Michael_A._Hitt,_R._Duane_Ireland,_Robert_E._Hosk

252 Part 2: Strategic Actions: Strategy Formulation

After selecting its business- and corporate-level international strategies, the firm

determines how it will enter the international markets in which it has chosen to compete.

We turn to this topic next.

8-4 Choice of International Entry Mode

Five modes of entry into international markets are available to firms. We show these

entry modes and their characteristics in Figure 8.5. Each means of market entry has

its advantages and disadvantages, suggesting that the choice of entry mode can affect

the degree of success the firm achieves by implementing an international strategy.^64

Many firms competing in multiple markets may use one or more or all five entry

modes.^65

Figure 8.5 Modes of Entry and their Characteristics

Exporting

Type of Entry Characteristics

High cost, low control

Low cost, low risk, little

control, low returns

Shared costs, shared

resources, shared risks,

problems of

integration (e.g., two

corporate cultures)

Quick access to new

markets, high costs,

complex negotiations,

problems of merging

with domestic

operations

Complex, often costly,

time consuming, high

risk, maximum control,

potential above-

average returns

Licensing

Strategic alliances

Acquisitions

New wholly owned

subsidiary