c. Company size: As smaller companies have limited resources to expand, they usually have limited market serving options. Porter (1990) says that the size of the company poses a huge limitation to the performance of the company. A large firm can afford international expansion because they can absorb high costs risks involved, however, smaller firms prefer exporting to avoid the risk.
d. The level of Control: Level of control also has an impact on selecting entry mode strategy. Levi (2006: 56) argues that in every strategy, there are two levels of control, high or full control, and low or shared control. Full control is also called as sole ownership in which the firm has full control as it has enough substantial resources, so they may go for a wholly owned subsidiary. In case of a low control mode which is also known as the joint mode of operation, companies chose to have a joint venture. So their control in management and operations in the foreign market is lesser.
e. Risk: Koch (2001: 8) states that the risk perception connected with a specific market entry strategy may considerably influence the company's decision to enter target market. Every strategy has a different …show more content…
Market Size And Growth Rate: Another important factor while considering the market entry strategy is the magnitude of the target market and the growth potential. Huge market size favors firms to involve in equity investment or exporting as the firm can expect high breakeven sales volumes. On the other hand, small markets favor licensing, contractual agreements or direct and indirect distribution, as they have low breakeven sales volumes. (Root, 1994: 176). Koch (2001: 357) stated that firms use direct and indirect exporting just to tap the opportunity when they see that growth is quick but will not sustain in the long run. In case, demand is high in target market but only for few years, firms sometimes establish their own operating subsidiaries with manufacturing and marketing
d. The level of Control: Level of control also has an impact on selecting entry mode strategy. Levi (2006: 56) argues that in every strategy, there are two levels of control, high or full control, and low or shared control. Full control is also called as sole ownership in which the firm has full control as it has enough substantial resources, so they may go for a wholly owned subsidiary. In case of a low control mode which is also known as the joint mode of operation, companies chose to have a joint venture. So their control in management and operations in the foreign market is lesser.
e. Risk: Koch (2001: 8) states that the risk perception connected with a specific market entry strategy may considerably influence the company's decision to enter target market. Every strategy has a different …show more content…
Market Size And Growth Rate: Another important factor while considering the market entry strategy is the magnitude of the target market and the growth potential. Huge market size favors firms to involve in equity investment or exporting as the firm can expect high breakeven sales volumes. On the other hand, small markets favor licensing, contractual agreements or direct and indirect distribution, as they have low breakeven sales volumes. (Root, 1994: 176). Koch (2001: 357) stated that firms use direct and indirect exporting just to tap the opportunity when they see that growth is quick but will not sustain in the long run. In case, demand is high in target market but only for few years, firms sometimes establish their own operating subsidiaries with manufacturing and marketing