The Different Types of Market Entry Modes

Abstract 

Market entry modes are channels or methods involved to stage a business in a foreign country. Some of the popular entry options include exportation, licensing and franchising, ownership, and joint ventures. Since this is business being set in other countries, the governments of this countries may influence in a great way to influence their adoption. Regional integration also affects entry modes as will be discussed below. 

Market Entry Modes 

Exporting 

Exporting as a form of market entry is the simplest to execute. This strategy is practiced by innumerable business worldwide as well as large business. Besides the simplicity in implementation, it allows one to maintain their line of operation locally and abroad, and requires lesser capital as compared to other forms of entry (Elsner, 2013). 

Ownership 

A company may decide to set up their business operation physically in another country. This will involve the construction of infrastructures and recruiting personnel in the foreign country. This mode of business entry offers several benefits to the foreign country such as technology and knowledge transfer and creation of job opportunity for its citizens (Elsner, 2013). 

How Government and Regional Integration Affects Market Entry Modes 

Governments affect business entry modes in a number of ways. Governments get involved in setting up of business laws and policies (Kugiel, Cooray, & Wickramaratne, 2013) . Some of these policies may hinder the free flow of exports or Greenfield investments. The laws may favor some businesses while putting a restriction on others. The problem is further compounded if the government is corrupt. A corrupt government would extend support to some business at the sight of bribe or other offers while denying other businesses opportunity (Kugiel, Cooray, & Wickramaratne, 2013) . 

Regional Integration and Entry Modes 

Regional integration has increased business operation scope ( Rodriguez, Uhlenbruck & Eden, 2005) . Through integration, entry modes are simplified. However, it faces several challenges like entrenched conflicts between countries, the difference in demographic factors, different trade potentiality, and sizes of the countries. However, it has proved beneficial in integrations like European Union EU with open border trade policies have been designed allowing the exchange of goods and services ( Rodriguez, Uhlenbruck & Eden, 2005) . This enables a country to have those products that they do not have and other countries to enjoy a wider market. Therefore, the model improves market entry. 

References 

Elsner, S. (2013). Retail Internationalization: Analysis of Market Entry Modes, Format Transfer and Coordination of Retail Activities . New York, NY: Springer Science & Business Media 

Kugiel, P., Cooray, S., & Wickramaratne, T. (2013). Benefits of regional integration: what Sri Lanka can learn from Poland.  Policy Paper, 73 (25): 1-8. 

Rodriguez, P., Uhlenbruck, K., & Eden, L. (2005). Government corruption and the entry strategies of multinationals.  Academy of Management Review, 30 (2), 383-396.