There are two kinds of international entry modes: equity and non-equity. The equity modes category includes: joint ventures (JVs) and wholly owned subsidiaries (WOSs).
WOSs further include Greenfield investment and acquisitions. The non-equity modes category includes export and contractual agreements.
What documents are needed for a joint venture
The documents required for creating a JV can broadly be classified into three categories: Memorandum of Undertaking (MoU) or Letter of Intent (LoI) Definitive Agreements (depending upon the chosen structure) Other Agreements (such as Technology transfer agreements/BTA etc.)
What strategic factors does a company need to take into account when choosing an entry mode?
- Economic Factors:
- Social and Cultural Factors:
- Political and Legal Factors:
- Market attractiveness:
- Capability of the Company:
What’s the difference between a joint venture and partnership
A joint venture involves two or more persons or entities joining together for a particular project.
A partnership is described as a relationship which exists between people carrying on a business, with a common view of making a profit.
It also includes incorporated limited partnerships.
Who is liable in a joint venture
Joint ventures are generally considered to have “joint and several liability.” This means: Each firm is responsible for the partnership’s actions.
The joint venture, or a partner, can be named as defendant in a suit.
A claimant can possibly recover a full award from either or both parties.
Which of the following modes of entry permits greatest degree of control over overseas operation
A wholly owned subsidiary is a company where 100% of the share capital is invested by the parent company or the holding company.
In case of foreign or overseas operations, this kind of mode is preferred as this gives the total control in the hands of the holding company.
What is franchising market entry strategy
Franchising as a strategy enables a company to gain competitive advantage over its competitors.
The competitiveness is achieved by nature of product, nature of the market, capacity of the franchisor, capacity of the franchisee and the rules and regulation of the host country.
Is an entry mode through which a firm invests directly in another country or market by establishing a new wholly owned subsidiary
A greenfield venture is an entry mode through which a firm invests directly in another country or market by establishing a new wholly owned subsidiary.
Is partnership an entry mode
In international markets, partnership entry modes include joint ventures, licensing, and joint distribution networks.
Self-reliance entry modes imply internalization which is usually manifested in the form of wholly owned manufacturing or distribution subsidiaries.
What are equity modes of entry
The equity modes of entry into a foreign market include both direct investment in facilities in the overseas location, as well as joint ventures with companies in the same industry with a base in the target market.
Who owns a joint venture
A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.
They are a partnership in the colloquial sense of the word but can take on any legal structure.
What are modes of entry into international business?
- Exporting
- Licensing
- Franchising
- Joint venture
- Foreign direct investment
- Wholly owned subsidiary
- Piggybacking
What are the six modes companies use to enter foreign markets quizlet?
- Exporting
- Turnkey projects
- Licensing
- Franchising
- Joint ventures
- Wholly owned subsidiaries
What are five common international entry modes
The five most common modes of international-market entry are exporting, licensing, partnering, acquisition, and greenfield venturing.
Each of these entry vehicles has its own particular set of advantages and disadvantages.
Which one of the following modes of entry brings the firm closer to international market
Answer: The mode of entry that brings a domestic firm closer to international markets is contract manufacturing.
What are the factors influencing entry modes in international business?
- i) Market Size:
- ii) Market Growth:
- iii) Government Regulations:
- iv) Level of Competition:
- v) Physical Infrastructure:
- vi) Level of Risk:
- vii) Production and Shipping costs:
- viii) Lower Cost of Production:
What are non-equity entry modes
Non-equity modes are essentially contractual modes, such as leasing, licensing, franchising, and management-service contracts (Dunning, 1988).
What is the most effective mode of entry into international business
JOINT VENTURE It is a strategy used by companies to enter a foreign market by joining hands and sharing ownership and management with another company.
It is used when two or more companies want to achieve some common objectives and expand international operations.
Is a joint venture Always 50 50
A joint venture may have a 50-50 ownership split, or another split like 60-40 or 70-30.
The majority corporate owner or investor usually has more control in decisions and earns a great share of the partnership earnings.
What is a non-equity mode of entry into a foreign market
3. NON-EQUITY MODES OF ENTRY • Defined as modes that do not entail equity investment by a foreign entrant, • Becoming increasingly popular among service firms for organizing overseas ventures/operations • Has low degree of ownership and Control and extent of investment.
Which among the following is a mode of entry in to international business
Modes of entry into international business MCQ Question 1: International Franchising. Licensing. Contract manufacturing.
Joint ownership.
What are three methods companies use for entering foreign markets check all that apply?
- exporting
- licensing or franchising to a company in the host nation
- establishing a joint venture with a local company
- establishing a new wholly owned subsidiary
- acquiring an established enterprise
What is a wholly owned subsidiary mode of entry
An organisation that enters a market as a wholly owned subsidiary has: high control, high commitment, high presence and high risk/reward.
A wholly owned subsidiary allows an organisation to reach diverse geographic regions, markets and different industries.
What are the non equity modes of entry available to the Mncs
NEMs include contract manufacturing, services outsourcing, contract farming, franchising, licensing, management contracts and other types of contractual relationships through which TNCs coordinate activities in their global value chains (GVCs) and influence the management of host-country firms without owning an equity
Why would a company choose to use a contractual mode of entry rather than an investment mode
Contractual forms of entry (i.e., licensing and franchising) have lower up-front costs than investment modes do.
It’s also easier for the company to extricate itself from the situation if the results aren’t favorable.
Which of the following is an equity mode of entry
Licensing and franchising are examples of equity modes of entry.
What are the factors that influence an organization’s choice of entry mode in a country
Quality, quantity and cost of raw materials, labor, energy and other productive agents in the target country, as well as the cost of economic infrastructure (transportations, communications, port and similar other) have high influence on entry mode decision.
Which type of entry mode in international business is also called Build Operate Transfer
BOT projects are a hybrid mode of international market entry, with unique features, benefits, and risks.
What is investment entry mode
The investment entry mode is the one that requires the most commitment on the part of a company, in terms of both management time and financial and human resources.
Which is not a mode of entry into foreign markets
Importing is not a market entry mode, because importing is not selling any product.
Importing is related with marketing and purchasing. Many countries are related with each other by import export through business.
But they are not importing, because they are not selling their product.
References
https://businessjargons.com/joint-venture.html
https://kadence.com/en-us/what-are-the-four-market-entry-strategies/
https://www.nibusinessinfo.co.uk/content/types-joint-venture
