Foreign market entry modes

In international trade, foreign market entry modes are the ways in which a company can expand its services into a non-domestic market.

There are two major types of market entry modes: equity and non-equity. The non-equity modes category includes export and contractual agreements. The equity modes category includes joint ventures and wholly owned subsidiaries. Different entry modes differ in three crucial aspects:

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.

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

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

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.

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.