What are the market entry strategy options available to a company seeking to enter the global marketplace? How do they relate to each other in terms of profit potential, risk, financial commitment required, and marketing control?

Question

What will be an ideal response?

Answer 1

Once a company has decided to enter the global marketplace, it may select one of four strategies: (1) exporting, which involves producing goods in one country and selling them in another country; (2) licensing, where a company offers the right to a trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or a fee; (3) joint venture, which involves a foreign company and a local firm investing together to create a local business; and (4) direct investment, which entails a domestic firm actually investing in and owning a foreign subsidiary or division. The amount of financial commitment, risk, marketing control, and profit potential increases as the firm moves from exporting to direct investment. See Figure 6-5.