“Market Entry Strategies”

Introduction:

Foreign market entry modes (Participation strategy) differ in degree of risk they present, the control and
commitment of resources they require and the return on investment they promise. There are two major types
of entry modes: equity and non-equity modes. The non-equity modes category includes export and
contractual agreements. The equity modes category includes: joint venture and wholly owned subsidiaries.
However, some industries benefit more from globalization than do others, and some nations have a
comparative advantage over other nations in certain industries. To create a successful global strategy,
managers first must understand the nature of global industries and the dynamics of global competition,
international strategy (i.e. internationally scattered subsidiaries act independently and operate as if they were
local companies, with minimum coordination from the parent company) and global strategy (leads to a wide
variety of business strategies, and a high level of adaptation to the local business environment). Basically
there are three key differences between them. Firstly, it relates to the degree of involvement and
coordination from the Centre. Moreover, the difference relates to the degree of product standardization and
responsiveness to local business environment. The last is that difference has to do with strategy integration
and competitive moves.

Strategies for Entering Foreign Markets

What is the best way to enter a new market? Should a company first establish an export base or license its
products to gain experience in a newly targeted country or region? Or does the potential associated with
first-mover status justify a bolder move such as entering an alliance, making an acquisition, or even starting
a new subsidiary? Many companies move from exporting to licensing to a higher investment strategy, in
effect treating these choices as a learning curve. Each has distinct advantages and disadvantages.

In order to complete this DISCUSSION BOARD assignment, you will need to complete the following:

Using the Internet, find ONE example of ONE of the following strategies for entering foreign markets that
you believe is an excellent example of the SUCCESSFUL implementation of the strategy
and ONE example of ONE of the following strategies for entering foreign markets that you believe is
an excellent example of the UNSUCCESSFUL implementation of the strategy.

 Multinational
 Joint Venture
 Contract Manufacturing
 Franchising
 Licensing

1. In your initial discussion post (150 – 175 words) share

your SUCCESSFUL and UNSUCCESSFUL examples! In addition to listing your example of
EACH, provide the following information

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 1. Why do you believe that the company/organization chose the entry strategies they did?
2. What went right with the SUCCESSFUL one and what went wrong with the
UNSUCCESSFUL one?
3. What can other companies looking to enter a global market learn from these two examples?
2. Be sure to post responses to at least TWO of your classmates before the due date.
3. Also, if you have links to articles or resources that you would like to share, please include them in
your initial post.

Goal: Identify the various strategies of international business and the strategic ways to enter a foreign
market.

Exporting

Exporting is the process of selling of goods and services produced in one country to other countries.

There are two types of exporting: direct and indirect.

Direct Exports

Direct exports represent the most basic mode of exporting made by a (holding) company, capitalizing on
economies of scale in production concentrated in the home country and affording better control over
distribution. Direct export works the best if the volumes are small. Large volumes of export may trigger
protectionism. The main characteristic of direct exports entry model is that there are no intermediaries.

Passive exports represent the treating and filling overseas orders like domestic orders.

Types

Sales representatives
Sales representatives represent foreign suppliers/manufacturers in their local markets for an
established commission on sales. Provide support services to a manufacturer regarding local
advertising, local sales presentations, customs clearance formalities, legal requirements.
Manufacturers of highly technical services or products such as production machinery, benefit the
most from sales representation.
Importing distributors
Importing distributors purchase product in their own right and resell it in their local markets to
wholesalers, retailers, or both. Importing distributors are a good market entry strategy for products
that are carried in inventory, such as toys, appliances, prepared food.

Advantages
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  Control over selection of foreign markets and choice of foreign representative companies
 Good information feedback from target market, developing better relationships with the buyers
 Better protection of trademarks, patents, goodwill, and other intangible property
 Potentially greater sales, and therefore greater profit, than with indirect exporting.

Disadvantages

 Higher start-up costs and higher risks as opposed to indirect exporting

 Requires higher investments of time, resources and personnel and also organizational changes
 Greater information requirements
 Longer time-to-market as opposed to indirect exporting.

Indirect exports

Indirect export is the process of exporting through domestically based export intermediaries. The exporter
has no control over its products in the foreign market.

Types

Export trading companies (ETCs)

These provide support services of the entire export process for one or more suppliers. Attractive to
suppliers that are not familiar with exporting as ETCs usually perform all the necessary work: locate
overseas trading partners, present the product, quote on specific enquiries, etc.
Export management companies (EMCs)
These are similar to ETCs in the way that they usually export for producers. Unlike ETCs, they
rarely take on export credit risks and carry one type of product, not representing competing ones.
Usually, EMCs trade on behalf of their suppliers as their export departments.
Export merchants
Export merchants are wholesale companies that buy unpackaged products from
suppliers/manufacturers for resale overseas under their own brand names. The advantage of export
merchants is promotion. One of the disadvantages for using export merchants result in presence of
identical products under different brand names and pricing on the market, meaning that export
merchant’s activities may hinder manufacturer’s exporting efforts.
Confirming houses
These are intermediate sellers that work for foreign buyers. They receive the product requirements
from their clients, negotiate purchases, make delivery, and pay the suppliers/manufacturers. An
opportunity here arises in the fact that if the client likes the product it may become a trade

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 representative. A potential disadvantage includes supplier’s unawareness and lack of control over
what a confirming house does with their product.
Nonconforming purchasing agents
These are similar to confirming houses with the exception that they do not pay the suppliers directly
– payments take place between a supplier/manufacturer and a foreign buyer.

Advantages

 Fast market access

 Concentration of resources towards production
 Little or no financial commitment as the clients' exports usually covers most expenses associated
with international sales.
 Low risk exists for companies who consider their domestic market to be more important and for
companies that are still developing their R&D, marketing, and sales strategies.
 Export management is outsourced, alleviating pressure from management team
 No direct handle of export processes.

Disadvantages

 Little or no control over distribution, sales, marketing, etc. as opposed to direct exporting
 Wrong choice of distributor, and by effect, market, may lead to inadequate market feedback affecting
the international success of the company
 Potentially lower sales as compared to direct exporting (although low volume can be a key aspect of
successfully exporting directly). Export partners that incorrectly select a specific distributor/market
may hinder a firm's functional ability.

Those companies that seriously consider international markets as a crucial part of their success would likely
consider direct exporting as the market entry tool. Indirect exporting is preferred by companies who would
want to avoid financial risk as a threat to their other goals.

Licensing

An international licensing agreement allows foreign firms, either exclusively or non-exclusively to

manufacture a proprietor’s product for a fixed term in a specific market.

Summarizing, in this foreign market entry mode, a licensor in the home country makes limited rights or
resources available to the licensee in the host country. The rights or resources may include patents,
trademarks, managerial skills, technology, and others that can make it possible for the licensee to

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manufacture and sell in the host country a similar product to the one the licensor has already been producing
and selling in the home country without requiring the licensor to open a new operation overseas. The
licensor earnings usually take forms of one time payments, technical fees and royalty payments usually
calculated as a percentage of sales.

As in this mode of entry the transference of knowledge between the parental company and the licensee is
strongly present, the decision of making an international license agreement depend on the respect the host
government show for intellectual property and on the ability of the licensor to choose the right partners and
avoid them to compete in each other market. Licensing is a relatively flexible work agreement that can be
customized to fit the needs and interests of both, licensor and licensee.

Following are the main advantages and reasons to use an international licensing for expanding
internationally:

 Obtain extra income for technical know-how and services

 Reach new markets not accessible by export from existing facilities
 Quickly expand without much risk and large capital investment
 Pave the way for future investments in the market
 Retain established markets closed by trade restrictions
 Political risk is minimized as the licensee is usually 100% locally owned
 Is highly attractive for companies that are new in international business.

On the other hand, international licensing is a foreign market entry mode that presents some disadvantages
and reasons why companies should not use it as:

 Lower income than in other entry modes

 Loss of control of the licensee manufacture and marketing operations and practices leading to loss of
quality
 Risk of having the trademark and reputation ruined by an incompetent partner
 The foreign partner can also become a competitor by selling its production in places where the
parental company is already in.

Franchising

The franchising system can be defined as: "A system in which semi-independent business owners
(franchisees) pay fees and royalties to a parent company (franchiser) in return for the right to become
identified with its trademark, to sell its products or services, and often to use its business format and
system."

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Compared to licensing, franchising agreements tends to be longer and the franchisor offers a broader
package of rights and resources which usually includes: equipment, managerial systems, operation manual,
initial trainings, site approval and all the support necessary for the franchisee to run its business in the same
way it is done by the franchisor. In addition to that, while a licensing agreement involves things such as
intellectual property, trade secrets and others while in franchising it is limited to trademarks and operating
know-how of the business.

Advantages of the international franchising mode:

 Low political risk

 Low cost
 Allows simultaneous expansion into different regions of the world
 Well selected partners bring financial investment as well as managerial capabilities to the operation.

Disadvantages of franchising to the franchisor:

 Maintaining control over franchisee may be difficult

 Conflicts with franchisee are likely, including legal disputes
 Preserving franchisor's image in the foreign market may be challenging
 Requires monitoring and evaluating performance of franchisees, and providing ongoing assistance
 Franchisees may take advantage of acquired knowledge and become competitors in the future

Turnkey projects

A turnkey project refers to a project when clients pay contractors to design and construct new facilities and
train personnel. A turnkey project is a way for a foreign company to export its process and technology to
other countries by building a plant in that country. Industrial companies that specialize in complex
production technologies normally use turnkey projects as an entry strategy.

One of the major advantages of turnkey projects is the possibility for a company to establish a plant and earn
profits in a foreign country especially in which foreign direct investment opportunities are limited and lack
of expertise in a specific area exists.

Potential disadvantages of a turnkey project for a company include risk of revealing companies secrets to
rivals, and takeover of their plant by the host country. Entering a market with a turnkey project CAN prove
that a company has no long-term interest in the country which can become a disadvantage if the country
proves to be the main market for the output of the exported process.

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Wholly owned subsidiaries (WOS)

A wholly owned subsidiary includes two types of strategies: Greenfield investment and Acquisitions.
Greenfield investment and acquisition include both advantages and disadvantages. To decide which entry
modes to use is depending on situations.

Greenfield investment is the establishment of a new wholly owned subsidiary. It is often complex and
potentially costly, but it is able to provide full control to the firm and has the most potential to provide above
average return. "Wholly owned subsidiaries and expatriate staff are preferred in service industries where
close contact with end customers and high levels of professional skills, specialized know how, and
customization are required." Greenfield investment is more likely preferred where physical capital intensive
plants are planned. This strategy is attractive if there are no competitors to buy or the transfer competitive
advantages that consists of embedded competencies, skills, routines, and culture.

Greenfield investment is high risk due to the costs of establishing a new business in a new country. A firm
may need to acquire knowledge and expertise of the existing market by third parties, such consultant,
competitors, or business partners. This entry strategy takes much time due to the need of establishing new
operations, distribution networks, and the necessity to learn and implement appropriate marketing strategies
to compete with rivals in a new market.

Acquisition has become a popular mode of entering foreign markets mainly due to its quick access
Acquisition strategy offers the fastest, and the largest, initial international expansion of any of the
alternative.

Acquisition has been increasing because it is a way to achieve greater market power. The market share
usually is affected by market power. Therefore, many multinational corporations apply acquisitions to
achieve their greater market power, which require buying a competitor, a supplier, a distributor, or a business
in highly related industry to allow exercise of a core competency and capture competitive advantage in the
market.

Acquisition is lower risk than Greenfield investment because of the outcomes of an acquisition can be
estimated more easily and accurately. In overall, acquisition is attractive if there are well established firms
already in operations or competitors want to enter the region.

On the other hand, there are many disadvantages and problems in achieving acquisition success.

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  Integrating two organizations can be quite difficult due to different organization cultures, control
system, and relationships. Integration is a complex issue, but it is one of the most important things
for organizations.
 By applying acquisitions, some companies significantly increased their levels of debt which can have
negative effects on the firms because high debt may cause bankruptcy.
 Too much diversification may cause problems. Even when a firm is not too over diversified, a high
level of diversification can have a negative effect on the firm in the long-term performance due to a
lack of management of diversification.

Difference between international strategy and global strategy

However, some industries benefit more from globalization than do others, and some nations have a
comparative advantage over other nations in certain industries. To create a successful global strategy,
managers first must understand the nature of global industries and the dynamics of global competition,
international strategy (i.e. internationally scattered subsidiaries act independently and operate as if they were
local companies, with minimum coordination from the parent company) and global strategy (leads to a wide
variety of business strategies, and a high level of adaptation to the local business environment). Basically
there are three key differences between them. Firstly, it relates to the degree of involvement and
coordination from the Centre. Moreover, the difference relates to the degree of product standardization and
responsiveness to local business environment. The last is that difference has to do with strategy integration
and competitive moves.

Joint venture

There are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing
and joint product development, and conforming to government regulations. Other benefits include political
connections and distribution channel access that may depend on relationships. Such alliances often are
favourable when:

 The partners' strategic goals converge while their competitive goals diverge
 The partners' size, market power, and resources are small compared to the Industry leaders
 Partners are able to learn from one another while limiting access to their own proprietary skills

The key issues to consider in a joint venture are ownership, control, length of agreement, pricing, technology
transfer, local firm capabilities and resources, and government intentions. Potential problems include:

 Conflict over asymmetric new investments

 Mistrust over proprietary knowledge
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  Performance ambiguity - how to split the pie
 Lack of parent firm support
 Cultural clashes
 If, how, and when to terminate the relationship

Joint ventures have conflicting pressures to cooperate and compete:

 Strategic imperative: the partners want to maximize the advantage gained for the joint venture, but
they also want to maximize their own competitive position.
 The joint venture attempts to develop shared resources, but each firm wants to develop and protect
its own proprietary resources.
 The joint venture is controlled through negotiations and coordination processes, while each firm
would like to have hierarchical control.

Strategic alliance

strategic alliance/ this is a type of cooperative agreements between different firms, such as shared research,
formal joint ventures, or minority equity participation. The modern form of strategic alliances is becoming
increasingly popular and has three distinguishing characteristics:

1. They are frequently between firms in industrialized nations.

2. The focus is often on creating new products and/or technologies rather than distributing existing
ones.
3. They are often only created for short term durations.

Advantages

Some advantages of a strategic alliance include:

Technology exchange
This is a major objective for many strategic alliances. The reason for this is that many breakthroughs
and major technological innovations are based on interdisciplinary and/or inter-industrial advances.
Because of this, it is increasingly difficult for a single firm to possess the necessary resources or
capabilities to conduct their own effective R&D efforts. This is also perpetuated by shorter product
life cycles and the need for many companies to stay competitive through innovation. Some industries
that have become centers for extensive cooperative agreements are:
 Telecommunications
 Electronics

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  Pharmaceuticals
 Information technology
 Specialty chemicals

Global competition
There is a growing perception that global battles between corporations be fought between teams of
players aligned in strategic partnerships. Strategic alliances will become key tools for companies if
they want to remain competitive in this globalized environment, particularly in industries that have
dominant leaders, such as cell phone manufactures, where smaller companies need to ally in order to
remain competitive.
Industry convergence
As industries converge and the traditional lines between different industrial sectors blur, strategic
alliances are sometimes the only way to develop the complex skills necessary in the time frame
required. Alliances become a way of shaping competition by decreasing competitive intensity,
excluding potential entrants, and isolating players, and building complex value chains that can act as
barriers.
Economies of scale and reduction of risk
Pooling resources can contribute greatly to economies of scale, and smaller companies especially can
benefit greatly from strategic alliances in terms of cost reduction because of increased economies of
scale.

In terms on risk reduction, in strategic alliances no one firm bears the full risk, and cost of, a joint activity.
This is extremely advantageous to businesses involved in high risk / cost activities such as R&D. This is also
advantageous to smaller organizations which are more affected by risky activities.

Alliance as an alternative to merger

Some industry sectors have constraints to cross-border mergers and acquisitions, strategic alliances
prove to be an excellent alternative to bypass these constraints. Alliances often lead to full-scale
integration if restrictions are lifted by one or both countries.

Risks of competitive collaboration

Some strategic alliances involve firms that are in fierce competition outside the specific scope of the
alliance. This creates the risk that one or both partners will try to use the alliance to create an advantage over
the other. The benefits of this alliance may cause unbalance between the parties, there are several factors that
may cause this asymmetry:

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  The partnership may be forged to exchange resources and capabilities such as technology. This may
cause one partner to obtain the desired technology and abandon the other partner, effectively
appropriating all the benefits of the alliance.
 Using investment initiative to erode the other partners competitive position. This is a situation where
one partner makes and keeps control of critical resources. This creates the threat that the stronger
partner may strip the other of the necessary infrastructure.
 Strengths gained by learning from one company can be used against the other. As companies learn
from the other, usually by task sharing, their capabilities become strengthened, sometimes this
strength exceeds the scope of the venture and a company can use it to gain a competitive advantage
against the company they may be working with.
 Firms may use alliances to acquire its partner. One firm may target a firm and ally with them to use
the knowledge gained and trust built in the alliance to take over the other.

Disadvantages

1. Difficult to find a good partner

2. Risk of unequal partnership
3. Loss of control
4. Relationship management across borders

Choosing a Partner for International Strategic Alliances

1. Strategic compatibility

The partners need to have same general goal and understanding in forming a joint venture. The
differences in strategy produces more conflicts of interest in the later partnership (Lilley and
Willianms, 1991).
2. Complementary skills and resources

Another important criterion is that the partners need to contribute more than just money to the
venture (Geringer and Michael, 1988). Each partner must contribute some skills and resources that
complement for another.
3. Relative company size

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 Different size of companies may cause domination of one firm or unequal agreement, which is not
favourable for long-term running (Lilley and Willianms, 1991)
4. Financial capability

The partners can generate sufficient financial resources to maintain the venture’s efforts, which is
also important for long-term partnership (Lilley and Willianms, 1991)

Some more like compatibility between operating policies (Lilley and Willianms, 1991), trust and
commitment (Lilley and Willianms, 1991), compatible management styles (Geringer and Michael, 1988),
mutual dependency(Lilley and Willianms, 1991), communications barriers (Lilley and Willianms, 1991) and
avoid anchor partners (Geringer and Michael, 1988) are also important for partner selection but less
important than the first four.

Political Issues

Political issues will be faced mostly by the companies who want to enter a country that with unsustainable
political environment (Parboteeah and Cullen, 2011). A political decisions will affect the business
environment in a country and affect the profitability of the business in the country (Click, 2005).
Organizations with investments in such opaque countries as Zimbabwe, Myanmar, and Vietnam have long-
term experiences about how the political risk affects their business behaviors (Harvard Business Review,
2014).

The following are the examples of political issues:

1. The politically jailing of Mikhail Khodorkovsky, the business giant, in Russia (Wade, 2005); 2. The
"Open-door" policy of China(Deng,2001); 3. The Ukraine disputed elections resulting in the uncertain
president recent years (Harvard Business Review, 2014); 4. The corrupt legal system in many countries,
such as Russia (Samara, 2008)

Three different rules of entry mode selection

The following introductions were based on the statement of Hollensen:

1. Naïve rule. The decision maker uses the same entry mode for all foreign markets. The companies use
this rule as the entry mode selection ignore the differences of individual foreign markets. The
performance of this selection could not be calculated, because it highly depends on the luck of the
manager.
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 2. Pragmatic rule. The decision maker uses a workable entry mode for each foreign market, which
means that the manager use different entry modes depend on the time stage or the business stage. For
example, as the first step to international business, companies tend to use exporting.
3. Strategy rules. This approach means that the company systematically compared all of the entry
modes and evaluated the value before any choice is made. This approach is common in large firms,
because the research requires resources, capital and time. It is rarely to see a small or medium-sized
company use this approach.

Besides these three rules, managers have their own ways to select entry modes. If the company could not
generate a mature market research, the manager tend to choose the entry modes most suitable for the
industry or make decisions by intuition.

Case analysis of Foreign Direct Investment of Telecommunication Company in

Albania

Foreign Direct Investment is a very important factor for a country’s economic growth especially in its
impacts on transmission of technology and developments in management and marketing strategies. FDI
takes place when a firm acquires ownership control of a production unit in a foreign country. According to
the content there are basically three forms of FDI: establishing new branch, acquiring control share of an
existing firm, and participating jointly in a domestic firm. As Albanian economy has changed from a
centrally planned to a market oriented one, FDI is seen as an important component of the transition process
toward a market-led economic system, since it contributes to the development of a country through multiple
channels (Kukeli, et al., 2006; Kukeli, 2007). In their study, a limited number of successful mobile networks
entry cases have been selected for deep investigation of entry models in Albania, to find out the most
important and efficient determinants of foreign mobile networks entry into Albania’s telecommunication
market in the future as well. It provides a successful Albanian business experience for the new comers in
mobile telecommunications industry. With its developing market economy, Albania offers many
opportunities for investors-property as labour costs are low, the young and educated population is ready to
work, and tariffs and other legal restrictions are low in many cases and are being eliminated in some others
(Albinvest, 2010). Location of Albania in itself offers a notable trade potential, especially with EU markets,
since it shares borders with Greece and Italy. In the last years Albania has entered the free trade agreements
with Balkan Countries creating the opportunity for trade throughout the region. As Albanian economy tends
to grow, the prospects and opportunities of multinational enterprises (MNEs) to invest in Albania for a long-
term period has increased also. However, after the transition to democracy since 1992, the country has taken
a long way in terms of economic, political and social life (Ministry of Economy 2004, p. 9-10). Demirel
(2008) finds all of these changes to form the strengths of Albania in terms of FDI. In his study Demirel
(2008) emphasizes that Albania has one of the most friendly investment environments in the region of the
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South- Eastern European Countries (SEECs) with her impressive economic performance in the last decade,
liberal economic legislation, rapid privatisation process and country specific advantages. By taking into
account all of these factors, the aim of this study is to offer a new perspective by the case studies of foreign
telecommunications companies, which form the majority of MNEs in this field, by finding the most
significant determinants before entering into Albania, with a successful entry strategy and crucial
consideration of FDI in Albania. It is crucially important to find the determinants and factors that affect
multinational firms when deciding on their entry modes, in order to successfully compete in the Albanian
mobile telecoms industry. There are four operators in these industries; two of the leading firms expand
rapidly in Albania by utilizing successful and aggressive entry strategies, and the other ones are new entries
in Albanian market. Lin (2008) emphasizes that the evaluation of the entry modes’ determinants is better to
be applied in some main theories and models such as transaction cost theory, eclectic theory and
internationalization model, which serve as theoretical foundation in these kind of studies, where host-
country condition, political and economic context, and organization capabilities are important factors and
require major consideration.

3 essential steps for entering a foreign market:

It takes research and a great plan to make sure your exporting and international expansion efforts pay off.

If you’ve decided to take your business into international markets, your timing is good.

Demand for Canadian products is strong in many growing markets around the world. And it’s never been
easier to access those markets thanks to free trade agreements, global supply chains and advances in
telecommunications and transportation.

But there is still a substantial amount risk involved if you want to export or set up operations abroad. To
minimize that risk, you need a structured and strategic approach to international growth to ensure your
limited resources produce maximum sales results.

It’s important to remember that your exporting or other international expansion efforts aren’t a fast-cash
exercise. Instead, they should be a long-term endeavour that can take a number of years to come to fruition.

Follow these three essential steps to international expansion success.

Step 1—Take a hard look in the Mirror

Begin by taking a look at your business. How prepared are you for this next phase of your growth?

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  Your finances—Does your business have the financial capacity to make a long-term commitment to
your exporting or other foreign expansion project?
 Your leadership—Are the owners and senior managers all on board? Are you ready to get the
outside expertise you need to support management?
 Your team—Do you have adequate marketing, sales and other human resources? What additional
personnel will you need?
 Your products or services—What will make your offerings stand out against the competition in a
foreign market? Are you ready and able to adapt them to the needs and desires of customers in your
target markets?

Step Two—Find the best markets for your business

Now it’s time to research potential markets. Screen them objectively both for opportunities and risk factors.

How easy is it to do business in a given foreign market? Investigate the regulatory environment and red tape.
Look at risks including those to your intellectual property. Investigate whether there is a clear and growing
demand for the type of products or services you offer, and a base of potential clients with the interest and
money to buy.

And don’t forget about local culture and customs. This may influence how you will have to package and
market your products. It could also impact your business dealings—you don’t want to harm an otherwise
rewarding business relationship by making a cultural faux pas.

Once you have distilled your options to a shortlist of potential markets, the last step is to make final
selections in line with your company’s situation. This may require getting on an airplane and meeting with
key contacts to learn about the competition, local rules and distribution channels.

Attending trade shows and events specific to your industry in the country can also be helpful. Another option
is to participate in a government trade mission.

Step Three—Plan and execute

By this stage, you have arrived at your final decision. Now it’s time to develop your plan of attack—your
market entry strategy.

In your market entry strategy, you should define your objectives clearly so that you can use the right tactics
to reach your goals and give yourself more credibility with lenders or investors, should you require external
funding.

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The plan should spell out the following information.

 A budget outlining how much money you’ll need to finance your project.
 The countries (or regions within a country) you are targeting.
 Opportunities and risks you foresee in the market.
 Who your competitors will be.
 How you will market and distribute your products.
 Ways in which you may have to adapt or customize your offering, including packaging, labeling and
promotion, in keeping with regulatory requirements, consumer tastes and cultural preferences.
 A method for determining pricing, taking into account the costs of exporting, product adaptation and
exchange rate.
 Goals and a time frame in which to achieve them in.

In addition, detail the staffing levels required to implement this international growth initiative. Decide how
you will reach your market—will it be through local distributors, sales agents, a joint venture partnership or
with your own on-site sales team?

With your plan, you can now go to a lender for an expansion loan to make up the difference between your
internal resources and what you need to finance your project. Keep in mind it’s often better to borrow for
growth projects than to put undue pressure on your cash flow.

Now you’re ready to start selling.

Be sure to focus on long-term relationship building in your new market—and again, be patient. It often takes
up to three years for an international expansion to take root.

Other resources

The Canadian Trade Commissioner Service, Export Development Canada and the Canada Border Services
Agency also have excellent resources for entrepreneurs interested in exporting and international expansion.

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Conclusion:
Summarizing, in this foreign market entry mode, a licensor in the home country makes limited rights or
resources available to the licensee in the host country. The rights or resources may include patents,
trademarks, managerial skills, technology, and others that can make it possible for the licensee to
manufacture and sell in the host country a similar product to the one the licensor has already been producing
and selling in the home country without requiring the licensor to open a new operation overseas. The
licensor earnings usually take forms of one time payments, technical fees and royalty payments usually
calculated as a percentage of sales. How easy is it to do business in a given foreign market? Investigate the
regulatory environment and red tape. Look at risks including those to your intellectual property. Investigate
whether there is a clear and growing demand for the type of products or services you offer, and a base of
potential clients with the interest and money to buy. And don’t forget about local culture and customs. This
may influence how you will have to package and market your products. It could also impact your business
dealings—you don’t want to harm an otherwise rewarding business relationship by making a cultural faux
pas. It is crucially important to find the determinants and factors that affect multinational firms when
deciding on their entry modes, in order to successfully compete in the Albanian mobile telecoms industry.
There are four operators in these industries; two of the leading firms expand rapidly in Albania by utilizing
successful and aggressive entry strategies, and the other ones are new entries in Albanian market. Lin (2008)
emphasizes that the evaluation of the entry modes’ determinants is better to be applied in some main theories
and models such as transaction cost theory, eclectic theory and internationalization model, which serve as
theoretical foundation in these kind of studies, where host-country condition, political and economic context,
and organization capabilities are important factors and require major consideration.

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