Entering New Markets – Entry Modes

These flashcards cover key concepts, definitions, and strategic considerations regarding entering new markets in international business.

Entry Modes

Different strategies used by firms to enter foreign markets.

Exporting

Selling products produced in one country to residents of another country.

Turnkey Projects

Contractor handles every detail of a project for a foreign client, including training of personnel.

Licensing

Grants rights to intangible property, such as patents and trademarks to another entity.

Franchising

Selling intangible property to a franchisee who must adhere to specific guidelines.

Joint Ventures

Cooperative undertaking between two or more firms with shared risks and rewards.

Wholly Owned Subsidiaries

A firm owns 100% of the subsidiary, can be established through either greenfield investment or acquisitions.

First-Mover Advantages

Benefits gained by being the first to enter a new market, such as capturing demand and brand loyalty.

Strategic Commitments

Long-term investments in a market that are difficult to reverse.

CAGE Framework

A tool for assessing markets based on Cultural, Administrative, Geographic, and Economic distance.

Pros and Cons of Acquisitions

Acquisitions can be quick and help preempt competitors but often produce disappointing results.

Strategic Alliances

Partnerships formed to share resources and capabilities between companies.

Cross-Licensing Agreements

Legal contracts allowing companies to share rights to each other's patents.

RAT-CAT Cycle

Concept in international business for adapting and gaining capabilities across cultures.

Greenfield Investment

Establishing a new operation in a host country.

Pioneering Costs

Costs associated with being the first to enter a market.

Experience Curve

The reduction in production costs as firms gain experience in production.

Market Entry Assessment

Evaluating factors such as market size, consumer wealth, and risks to determine entry strategies.

Supply Chain Diversification

Creating multiple suppliers to mitigate risks in global markets.