Pros And Cons Of The Foreign Market Entry Strategy

Foreign market entry strategy in more simpler words means when an organization tends to enter the market of some other country, or city at times, which are not native to them. As an organization makes a stance of entering a market, more specifically overseas, there are numerous options that lay in front of them. The nature of this options differ owing to a few variables, those variables being; the degree of control through which they can be monitored, risk factors that are likely to take place, and the cost of the project. Studies show that the easiest and most preferred entry strategy is 'exporting '. Exporting is done in two forms, either by following a direct method or an indirect one. However there are other strategies as well, which …show more content…
Franchising refers to a process which intakes rapid market expansion. It works well for firms which have a business model that is repeatable such as that of the food outlets. It mean to open up the outlet of your brand elsewhere. The pro 's of franchising include that risk factor in business failure is less, as a new franchise is opened on the success of a previous one. The services and products of the franchise have previously established a market share, thus the need for market testing is not required. Experience priority is not a threshold, as the franchisor would ensure that the franchisee has the required traits and knowhow for running the franchise. There is an ongoing support by the franchisor in terms of training, assistance in setting up the business, and also instructions are provided as to how the business should be carried out. There are exclusive rights in the respective territory in which the franchise is opened, the franchisor cant, and does not sell another franchise in the same territory. However, there are disadvantages of this strategy as well, which include, The costs might be higher than the expected ones and an agreement between you and the franchisor might be signed, which requires you to buy the products only from the franchisor himself. There are restrictions as to how the business can be run. At the initial stages it might not be that evident but with the passage of time the franchisor monitoring becomes intrusive. Reselling of your franchise may become a problem, as it can be sold to someone approved by the franchisor. Thus, though you may own a franchise, still your authority is restricted, and that business can never completely be all your own (E. Holmes, 2003). Some examples of franchising business include, Pizza hut, KFC, Hardees, TGIF,