I. Modes of Entry There are several modes of entry feasible for a firm looking t
ID: 381970 • Letter: I
Question
I.Modes of Entry
There are several modes of entry feasible for a firm looking to enter international markets. Few of the options available typically pursued are: 1. Trading Company 2. Contract manufacturing 3. Joint venture 4. Licensing 5. Foreign Direct Investment
Look at the examples below. Identify which mode of entry applies to each situation. Provide the rationale.
1.A water purification plant works with WTSC Industrial Group to connect it with buyers throughout the world.
2.Apple uses factories in China to manufacture its iPad and iPhone components.
3.Siemens has partnered with Nokia to create Nokia Siemens Networks U.S. This entity is gaining large inroads into telecom manufacturing equipment.
4.An Australian lunchbox manufacturer makes a deal with Disney to use Marvel comic book characters and names on its lunchboxes.
5.Jaguar Land Rover opened up a new car plant in China and is planning to open up an engine factory there as well.
Explanation / Answer
1) Trading company
As the company wants to distribute the product throughout, a trading company will help to do the same
2) Contract manufacturing
The Apple can use the existing manufacturing sites at China for production requirement
3) Joint Venture
As both companies are coming up together for operation, it is a joint venture
4) Licensing
As the company is obtaining legal rights to use characters, license is required for same
5) Foreign direct investment
In this case, company is opening new facility to help in enhancing production