporting and finally, high costs would militate against local
Target Country Environmental Factors
Root (1994) argues that the political, economic and sociocultural character of the target
country can have a decisive influence on the choice of entry mode and the most noteworthy
may be government policies and regulations regarding to international business. Restrictive
import policies (high tariffs, tight quotas and other barriers) discourage an export entry mode
in favor for other modes. Another environmental factor is the geographical distance. When the
distance is great, transportation costs can make...
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