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.