Foreign Market Entry Strategies


Foreign Market Entry Decision

Foreign market entry can take different shapes depending on the targeted business goals and costs. The major market-entry decisions are discussed below.

  • Licensing: This kind of arrangement occurs when “a licensor grants the rights to intangible property to another company for a certain period of time” (Akbar and McBride 91). The “licensee will be required to pay a royalty fee to the parent company” (Jota and Horiuchi 4).
  • Exporting: A company manufactures different goods and markets them in a different country (Hyun 27).
  • Joint Ventures: This approach focuses on establishing a single firm that is conjointly owned by two or more different companies (Akbar and McBride 94).
  • Wholly-Owned Foreign Investment: This foreign investment approach is associated with a hundred percent ownership of the targeted stock (Hyun 27). A company can establish a greenfield venture or purchase an existing organization.

The choice between Acquisition and Greenfield Investment (GI)

International companies can invest in different countries using Greenfield investment strategies or acquisitions. The decision to acquire an established business results in immediate profits. As well, the investor will be able to access different existing markets. However, the approach can result in new problems and weaknesses. Greenfield investment is associated with greater control of every business aspect (Jota and Horiuchi 8). Companies are committed to new markets. They can also achieve economies of scale in purchasing, production, and transportation. However, the approach is costly and results in competition.

Haven’t Found The Relevant Content? Hire a Subject Expert to Help You With
Foreign Market Entry Strategies
Post Your Own Question And Get A Custom Answer
Hire Writer

Subcontracting and Franchising

Subcontracting can make it possible for companies to have increased productivity and performance. The level of effectiveness increases. Subcontracting also makes it possible for companies to reduce their operational costs. However, the approach can result in increased competition. Franchising is appropriate because it presents ready markets and business systems (Hyun 26). It also presents more customers and research and development (R&D) practices. The approach is characterized by limited creativity and unpredictability.

Difference between Investment in Production Facilities and Investment in Distribution Facilities

The method of foreign market entry dictates the investment approach embraced by an organization. Investment in production facilities is undertaken when companies establish new firms through greenfield ventures (Buckley and Casson 546). Investment in distribution facilities is widely associated with franchising. The firm invests a lot in procurement, warehousing, and transportation facilities.

Strength of Competition from Indigenous Rivals

Indigenous rivals can present much competition for foreign investors. Such rivals ted to have a proper understanding of the local market. Consumer loyalty and patriotism can also force more individuals to purchase locally-manufactured products. Such rivals also understand the cultural aspects associated with the local population (Buckley and Casson 544). Foreign investors should, therefore, be ready to face competition from such rivals.


1960: Exporting Vs FDI

Before the 1960s, foreign investment mainly focused on exportation and foreign direct investment. The product lifecycle theory (PLT) supported the use of exports in order to benefit from international trade (Buckley and Casson 544). FDI was characterized by continued investments in different countries.

1970: Licensing, franchising, and subcontracting

New methods of investment emerged throughout the 1960s and 1970s. Companies embraced new concepts such as franchising, subcontracting, and licensing in order to succeed in foreign markets (Buckley and Casson 541).


Throughout the 1980s, the continued resurgence of mergers and acquisitions was seen by many theorists as the best way to promote international trade. During the same period, foreign investors focused on the appropriateness of greenfield investment and the acquisition of already-established business entities (Ramady and Sale 49). Many US firms began to engage in international joint ventures (IJVs) during the same period. The concept of cooperation emerged in an attempt to support the business objectives of many multinational corporations.


Towards the end of the 20th century, FDI investors in emerging economies began to re-examine various issues such as the cost of doing business in other countries and psychic distances. Companies began to focus on the cultural issues and aspects associated with foreign countries (Nitsch, Beamish, and Makino 29). It was also necessary to focus on the best approaches to minimize operational costs.


Model 1: Detailed Analysis of Market Entry Strategy

This model focuses on the planned approaches that can be used to deliver services or goods to a specific target market. The right market entry should be identified in order to emerge successfully. The model encourages entrepreneurs to use appropriate business procedures in every foreign market (Nitsch et al. 32). Distribution should also be done carefully in order to get the best business outcomes.

Model 2: FDI in Distribution or Production

FDI can be achieved by investing either in production or distribution. The international company should consider the best approach that can deliver the best outcomes (Jota and Horiuchi 13). The model encourages companies to consider the best strategies that will improve the level of business performance.

Model 3: Strategic Interaction between Foreign Entrant and Leading Host Rivals

Foreign entrants will encounter competition from leading host rivals. This is the case because such rivals have existing markets and customers (Jota and Horiuchi 8). However, new strategic interactions can be embraced whenever offering customized services and products to more customers. The companies can also share resources and R&D processes in order to emerge successfully. This model has the potential to improve the level of synergy.

Factors Affecting Foreign Market Entry Strategy

Location Cost

The costs of doing business vary from region A to B (Hyun 46). Investors should consider such costs before entering a new foreign market.

Internalization Factors

These are forces embraced by companies to internalize their business operations (Akbar and McBride 95). Such factors are usually aimed at dealing with specific challenges such as business uncertainties.

Financial Variables

These include financial aspects such as currencies, down-payments, royalties, pricing, and credits (Jota and Horiuchi 17). Businesspeople should consider these variables before investing in a foreign country.

Cultural Factors

People tend to have unique cultural values and behaviors (Akbar and McBride 91). Such behaviors will determine their purchasing and consumption behaviors. Businesses should be aware of such factors since they change from one region to another.

Adaptation Cost

These are the costs incurred by companies whenever adapting to various market and environmental changes experienced in a specific foreign country (Jota and Horiuchi 15). Such costs should be carefully calculated in order to have profitable businesses.

Market Structure

This term refers to the existence of different companies producing similar services or products (Hyun 29). The existence of a market structure compels companies to identify appropriate strategies that can produce the best outcomes.

Competitive Strategy

This is an approach embraced by a company to emerge successfully by competing directly with its immediate rivals (Hyun 42).

Cost of Doing Business Abroad

The cost of doing business differs from one country to another. Such costs depend on different factors such as “income levels, economic statuses, and government policies” (Akbar and McBride 92). Entrepreneurs should, therefore, be aware of such costs in order to have successful businesses.

Works Cited

Akbar, Yusaf and Brad McBride. “Multinational enterprise strategy, foreign direct investment and economic development: the case of the Hungarian banking industry.” Journal of World Business 39.1 (2004): 89-105. Print.

Buckley, Peter and Mark Casson. “Analyzing Foreign Market Entry Strategies: Extending the Internalization Approach.” Journal of International Business Studies 29.3 (1998): 539-561. Print.

Hyun, Hae-Jung. “Strategic Foreign Direct Investment in Developing Countries under Demand Uncertainty: Commitment vs. Flexibility.” Journal of East Asian Economic Integration 16.1 (2012): 25-66. Print.

Jota, Ishikawa and Eiji Horiuchi. “Strategic Foreign Direct Investment in Vertically Related Markets.” RIETI Discussion Paper Series 12.1 (2012): 1-28. Print.

Nitsch, Deklev, Paul Beamish and Shige Makino. “Entry mode and performance of Japanese FDI in Western Europe.” Management International Review 36.1 (1996): 27-43. Print.

Ramady, Mohamed and John Saee. “Foreign direct investment: A strategic move toward sustainable free enterprise and economic development in Saudi Arabia.” Thunderbird International Business Review 49.1 (2007): 37-56. Print.


Why Hire a Professional Essay Writer from MyHomeworkGeeks

Quality Urgent Essays

Domyhomeworkk online platform provides the best essay writing service ever received elsewhere, thanks to our professional essay writers. Experience gained in the 10+ years of being in the assignment writing industry is also an added advantage.

Professional and Experienced Academic Writers

A lot is done to maintain us as the best essay writing service provider. Besides owning a degree from a recognized university, a writer must pass the rigorous tests we take them through before they are considered eligible to offer urgent essay help on our website.

Affordable Urgent Assignment Help

Who said a reliable website should not be cheap also? While it is human nature to associate prices with quality, that does not always work. At, we guarantee you cheap and urgent essay help without compromising the quality.

24/7 Available Urgent Essay Writing Service

Whether it is a ‘write my essay for me cheap’ or ‘edit my essay’ order you want to request, always feel free to reach us at any time of the day. Our experts work in shifts to ensure that you access urgent essay writing services at any time of the day.

Plagiarism Free Essays Online

The punitive measures that come with plagiarized content are so harsh, and we understand that. We consequently ensure to write each client’s papers from scratch no matter how urgent the essay is. To acknowledge borrowed content, our quick writer references and cites the work.

Wow Customer Support 24/7

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

So much stress and so little time? Take care of yourself: let us help you with your tasks. We offer all kinds of writing services.


Custom Essay Writing Services

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission and Business Papers

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing and Proofreading

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Have a homework question? Get help from verified tutors now!