In what ways may a firm enter a foreign market?

Expert Answers

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There are a number of ways that firms can enter a foreign market.  The most important ways are:

  • Exporting.  In this mode, a firm simply produces its goods in its own country and ships them to the foreign market to be sold.
  • Licensing.  Here, the firm takes payment from a firm in the target country.  In return, the firm that pays gets the right to use the other firm's intellectual property such as trademarks and production methods to produce goods in the target country.
  • Joint venture.  Here the firm and a firm in the target country work together in a partnership.
  • Foreign direct investment.  Here, the firm that wishes to enter the market simply buys facilities in the target country and starts to produce goods.
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