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B there can also be disadvantages associated with

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b)There can also be disadvantages associated with entering a foreignmarket before other international businesses.1)One disadvantage ispioneering costs,or costs thatan early entranthas to bear but a later entrant can avoid.2)Pioneering costs canarise when a business system in a foreigncountry is very different than in a firm’s home market.3)Pioneering costs also arise when the companymakes strategicmistakes through ignorance.4)Another source ofpioneering costs is the cost of educatingcustomers about products with which they may be unfamiliar5)Researcher’s shows evidence thatthe early mover advantage s areoutweighed by the disadvantages in most cases.Therefore itpays for companies to be late entrants into new foreignmarkets.Scale of Entry-An international business also needs to decide on the scale of its entryinto foreignmarket.a)Entering a market on a large scale involves the commitment ofsignificant resources to that venture.Smaller companies may not havethe resources necessary to enter on a large scale.Even some largeenterprises prefer to enter foreign markets on a small scale and thenbuild their presence slowly over time as they become familiar with theforeign market in order to reduce risk.b) Astrategic commitmentis a decision that has a long-term impactand is difficult to reverse.Deciding to enter a foreign market on asignificant scale is a major strategic commitment1)Strategic commitments such as large-scale market entry can have animportant influence on the nature of competition in a market throughsignaling to competitors.2)Large companies are more likely to have the resources necessary tosuccessfully implement a strategic commitment to early entry than aresmall companies.3)Small-scale entry is a wayof gathering more information about aforeign market before making a large-scale strategic commitment andtherefore can reduce risk and increase the chances of entry success,112
although delay will also cause the company to lose any first-moveradvantage.5.The Choice of Entry ModeMost manufacturing companies begin their global expansion as exporters,making their products in the home country and then transporting them toforeign markets for sale.-Exportingavoids that costs of having to establish manufacturingoperations in the host country, and it is consistent with a pure globalstrategy.-However exporting from the company’s home base may not beappropriate if there are lower-cost locations for manufacturing theproduct abroad.High transport costs or tariff barriers can makeexporting uneconomical.-Also many exporters rely on local sales agents and it is difficult for thecompany to ensure that the agent act in the company’s best interest.

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Term
Fall
Professor
BARBARACARLIN
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