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Unformatted text preview: Gatignon 19861. Control
is desirable to improveafirm’scompetitivepositionandmaximizethe
returnson its assetsandskills.Higheroperationalcontrolresultsfrom
having a greater ownership in the foreign venture. However, risks are also
likely to be higher due to the assumptionof responsibility for decisionmaking
and higher commitment of resources.
Entry mode choices are often a compromise among these four attributes.
The exporting mode is a low resource (investment) and consequently low
riswreturn alternative. This mode, while providing a firm with operational
control,lacks in providingmarketingcontrolthatmay
market seeking firms. The sole venture mode, on the other hand, is a high
investment and consequently high riswretum alternative that also provides
firm. The joint venturemode
involves relatively lower investment and hence provides risk, return, and
control commensurate to the extent of equity participation of the investing
fm. Finally, the licensing mode i a low investment, low riswreturn alters
native which provides least control to...
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- Summer '14