Mode | Condition to use | Advantages | Disadvantages |
Exporting | High target market, product cost, high political risk, low home-country currency | Relatively low financial exposure, permit gradual, market entry Acquire knowledge about local market | Vulnerability to tariffs logistical complexities potential conflicts with distributors |
Licensing | Licensing licks ability to become a competitor, low sales, potential in targeted market | Lower cost and risk licensee provides knowledge of local market | No tight control, risk for losing know-how |
Franchising | Contractual agreement | Low financial risk, low cost way to assess market potential, maintain more control than with licensing | Limits market opportunity, dependence on franchisee, potential conflicts with franchisee |
FDI | High sales potential low political risk. | Greater knowledge of local market, Can better apply specialized skills | Higher risk than other modes requires more resources and commitments may be difficult to manage the local resources |
Joint ventures | High sales potential local company can provide recourses and skills | Benefit from local partner Share cost and risk, Political considerations | Loss control of technology, no tight control of partner, Conflicts and battles |