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Once a firm decides to trade internationally, it must choose how to enter foreign markets and how to manage international operations. This lesson examines the main market entry strategies — from low-risk exporting to high-commitment direct investment — and the strategic decisions around off-shoring, re-shoring, and managing multinational operations.
Firms can enter international markets through a range of strategies, each offering a different balance of risk, control, and commitment.
| Method | Risk Level | Investment Required | Control | Speed |
|---|---|---|---|---|
| Exporting | Low | Low | Low | Fast |
| Licensing | Low | Low | Low | Fast |
| Franchising | Low-Medium | Low-Medium | Medium | Medium |
| Joint venture | Medium | Medium-High | Shared | Medium |
| Strategic alliance | Low-Medium | Low-Medium | Shared | Fast |
| Direct investment (FDI) | High | High | High | Slow |
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