Papers on "Modes of Entry" and similar term paper topics
Paper #046713 ::
Modes of Entry
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An examination of the concept of modes of entry in international economics.
Written in 2004; 2,086 words; 3 sources; MLA;
$ 65.95
Paper Summary:
A major part of international marketing is the decision of which mode of entry to select to enter a certain market. This decision requires an analysis of the aspects of the foreign market. To consider how this decision is made, a specific case is as an example. This case involves a market that offers huge potential in terms of sales and profits, but is protected by stiff tariff barriers of 45 percent on all imported items. To consider which entry mode is most suitable to this particular market, the market is, first, analyzed to determine the important aspects that must be considered. Secondly, three market entry options are compared. These market entry options are exporting directly to the foreign market, developing a strategic alliance with a company in the foreign market, and setting up operations in the foreign market. By an analysis of these three options, it concludes that setting up operations in the foreign market is the best mode of entry for this situation.
From the Paper:
"The first step is to briefly analyze the market to determine the aspects that need to be considered. There are two important characteristics of the foreign market: high tariffs and high potential. The high tariffs on imports means that companies operating in the foreign market have a significant price advantage over companies outside the foreign market, assuming that products can be produced by the same amount in both markets. For example, if products can be manufactured and shipped to the foreign market for around half the price that they can be manufactured in the foreign country, the high tariffs may not be a significant barrier. The high tariffs would increase the end price, but only to the same amount that it would be if the product were manufactured there. Therefore, the high tariffs is a barrier, but the impact of that barrier depends on the production costs in the foreign market and outside of it. The second important characteristic is high potential for sales and profits. This has two important impacts. Firstly, it means that an initial cost output may be justified. For example, if the market only had limited sales potential, a company may not be able to justify the high initial costs associated with setting up operations in the foreign country. Since the market does have high potential sales and profits, a high initial cost output is justified and so low costs on entry are not a major concern."
Tags:
market import export operation
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