Foreign Market Entry Strategies

Foreign Market Entry Strategies

Author Name : Mrs. Nisha

ABSTRACT Foreign market entry strategy is an important strategic decision for international business units. The choice of foreign market entry strategy is to be made very cautiously as it has long-term implications and it cannot be easily reversed. The future growth of international business unit depends upon the right mode of entry into foreign market. There are three main modes of entry into foreign market viz. trade mode, investment mode and contractual entry mode. In trade route, the entry in foreign market is made through exports. In investment mode, the subsidiary units are set up in the foreign market. This mode is also called foreign direct investment mode. In contractual entry mode, technological collaboration agreements are made with the business units of host nation. In this mode, technical skills/managerial skills are provided by business unit in parent country to business units in host country. Besides these three main strategies for entry into foreign market, there are various other strategies to take entry in foreign markets. The choice of the appropriate strategy depends upon various factors like availability of resources, level of risk, tariff and non-tariff barriers imposed by other nations, transportation cost, infrastructure facilities, vision of management, restrictions on inflow/outflow of foreign investment, etc.