Country Selection: Modes of Entry - Essay Example

Globalization I would start this paper by pointing out that there are four major modes of entry such as exporting, franchising, joint venture and green field. The first option is exporting the wheat to Morocco where there has been considerable shortage because of rising consumption and shrinking production. Nevertheless, this is the most feasible option for entering in Moroccan market because grains abundant nations usually choose exporting (traditional method) because they enjoy an advantage due to price inelastic nature of wheat, rice, sugarcane etc.

Also, exporting does not require any establishment of production / sales facilities in the chosen target market in short run. I would give 9.5 points out of 10 to this option on the basis of aforementioned analysis. The second possible mode of entry is known as Joint Venture that refers to creating a partnership or profit-sharing agreement with a domestic investor or business group for producing / selling the goods and services. Since our chosen product is wheat, it would not be much lucrative of getting involved into a joint venture because the product has inelastic demand and the vendors do not face any difficulties / complexities in selling wheat to consumers.

Quite unequivocally, this option would have been adopted if there had been cutthroat competition in the Moroccan market and it had been difficult to create market for innovative / new products and succeed without assistance of local partners. I would give 3 points out of 10 to this option on the basis of aforementioned analysis. The third possible mode of entry is known as Franchising that refers to getting involved with business relationships with local parties (called franchisees) which form retail stores for selling franchisor’s products at agreed upon business terms and conditions.

Nevertheless, the grain exporters never have franchising agreements to sell their products only at certain franchises. Rather, wheat products are sold at all grocery stores, supermarkets and specialized wheat shops (for wheat only) across chosen cities. Hence, franchising is also an inappropriate option and I would give 3 points out of 10 in the light of aforementioned reasons. The fourth option is known as Green Field venture, which is about setting up a new company / subsidiary from scratch in a foreign market.

Indeed, this is considered as the most risky option by business pundits because of relatively high financial liability and certain management difficulties (language barriers, culture, societal values and traditions) encountered during setting up a new firm from scratch. However, in this scenario, we could establish a new registered grain trading company because shortages persist in Moroccan grain market. In addition, this option would be quite beneficial if we opt to enhance our sales volume for wheat only as well as to commence trade of other agricultural products such as cotton, rice, sugarcane etc.

For instance, the profits could be maximized because wheat will first be imported from USA and then sold by our Moroccan subsidiary in domestic market, thereby eradicating role of importer and middleman. However, this option is exclusively for long run so I would give 8.5 points out of 10.