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Factors and Issues That Are Faced for Making the Choice of the Mode of International Market Entry - Term Paper Example

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The paper "Factors and Issues That Are Faced for Making the Choice of the Mode of International Market Entry" includes the factors or circumstances under which the organizations must prefer to internationalize via foreign direct investment rather than the other modes of internationalization.   
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Factors and Issues That Are Faced for Making the Choice of the Mode of International Market Entry
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Download file to see previous pages In simple terms, FDI can be defined as the investment process where residents of one nation or country acquire ownership of assets of the firm in some other country or nation for the purpose of controlling interest in the production, distribution and other activities. It can also be said to be as the acquisition of a lasting interest in a firm operating in an economy other than the home economy or of the investor in order to have a hold in the management of the enterprise (Ravenhill 2008). The major factors explained in the definitions above include controlling interest. So the main factor that is included for the use of the FDI as a source of international investment over other modes of internationalization is the element of control on the policies and decisions of management (Zekiri and Angelova 2011).   
Exporting in simple terms can be said to be as the process of selling goods and products or services produced in the domestic country to another country. Exporting is done in the form of direct and indirect exporting. In indirect exporting the products are sold in the original or modified form from one nation to another, while indirect exporting includes selling of products and services directly through the use of direct distribution channels (Mosa 2012).
Under the franchising internationalization mode, the organizations sell limited rights to the franchisees to utilize the brand name of the organization in return for a lump sum amount of payment and also with the agreement to provide a share in the franchisee's profitability (The Drive to Internationalize 2004). In simple terms, the franchising can be said to be as making use of the other firm’s successful business model. This mainly includes the opening of chain stores and the distribution of goods and services that avoids the liability of investment of the store and the chain. The success of the franchisor or organization depends on how the franchise operates the business practices (Svetličič and Rojec 2003).         ...Download file to see next pagesRead More
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