Discuss the methods firms can use to enter new global markets.
Firms can enter new foreign markets in the following ways: exporting products to the new market, licensing products to local firms, acquiring or creating strategic alliances with local firms, or establishing operations within the new market. Exporting involves manufacturing products in a firm’s home country and shipping them to a foreign market. Licensing arrangements allow a local firm in the new market to manufacture and distribute a foreign firm’s products. Strategic alliances are cooperative arrangements between two firms in which they agree to share resources to accomplish a mutually desirable goal. Acquisitions of local firms made by foreign firms to enter a new international market are called cross-border acquisitions. When a company creates a wholly owned subsidiary in a foreign country, it makes a direct investment to establish a business that it solely owns and controls there.
Management, 10e (Robbins/Coulter)