Companies desiring to enter the foreign markets, face the dilemma while deciding the method of entry into a given overseas location. Companies can reduce the dilemma by analyzing the decision factors.
Decision factors:
After deciding to go to foreign markets, the companies have to decide the mode of entry.
This dilemma can be solved to some extent by considering the following factors:
- Ownership advantages
- Location advantages
- Internationalisation advantages
Ownership Advantages:
Ownership advantages are those benefits designed by a company by owing resources. These benefits provide competitive advantages to the company over its competitors. These advantages are both tangible and intangible.
Location advantages:
Certain locational factors grant benefit to the company when the manufacturing facilities are located in the host country rather than in the home country. These locational factors include:
- Customer Ned, preferences and tastes
- Logistic requirements
- Cheap land acquisition cost
- Cheap labour
- Political stability
- Low cost raw materials
- Climatic conditions
Internationalisation advantages:
Internationalisation advantages are those benefits that a company gets by manufacturing goods or rendering services in the host country by itself rather than through contract arrangements with the companies in the host country.