Furthermore, the costs and risks of doing business in a foreign country are typically lower in economically advanced and politically stable democratic countries, and higher in less developed and politically unstable countries.
driven by an evaluation of relative long-term growth and profit potential Another major issue with which international businesses must contend is the mode of entry into a foreign market.
Exporting, licensing, or franchising to host-country firms; establishing joint ventures with a host-country firm; establishing a new wholly owned subsidiary in a host country to serve its market; and acquiring an established enterprise in the host country to serve that market are the various modes for serving foreign markets. Each of these options has benefits and drawbacks.
A variety of factors influence the magnitude of the advantages and disadvantages associated with each entry mode, including logistics costs, trade barriers, political risks, economic risks, business risks, costs, and firm strategy. Depending on these factors, the optimal entry mode varies by situation.
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