Entering Strategy

Topics: Risk, Economics, Macroeconomics Pages: 2 (678 words) Published: June 19, 2013
There are many entering foreign market strategies. Such as export, foreign sales, licensing, franchising, joint venture, merger, Greenfield foreign direct investment. and so on. If a firm want to enter the foreign market, it also need to consider about the enter environment and risk levels. There are two parts of foreign market environment. They are macro environment and micro environment. The macro environment includes political, economic, social and technology. Macro environment means the conditions that exist in the economy as a whole, rather than in a particular sector or region. The political is based on the host country policy. And the economic is the economic environment in the host country. In general, the macro environment will include trends in gross domestic product (GDP), inflation, employment, spending, and monetary and fiscal policy. Micro environment is the environment of industry. Normally people use Poter’s five force to analysis industry analysis. Poter’s five is threat of entry, buyer power, threat of substitutes, seller power and internal competitive rivalry. Through the economic environment the firm can find out the opportunities and challenges to choose a befitting enter strategy. Exporting is the function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The advantage of exporting is help to globalization. The disadvantage of foreign sales is the currency exchange risk. Licensing is A business arrangement in which one company gives another company permission to manufacture its product for a specified payment. The disadvantage of licensing is the company can not control the quality of products. Franchising is A continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration. The advantage...
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