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Entry Modes (Hierarchal Entry Mode (Examples (Sales/Production Subsidiary,…
Entry Modes
Hierarchal Entry Mode
Examples
Sales/Production Subsidiary
Domestic based Sales Representative
Region Centre (Head Quarters)
Transactional organization
Advantages
Will follow policy/trademark
Can be less time consuming
Complete control
Disadvantages
High Risk
Can be complex!
Low flexibility
Intermediate Entry Mode
Disadvantages
Future competition possible
Cultural Clash
Partners can tarnish reputation
Examples
Joint venture
Franchising/Licensing
Strategic Alliance
Management contracting
Advantages
Partners will know the market
Expansion opportunity
Low cost for Licensing and Franchising
Reduces political risk
Export Entry Mode
Disadvantages
High cost for offline products
Lead time
Examples
Indirect
Cooperative
Direct
Advantages
Can select foreign representatives in overseas markets
Can utilize direct export strategy to test products before making a bigger investment
Helps to protect patents