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.
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 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.
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 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.