In business management, the goal is to increase profit margins as the business progresses while broadening market potential. The relationships between entry mode, time of entry, and location have been discussed in relation to a business's entry into foreign or international market. Understanding the guided relationship among these dynamics allows entrepreneurs to hold maximum control over business proceedings, calculate the cost, and analyze risks that these parameters may bring to a business.
The success of the business depends on the accurate predictability of market turns. When local markets are saturated, internationalization presents as a viable option. Knowledge of timing for a smooth transition, entry mode into the new market, and location to shift are important considerations. Gallego et al., (2009), argues that the time of entry is the main variable in a business expanse to foreign markets; thus, the mode of entry and location depend on the accurate analysis of market entry. This further depends on generic variables such as intricate knowledge of the foreign market that facilitate smooth transition, situational uncertainties that may occur and the tendency to produce and process innovation. These variables are codependent and have a bearing on the relationship between entry time, location, and entry mode.
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The longer time a firm takes to join foreign markets, the more committed it is assumed to be under the guise that the lag time was used to gather information leading to choosing less conservative entry modes. The earlier or later timing of transitioning affects the location chosen, either geographically or psychologically (Gallego et al. 2009). If the psychological plan is to reduce risks, firms may opt for closer locations, while the longer the timing, the more a firm is likely to choose a different and further geographical location. The mode of entry and location also relate in that the closer the relocation market, the fewer risks firms are likely to face hence more risks are likely to be taken in terms of mode of entry and vice versa. “When and Where” to internationalize a firm is a flexible debate that only shareholders of each firm can accurately conclude on. It is, however, reasonable to consider each variable stated above for-profit assurance once decisions have been made.
Reference
Gallego, M. Á., Hidalgo, E. R., Acedo, F. J., Casillas, J. C., & Moreno, A. M. (2009). The relationship between timing of entry into a foreign market, entry mode decision and market selection. Time & Society , 18 (2-3), 306-331. https://doi.org/10.1177/0961463x09337843
