Which global market entry strategy has the lowest risk and lowest return?
Exporting
Exporting is the direct sale of goods and / or services in another country. It is possibly the best-known method of entering a foreign market, as well as the lowest risk.
Exporting means sending goods produced in one country to sell them in another country. Exporting is a low-risk strategy that businesses find attractive for several reasons. First, mature products in a domestic market might find new growth opportunities overseas.
Exporting is the least financially risky global entry strategy, so Mary most likely would choose this route.
- Exporting. Exporting involves marketing the products you produce in the countries in which you intend to sell them. ...
- Piggybacking. ...
- Countertrade. ...
- Licensing. ...
- Joint ventures. ...
- Company ownership. ...
- Franchising. ...
- Outsourcing.
It is a low-risk and one of the less costly strategies which make it easier for a product to break into a foreign market. In this strategy, the costs of production are minimized as the raw material and other material costs are that of the home country itself.
| Type of Entry | Advantages |
|---|---|
| Exporting | Fast entry, low risk |
| Licensing and Franchising | Fast entry, low cost, low risk |
| Partnering and Strategic Alliance | Shared costs reduce investment needed, reduced risk, seen as local entity |
| Acquisition | Fast entry; known, established operations |
The five most common modes of international-market entry are exporting, licensing, partnering, acquisition, and greenfield venturing. Each of these entry vehicles has its own particular set of advantages and disadvantages.
The simplest form of entry strategy is exporting using either a direct or indirect method such as an agent, in the case of the former, or countertrade, in the case of the latter.
Generally, we would expect small firms to use entry strategies (e.g., exporting, use of an export management company, licensing...) that place fewer resources at risk. Larger firms can manage larger investments here and have more options.
Which global entry strategy has the highest degree of risk? Direct investment requires the highest level of investment and exposes the firm to significant risks, including the loss of its operating and/or initial investments.
Which entry mode has highest risk and profit?
Direct investment-Foreign Direct Investment (FDI's) risk and profit potential are the highest in the foreign markets.
Exporting means sending goods produced in one country to sell them in another country. Exporting is a low-risk strategy that businesses find attractive for several reasons.
Which of the following best describes the direct investment global entry strategy? With direct investment, a firm maintains total ownership of its plants, operation facilities, and offices in a foreign country.