Understanding and critically Evaluating Entry Modes of Businesses in International Market

Business’s choice of entry modes in international market and its advantages and disadvantages

Introduction

Well known companies like Nike, Microsoft, Sony, Shell Group are just some of the big companies that went global and expanded their trading around the world, they are large businesses that operate internationally in many countries. Development of worldwide integration urges companies to reach out international markets and interact with foreign customers. Businesses focus on fulfilling the demand of the market by its products or services, besides their target is increasing profit, in order achieve these goals they favor to expand their work in a foreign market. Other reasons to internationalize their business may be to become stronger than the other competitors and in addition, to lower their expenses by getting resources they need at lower cost. Recently most of business’s activities are affected by changes that occur globally; this is a result of their operating activities with foreign markets, most of companies’ export goods, move resources with other country and also many companies get suppliers from foreign countries. Likewise these trading activities of businesses outside the country contribute to the growth of the economy.

The aim of this paper is to understand and critically evaluate entry modes of businesses in international market and understand their pros and cons; this research question was chosen to figure out how an enterprise decides to engage in international market and whether that choice is a good or bad decision for the future of the company. The first part of the paper which is literature review will explain in the details types of entry choices, after evaluating the first part, the second part de...

... middle of paper ...

...e operations.

Considering the fact that initial decision to enter in foreign market of companies is to increase sales which results in increasing profit, the business must pick an entry mode which promise higher return on investments, therefore internationalization process will result as a success.

The objectives of this paper were to figure out modes of entry in foreign market and to critically evaluate their advantages and disadvantages, the objectives have been fulfilled. Although there was limit number of research and as a result generalization cannot be made, this report cannot conclude that there exists a best choice of entry mode for a particular businesses when they decide to internationalize, plus each advantage and disadvantage mentioned in part two of the paper cannot be used for all enterprises, they may be contrasting for separate industries.